Are Your Health-Promotion Programs Really Saving You Money?
Good ol' Ben Franklin said, "An ounce of prevention is worth a pound of cure," but Ben never had to run his folksy wisdom through the buzz saw of a national healthcare debate. If he had, it would have likely set off a firestorm about the cost-effectiveness of preventive services, a subject that has major productivity implications for U.S. businesses.
"It's a debate we should watch closely," said Mark Vickers, VP of research at i4cp. "Regardless of the outcome of today's national healthcare initiatives in the U.S., this is a chance to have a large-scale dialogue about the cost-effectiveness of such programs, and some of this information will be very helpful for employers. After all, our research shows that most large companies are offering wellness programs, and some are striving to become true employers of choice in these areas."
Preventive services have been a prime component of the Obama administration's vision for healthcare reform. Underlying it is the idea that prevention adds up to billions in savings by boosting patient wellness and providing early detection of conditions that, if allowed to go untreated, could wind up costing more in their advanced stages.
But not so fast. Douglas W. Elmendorf, director of the Congressional Budget Office, sent a letter to the U.S. House Energy and Commerce Committee citing a 2008 study in the New England Journal of Medicine that showed that "slightly fewer than 20% of [preventive] services that were examined save money, while the rest add to costs. ... [S]creening costs will exceed the savings from avoided treatment in cases in which only a very small fraction of the population would become ill in the absence of preventive measures."
Others remain less skeptical of the ROI of preventive programs, saying that researchers need to look at data from further back to get a longer-range view. And some experts argue that not only does wellness/prevention pay off, but only a relatively minor reduction in risk factors - less than 1% - is needed to reach a positive ROI. Dr. Ron Goetzel of Cornell University has even come up with an ROI calculator that reportedly allows him to figure out the break-even point on wellness initiatives and to predict any savings (or losses) that might be realized from a specific proposal.
Even as the battle over prevention and wellness programs heats up at the national level, many corporations have adopted these ideas to some degree for their employees. A survey by i4cp found that nearly two-thirds (62%) of participants said their companies offered some form of wellness program. Smaller companies were less likely to offer them, but the percentage rose to 82% among those with 5,000 to 9,999 employees and to 96% for those with more than 10,000 workers.
Of course, there are lots of different kinds of wellness and preventive services, and sometimes we're really talking only about covering the basics. For example, the most commonly provided wellness services are flu shots, offered by 73%, and health information (65%). These aren't exactly high-cost/low-return initiatives.
Some companies, however, go considerably further. For example, 70% of large companies offer on-premises gyms and 65% offer on-premises classes such as yoga, exercise, and health or nutrition information.
And then there are firms, such as i4cp member company Target, that go the extra mile in the area of wellness. Target became a founding member of the Alliance to Make US Healthiest last May. The alliance is a non-partisan organization that, among other things, "fosters innovative actions" designed to "spark a nationwide social movement to make the U.S. the healthiest nation in a healthier world." At the same time, Target announced a partnership with Redbrick Health to pilot a wellness program that includes what Target calls advocates to help the company's employees in all their health-related goals.
The Redbrick partnership was merely the newest component of a companywide focus on wellness and prevention. The overall program includes such components as a 24/7 toll-free NurseLine designed to help employees decide what level of care they might need for any medical problem, a website devoted to health and wellness with online health coaches, a health-risk assessment tool and health information, on-site clinics, and employee discounts at fitness centers and Weight Watchers classes.
"We firmly believe that healthy team members create a more successful business and vibrant communities," said Jodee Kozlak, Target's executive vice president of human resources. "We want all team members and their families to focus on prevention - the key to access and affordability."
Target has even provided federal legislators with a list of suggestions for improving the U.S. healthcare system. Number 1 on the list: "Adopt specific and meaningful cost containment measures and offer choices that focus on prevention and wellness."
i4cp's 4-Part Recommendation:
"It's a debate we should watch closely," said Mark Vickers, VP of research at i4cp. "Regardless of the outcome of today's national healthcare initiatives in the U.S., this is a chance to have a large-scale dialogue about the cost-effectiveness of such programs, and some of this information will be very helpful for employers. After all, our research shows that most large companies are offering wellness programs, and some are striving to become true employers of choice in these areas."
Preventive services have been a prime component of the Obama administration's vision for healthcare reform. Underlying it is the idea that prevention adds up to billions in savings by boosting patient wellness and providing early detection of conditions that, if allowed to go untreated, could wind up costing more in their advanced stages.
