How effective are corporate wellness programs?

Aware of the fact that company’s finance hinges on the health of its employees; more and more companies are incorporating health and wellness programs. But are these efforts paying off?

According to the National Center for Chronic Disease Prevention and Health Promotion, productivity loss due to family and personal health problems cost US employers $1,685 per employee per year, which makes a whopping sum of $225.8 billion annually. Moreover, nearly 50 percent of employers with at least 50 workers, and 90 percent of employers with more than 50,000 workers integrate wellness programs into their companies.

A Fidelity Investments and National Business Group study notes that wellness-based incentives have grown from $260 per employee to $521 in four years. Amendments to the Affordable Care Act have something to do with it. The changes implemented in the act have raised the value of wellness incentive provided to employees from 20 to 30 percent. However, it remains to be seen if such measures have had any impact on employees.

A study from the RAND Corporation reveals the outcomes of a corporate wellness program conducted at PepsiCo. The study report concluded that while disease management programs that assist people in handling chronic disease, such as diabetes and heart problems, lowered health costs by $136 per member per month and saw a drop in hospital admissions of 29 percent, the lifestyle management program fell flat, having little to no effect on healthcare costs.

It was also revealed that participants of wellness programs that focused on weight management, on an average, lost only one pound a year for three years. Moreover, there was no significant reduction in total cholesterol level. The smoking cessation programs also failed to yield promising results.

Companies tie disease management and lifestyle management programs to health insurance premiums to engage employees. Discounts, gift coupons and other incentives are utilized to incite action.

Wellness programs by companies, expenditure and results.

Organizations deploy various strategies, including like action-based, target-based, and awareness-based programs, to get employees to behave responsibly towards their health.

Caterpillar Inc., for instance, reduced its premium by $75 a month for the employees who opted to complete a health risk assessment, which then saw a 90 percent participation rate. The annual value for such an assessment is estimated to be around $120.

A wellness program conducted by Johnson & Johnson has also shown encouraging results. This program offers $500 off annual premiums to employees who submit a health profile. For each dollar it invests, the company claims to receive a return of up to $4.

Joining these ranks, JetBlue Airways Cor. offers as much as $400 for activities spanning across a wide range, from getting your teeth cleaning ($25) to participating in an Ironman triathlon ($400).

Wellness programs are not complete non-performers

Though researchers suggest that companies should not pin their faith to these wellness programs, their positive implications cannot be brushed aside.

Soren Mattke, a senior natural scientist at RAND says that disease management programs could save companies money because they address diseases that already carry hefty costs. This way, he suggests, a lot of money is saved by cutting down on hospital admissions.

Lifestyle management programs should not be undermined as they do manage to bring down the rate of absenteeism among employees. Smoking cessation and weight loss programs may not save money, but they do have the potential to show favorable results in a long run.

Helen Darling, president of National Business Group on Health looks beyond the financial aspect of these programs. She says, “These programs aren’t only aimed at saving money; they send out a message that the company cares about people. Additionally, a company which exhibits a culture of health can prevent its workers from developing high cost diseases such as diabetes.”