Studies Question Cost Savings of Wellness Programs

Dorian Martin Health Guide
  • Are wellness programs worth it? A story in the Houston Chronicle noted that most major companies as well as some smaller organizations offer these programs to encourage their employees to adopt a healthy lifestyle. Furthermore, the Affordable Care Act allows organizations to expand the rewards and penalties to promote a healthy lifestyle as long as workers are provided programs that could help them make healthier choices.

    So let me share a little bit more about the current status of wellness programs. The Henry J. Kaiser Family Foundation offers some interesting data on wellness programs. Large firms that have 200 or more employers are more likely to offer some sort of wellness program than smaller firms that have between 3-199 workers. Furthermore, 41 percent of large firms and 10 percent of small firms that offer at least one wellness benefit also offer financial incentives to workers who participate in the programs. Eighteen percent of the firms ask employees to undergo a health risk assessment. Some of these firms link financial penalties or rewards to employees who complete wellness programs.

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    These programs range from classes in nutrition to a wellness newsletter. The Kaiser Foundation found that 63 percent of firms that offered health benefits had at least one of the following wellness programs: weight loss program, biometric screening, smoking cessation, lifestyle/behavioral coaching, gym membership discounts, on-site exercise facilities, nutrition classes, healthy living classes, web-based resources for healthy living, or a wellness newsletter.

    So are these programs making a difference? In some ways, I bet the answer is yes in relation to reduced absenteeism, stress reduction and higher productivity. However, two new studies question whether businesses will reap any short-term savings from having these programs.

    The first study, which is out of the University of Arizona at Tucson, tracked a wellness program at a major hospital system in St. Louis over a period of two years.  The hospital system tied employees’ eligibility to participate in the organization’s most generous health plan with participation in a wellness program, which started in 2005.

    They found that hospitalizations for employees and family members decreased by 41 percent overall for six conditions that were targeted by the wellness program. However, there were no significant increases in other hospitalizations. The researchers did find some reductions in inpatient costs, but these were countered by increases in non-inpatient costs. Their conclusion was that while the program did result in the reduction of some hospitalizations, it didn’t save money for the employer during the short term.

    The Houston Chronicle story on this study points to an analysis by the Mercer benefits consulting firm that suggests that well-designed wellness programs can show a positive return of about two percent by the third year of implementation. However, the story also notes that some previous studies have found increased spending or little change as far as savings from having a wellness program.

  • The second study, which was out of the University of California, Los Angeles, involved looking at the allocation of wellness programs’ cost savings for employers. The researchers reviewed the results of randomized controlled trials to identify challenges for workplace wellness programs in relation to the Affordable Care Act. “Although there may be other valid reasons, beyond lowering costs, to institute workplace wellness programs, we found little evidence that such programs can easily save costs through health improvement without being discriminatory,” the researchers wrote. They noted that the evidence suggests that savings to employers actually would come from shirting costs, possibly to the most vulnerable employees who are in a lower socioeconomic group and have the most health risks. The researchers suggest that this shifting would basically subsidize their healthier co-workers.

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    So what should you take away from these studies? Well, I’d suggest that businesses be realistic in what they expect from wellness programs. They need to take other factors such as lower absenteeism, greater productivity and staff morale into the economic equation and not just base decisions on short-term savings.

    Primary Sources for This Sharepost:

    Gowrisankaran, G., et al. (2013). A hospital system’s wellness program linked to health plan enrollment cut hospitalizations, not overall costs. Health Affairs.

    Horwitz, J. R., et al. (2013). Wellness incentives in the workplace: Cost savings through cost shifting to unhealthy workers. Health Affairs.

    Houston Chronicle. (2013). No quick savings seen in workplace wellness programs.

    The Henry J. Kaiser Family Foundation. (2012). Employer health benefits 2012 annual survey.

Published On: March 05, 2013