return on investment

Forecasting any company’s return on investment for a wellness program can be difficult.  In a corporate wellness program, the immediate return can be especially hard to measure. Just ask the experts like Ron Goetzel, Director of the Institute for Health and Productivity Studies at Emory University in Atlanta. "People ask me what to expect. I'm more conservative: 1.5- to 2-to-1 over three years," says Goetzel. "ROI is a dirty word. ...it's very tricky. People are used to seeing it in the financial world, and it migrated over into healthcare. Financial executives always want the bottom line, the dollars and cents of what they're doing."

But the belief that wellness pays and the concept of seeking a return persists. According to a story in USA Today based on a study in Pediatrics, IBM employees and their families were given the opportunity to improve their eating and exercising habits over a twelve week program.  They would receive a $150.00 cash rebate by satisfying a few requirements; watch less TV, less computer time, make better food choices, and spend quality time with the family. 

How did this program perform? In simple terms and without a typical six-figure consulting study, the program passed the participation test; 22,265 (52% of the eligible employees with children) signed up to participate. But only 11,631 (52% of those who signed up) completed the requirements and received the cash incentive. Is getting 25% of your employees and their families more active and eating healthier worth $1.85M (an estimate of program costs plus incentives)? This is a tough question to answer in terms of ROI. Not so tough to answer in terms of employee morale, work/life balance, and their perception of IBM as an employer who cares about their families’ health.  

The Alliance for Wellness ROI, Inc. is a company that has set standards to determine ROI on wellness programs. “The goal of the Alliance for Wellness ROI, Inc. is to promote wellness and demonstrate that a wellness expenditure is an investment and its ROI can be objectively measured.”

According to Alliance for Wellness ROI, Inc. there should be eleven components to a wellness program:

1. Work Life Balance
2. Employee Assistance Plan
3. Disease Management
4. Health Risk Appraisal
5. Telephonic Coaching
6. On-Site Medical
7. Weight Management
8. Smoking Cessation
9. Wellness Education
10. Preventive Care
11. Fitness

There are variables that affect each of these components such as age, underlying health factors, and gender, and many of these components will overlap. Measuring and recording the results of these standards is the core of presenting an accurate, tangible prediction on returns.  It’s easier to immediately see the return when someone is motivated to lose a few pounds for a handful of cash.  In a bigger, more realistic picture, the ROI of a corporate wellness program can also be measured.  It just takes little longer. Years longer.

The University of Michigan published a unique study that reported a substantial return when a company invests in corporate wellness.  What set this study apart from the rest was that it considered all costs involved with implementing a long-term employee wellness program, such as menu changes, employee recruiting, and marketing.

For the nine year study, researchers at the U of M followed a midwestern utility company and discovered a net savings of close to $5 million after offering a corporate wellness program that not only aimed to take care of sick employees, but also kept the rest of the employees and their families healthy and on the job.

According to Alyssa Shultz, research area specialist intermediate, the midwestern company spent $7.3 million on their wellness program over the nine years.  After determining various medical and pharmaceutical costs and employee time off, Shultz reported a savings of $12.1 million.

“One of the advantages of the study is it shows that a sustainable program will give you savings,” stated Dee Edington, a research scientist in the University of Michigan school of Public Health.

Evaluating the return on your investment for a wellness program can be a complex, long-term process.