A New Approach to Measure the ROI of Wellness Programs

Most companies are able to measure basic production variables, such as employee absenteeism and/or time-on-task; however, it appears that calculating the return on investment of wellness programs has been much less successful. In fact, according to data from the IBI 2015 CFO survey, only 6% of CFOs measure the ROI of their current wellness programs.1

If you cannot measure it, you can’t improve it. ­­­­Peter Drucker

Over the past several years, many large companies have made significant investments in employee wellness. How much are they spending?  According to a National Business Group on Health (NBGH) and Fidelity Investments survey, incentives alone amounted to an average of $784 per employee in 2018.

More than two-thirds report that engagement, productivity, and reducing absenteeism are the primary goals of their wellness programs, and almost nine out of ten (86%) are using financial incentives as motivation. 2

Unfortunately, assessing how much impact these initiatives are having on a company’s bottom line has often proven elusive. Legendary management expert Peter Drucker might assert that if measurement tools are failing, program sustainability can’t be far behind.

ROI of Wellness Programs

Perhaps it is time to take a different approach, one that is two-fold, which measures the ROI of wellness programs and utilizes the mass amounts of data that we so often find at our finger tips, such as:

  1. Biometric Data: Of course, this is already being done across the industry – requesting that employees take a biometric test in order to establish their baseline and, therefore, gives the ability to track their progress throughout the duration of a wellness program. However, this biometric data can, and should, be taken one step further. Given to the organization in the form of aggregated data, the employer can measure the ROI by seeing the general health and well-being (or lack thereof) of their employee base. What’s more, year-by-year they can now visibly see the improvement caused by their wellness program on a population-wide level.
  2. Healthcare Claims Data: HealthyCapital offers a data aggregation dashboard that ingests the actual healthcare claims data from an organization (on an aggregated basis) and displays it in terms of its change in the health of the population. Taking it a step further, the data can be broken down by chronic conditions, age group, etc. This allows employers to see, quarter-by-quarter and year-by-year, the improvement in the clinical outcomes of their employees.

Chronic Conditions

Approximately 50 percent of adults in the U.S. have one or more chronic conditions 3 – including high blood pressure, diabetes, obesity, high cholesterol, or use of tobacco products – which account for up to 90% of the nation’s health care expenditures[1].  Above all, addressing this cohort of employees and choosing to measure the ROI can be an innovative way to ensure that a wellness program is measured and constantly improved based on those metrics.

Using Actuarial Data

Actuarial data indicates that motivating this population to actively manage their conditions through simple behavioral changes will have a significant payoff for both workers and employers.  In fact, for every dollar an employee saves on healthcare costs, the company saves triple that value[2]. HealthyCapital, itself, projects annual savings of $900,000 for an organization with 2,000 employees. For an organization with 5,000 employees, more than $2.5 million.

 

1 https://hitconsultant.net/2016/04/08/how-wearables-are-revolutionizing-healthcare/#.XLz4vlMvzOQ

2 “NBGH Press Release.” National Business Group on Health, www.businessgrouphealth.org/news/nbgh-news/press-releases/press-release-details/?ID=343.

3 5 Ward BW, Schiller JS, Goodman RA. Multiple chronic conditions among US adults: a 2012 update. Prev Chronic Dis. 2014;11:E62.

4 Data provided by HealthyCapital

[1] https://www.cdc.gov/chronicdisease/about/costs/index.htm

[2] https://meetingsnorthwest.com/want-a-31-roi-think-employee-wellness/