But not so fast. Douglas W. Elmendorf, director of the Congressional Budget Office, sent a letter to the U.S. House Energy and Commerce Committee citing a 2008 study in the New England Journal of Medicine that showed that "slightly fewer than 20% of [preventive] services that were examined save money, while the rest add to costs. ... [S]creening costs will exceed the savings from avoided treatment in cases in which only a very small fraction of the population would become ill in the absence of preventive measures."
Others remain less skeptical of the ROI of preventive programs, saying that researchers need to look at data from further back to get a longer-range view. And some experts argue that not only does wellness/prevention pay off, but only a relatively minor reduction in risk factors - less than 1% - is needed to reach a positive ROI. Dr. Ron Goetzel of Cornell University has even come up with an ROI calculator that reportedly allows him to figure out the break-even point on wellness initiatives and to predict any savings (or losses) that might be realized from a specific proposal.
Even as the battle over prevention and wellness programs heats up at the national level, many corporations have adopted these ideas to some degree for their employees. A survey by i4cp found that nearly two-thirds (62%) of participants said their companies offered some form of wellness program. Smaller companies were less likely to offer them, but the percentage rose to 82% among those with 5,000 to 9,999 employees and to 96% for those with more than 10,000 workers.
Of course, there are lots of different kinds of wellness and preventive services, and sometimes we're really talking only about covering the basics. For example, the most commonly provided wellness services are flu shots, offered by 73%, and health information (65%). These aren't exactly high-cost/low-return initiatives.
Some companies, however, go considerably further. For example, 70% of large companies offer on-premises gyms and 65% offer on-premises classes such as yoga, exercise, and health or nutrition information.
And then there are firms, such as i4cp member company Target, that go the extra mile in the area of wellness. Target became a founding member of the Alliance to Make US Healthiest last May. The alliance is a non-partisan organization that, among other things, "fosters innovative actions" designed to "spark a nationwide social movement to make the U.S. the healthiest nation in a healthier world." At the same time, Target announced a partnership with Redbrick Health to pilot a wellness program that includes what Target calls advocates to help the company's employees in all their health-related goals.
The Redbrick partnership was merely the newest component of a companywide focus on wellness and prevention. The overall program includes such components as a 24/7 toll-free NurseLine designed to help employees decide what level of care they might need for any medical problem, a website devoted to health and wellness with online health coaches, a health-risk assessment tool and health information, on-site clinics, and employee discounts at fitness centers and Weight Watchers classes.
"We firmly believe that healthy team members create a more successful business and vibrant communities," said Jodee Kozlak, Target's executive vice president of human resources. "We want all team members and their families to focus on prevention - the key to access and affordability."
Target has even provided federal legislators with a list of suggestions for improving the U.S. healthcare system. Number 1 on the list: "Adopt specific and meaningful cost containment measures and offer choices that focus on prevention and wellness."
i4cp's 4-Part Recommendation:
- When considering which, if any, wellness and preventive services to adopt or retain in your organization's benefits programs, examine the picture from multiple angles. Certainly, the ROI of these services in terms of reducing healthcare costs is one crucial angle, but other perspectives should also be considered. These include the impact on employee satisfaction, retention, recruitment, and productivity.
- Start with the "low-hanging fruit" that is both inexpensive and likely to have a positive impact. Providing health information and helping to cover the costs of flu shots are likely to be low-cost/high-return practices, especially in today's H1N1 influenza environment.
- Consider offering employees health incentives. These can range from offering salads at a lower cost than burgers and fries in the company cafeteria to providing actual cash incentives for losing weight or quitting smoking.
- Investigate best practices in these areas and network with companies that seem to be using them. Ask those companies what seems to be working best. Also, find out what your employees and prospective hires want in these areas. Look for the win-win practices that allow your firm to reap benefits at multiple levels.
- Brady, B. (2007, May 4). Workplace wellness programs: Can they really pay a 300% return on investment? HR Daily Advisor.
- Fey, C. T. (2009, September 1). Preventive medicine does help to keep costs down. San Francisco Examiner.
- Health care. (2009). The White House.
- Institute for Corporate Productivity. (2008, September). Taking the pulse: Healthcare.
- Montz, E., & Seshamani, M.. A success story in American health care. Healthreform.gov.
- Petrecca, L. (2009, June 16). Cost-conscious companies re-evaluate wellness programs.
- President Obama's fiscal 2010 budget. (2009). Office of Management and Budget.
- Target Corporation makes getting and staying healthy easier. (2009, May 18). Target Corporation.
- Terry, K. (2009, August 10). CBO brings Obama back to Earth on preventive care. Bnet.com.
- U.S. health reform estimates need long view: Study. (2009, September 1). Reuters.