Friday Favorites: The Return on Investment (ROI) for Employee Health and Wellness Programs Put to the Test

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An impressive number of studies have shown that lifestyle is the root cause of what ails us, particularly for chronic conditions. The studies also show that changing one’s lifestyle can have a dramatic effect on health improvement, both in the prevention and treatment of disease. So, given the benefits of lifestyle medicine interventions, it would seem that our health care system would rush to embrace this movement; however, little could be further from the truth. Now, I know we have a for-profit healthcare system, but even just from a dollars-and-cents perspective, it may make sense—and dollars!

A majority of Americans have health care insurance through their employers, the cost for which is rising at an alarming rate. Health insurance premiums continue to go up year after year. Unfortunately, all the money we’re spending has not translated into healthier employees or healthier Americans. We spend more on healthcare per person by far, yet the U.S. population is not healthy. By 2014, our life expectancy had slipped down to 43rd in the world. And since then, our life expectancy declined year after year. It’s not just that other countries are doing better; we now may be living shorter and shorter lives. And unhealthier lives—again even just from a financial bottom-line perspective––hundreds of billions in productivity lost, beyond all the healthcare costs.

One employee gets diabetes, and it costs about $10,000 more per year. So, if a self-insured company could prevent or reverse that case, they could save the company a lot of money, raising the possibility that workplace wellness programs could not just be cost-neutral––in other words pay for themselves––but actually save the company money, even make the company money. This brings up the concept of ROI, or return on investment. That’s how much money you get back for every dollar spent. So, an ROI of 3 to 1 means every dollar you spend yields $3 back; so, by investing in such a program, you’d end up tripling your money. You don’t know though, until you put it to the test.

Johnson & Johnson, for example, claimed that investing in employee wellness yielded around 2 to 4 dollars for each dollar they spent. Citibank estimated their return on investment was $5 saved for every dollar spent. A compilation of a handful of such studies found an average ROI of more than three dollars of healthcare cost savings for each dollar spent on health promotion. A more recent review including more than 20 studies came up with a return on investment exceeding 5 to 1, though an even more recent review out of Harvard looking at more than 30 studies found the ROI closer to three dollars. Spend one dollar, get three back. Not a bad deal.

One heavy manufacturing company reported an outstanding 34-to-1 return on investment, and that’s just direct healthcare costs. Some of their indirect costs, like lost workdays and disability, fell even more. Then, you can imagine other potential benefits—happier employees, more productive employees, making them more likely to stick around. So, do companies that invest in health promotion have a competitive advantage?

Publicly traded companies that got Corporate Health Achievement Awards outperformed the S&P 500 by 40 percent. C. Everett Koop Award winners outperformed the S&P 500 two to one. Those scoring higher on workplace health promotion best practices, same trend. And the same thing most recently with companies investing in an internal culture of health.

Of course, instead of healthier employees leading to a more profitable company, maybe more profitable companies have more money to spend to make employees healthier. Is there a link between stock market price growth and having a great employee wellness program? Maybe, but correlation doesn’t mean causation. Maybe prioritizing wellness is just a sign of a great management team, and that’s the real reason they’re raking in the dough.

Even most of the ROI studies lacked an adequate control group. You can’t just compare the costs of employees that signed up versus those that didn’t, because maybe healthier people are just drawn to such programs in the first place. That’s why you need randomized clinical trials to really put it to the test, which we’ll cover, next.

How much is a human life worth? Ideally, we’d like to think there is no price tag; each precious life is of inestimable value, but there are limited resources and policy decisions to be made, which leads to fascinating papers like this: the cost effectiveness of 500 life-saving interventions––587 to be exact, with some costing more than 10 billion dollars per year of life saved. Overall, the average intervention costs $42,000, which is how much it costs to save a year of someone’s life putting flashing lights at railroad crossings. So, how could you justify not installing them? Well, you could save more lives with the same money if you added grooved payment on highways. But if you really cared about saving drivers, you could save nearly a hundred times more lives investing the same money in media campaigns to encourage people to wear their seatbelts.

But if you really want value, if you want to prevent bangs for the least bucks, there are some interventions that save more resources than they cost. Yeah, most interventions cost $10,000 or more per year of life saved, but check out these. They’re not just cost-neutral, they mean you can save lives by saving money—talk about low-hanging fruit!

Studies, for example, suggest “Workplace Wellness Programs Can Generate Savings.” Not just saving more than you’re spending, but potentially tripling your money by investing in wellness. But since employee participation is almost always voluntary, this introduces the specter of selection bias, where healthier people are just drawn to wellness programs in the first place. And indeed, during the year prior to a wellness intervention, those who would later sign up already had lower medical expenditures and healthier behaviors than future nonparticipants; so, no wonder they could end up doing better than their nonparticipating colleagues, even if the wellness program had zero benefit. Thankfully, there are an increased number of randomized controlled trials of wellness programs to see if we can prove cause-and-effect––to answer the question “Do Workplace Health Promotion Programs Work?”, particularly important given that the workplace wellness industry is now a multibillion-dollar industry.

One of the most recent randomized controlled trials was published in the Journal of the American Medical Association. Thousands of employees were effectively randomized to a workplace wellness program at BJ’s Wholesale Club, and although program participants reported they were engaging in more positive health behaviors, such as getting regular exercise, there were no significant differences in clinical measures of health, or health care spending and utilization. The authors suggested we may have to temper our expectations about the financial return on investment that wellness programs can deliver, at least in the short term.

Now, some argue that even a break-even program, that is, one that does not impose additional costs to the company but produces significant population health improvement, might be a worthy investment. But perhaps the growing evidence that demonstrates limited or no concrete wellness program effects should encourage wellness companies and employers to critically assess the programs and try to improve them. In a survey of 162 company wellness programs, for example, only a third offered nutrition counseling. And even with counseling, it’s more than simply trying to convince people to take better care of themselves. It requires that the organization creates an environment where leading a healthy lifestyle is the “default” option. What are they promoting in the company cafeteria, for example? What’s being served up at meetings and in vending machines?

Yeah, a lifestyle management program at PepsiCo failed to save the company money, but somehow I doubt one of the components of PepsiCo’s wellness program, Healthy Living, was telling employees not to eat or drink any of their own products.

In fact, if you go back to that BJ’s case, yes, a few percentages more employees said they were more regularly exercising, but when it came to nutrition, it was a complete flop, in terms of things like drinking less soda, or more fruits and vegetables. No wonder their health hardly budged.

In a systematic review of systematic reviews on the effectiveness of dietary workplace interventions, the average improvement in fruit and vegetable intake combined was 0.7 portions a day. No wonder these programs aren’t doing better.

In Wealth of Nations, Adam Smith wrote that workers are less likely to be productive “when they are frequently sick than when they are generally in good health.” Sickness “cannot fail to diminish the produce of their industry.” Maybe they just need more produce than 0.7 servings a day.

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