The Cost of Not Doing Wellness
Some employers are still somewhat skeptical about why they should consider wellness. After all, if people don’t want to take care of themselves it’s their problem, right? It’s not your responsibility to watch over your employee’s lifestyle choices. Although there is some truth in that perspective, there is strong evidence that you may have a vested interest in what they do.
Let’s look at what it may be costing you to not do wellness. For instance, how much does it cost you when someone…
- Calls in sick?
- Takes disability?
- Needs a week off for knee replacement surgery?
- Suffers a stroke?
Whether you’re a large employer or small, when people are unhealthy it costs you, and the unhealthier they get, the higher the cost. Insurance premiums aside, illness-related loss of productivity is already costing you even before you look at whether or not your premiums have gone up.
Investing in wellness programs makes financial sense partly because it can impact health care claims, but ESPECIALLY because it will improve productivity and morale. A Wellness Councils of America (Welcoa) report estimates that savings generated from productivity improvements resulting from wellness programs can be 2 to 4 TIMES the annual healthcare cost for the group. Read that again: the $$ you can generate in productivity improvements from wellness initiatives can be 2 to 4 times greater than what you are currently spending as a group on your health care plan.
Where will these savings will come from?
- Fewer sick days (absenteeism)
- Fewer sick-at-work days (presenteeism)
- Reduction in disability claims
- Improvements in task efficiency
- Engaged, healthy employees working harder (read the bit about the Hewitt study below)
Also, an interesting analysis by Hewitt in 2004 showed that companies with sustained double-digit growth are the ones with the highest employee engagement. The employees who are more likely to exert discretionary effort (i.e. going above and beyond) are the same who agree with statements such as, “I love my company,” “I love my boss,” and “I love my job.”
In a nutshell, the genuine efforts you make to improve your employees’ lives will pay back big time.
If you need to build a case for the importance of doing wellness, here’s the most important statistic: 74% of health care claims are directly linked to poor lifestyle habits.1 (what is this 1 referencing?) This means that 74% of your claims could have been totally avoided if people were healthier. That could certainly help your premiums!
Still not convinced that wellness is a good idea? Or perhaps you need some numbers to build a case to present to your management team?
Johnson & Johnson:
- Since 1995, the percentage of Johnson & Johnson employees who smoke has dropped by more than two-thirds.
- The number who have high blood pressure or who are physically inactive also has declined by more than half.
- J&J’s leaders estimate that wellness programs have cumulatively saved the company $250 million on health care costs over the past decade.
- From 2002 to 2008, the return was $2.71 for every dollar spent.
MD Anderson Cancer Center:
- In 2001, they created a workers’ compensation and injury care unit staffed by a physician and a nurse case manager.
- Within six years, lost work days declined by 80% and modified-duty days by 64%.
- Cost savings totaled $1.5 million and workers’ comp insurance premiums declined by 50%.
A study by Towers Watson and the National Business Group on Health:
- Organizations with highly effective wellness programs report 9% voluntary attrition vs. 15% for those with low effectiveness.
- At the Biltmore tourism enterprise, voluntary attrition was 9% in 2009, down from 19% in 2005.
- The Biltmore’s director of benefits reports, “Employees who participate in our wellness programs do not leave.”
- Nelnet asks in exit interviews what departing employees will miss most. The number one answer: the wellness program.
Two doctors (Drs. Milani & Lavie) studied the effect of providing cardiac rehabilitation and exercise to a group of 185 workers and their spouses. The participants were not heart patients, but they received cardiac rehabilitation and exercise training from an expert team.
- 57% of people identified as high-risk at the beginning of the study (according to body fat, blood pressure, anxiety, and other measures) were converted to low-risk status by the end of the six-month program.
- Medical claim costs declined by $1,421 per participant.
- A control group showed no such improvements.
- Every dollar invested in the program yielded $6 in health care savings.
Source: Berry, L.L., Mirabito A.M. & Baun W.B., What’s the Hard Return on Employee Wellness Programs? Harvard Business Review, December, 2010.