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Wellness Programs – It’s About Expectations

Overall Performance Rating Form 3Having a healthy dose of realistic expectations is extremely important in most every part of our lives. Whether it’s with school, friends, a favorite sports team, work, marriage, raising a family or any other life event, our expectations exist. The expectations we have might very well define how we react to the actual experiences that ultimately occur. If we have set lofty expectations about “fill in the blank,” we might be more susceptible to feeling disappointed and/or angry if the results are anything less than what we expected. This is all part of human nature, right?

The same thing applies to a big trend happening today in the workplace – wellness programs.

What are your expectations about workplace wellness? Do you believe such programs, when appropriately and thoughtfully implemented, will greatly mitigate your healthcare costs, improve workforce productivity and reduce absenteeism? Perhaps your expectations are, at a bare minimum, the associated expense of implementing these programs will be cost neutral. Maybe you feel these programs are a waste. From our 2012 Iowa Employer Benefits Study, employers shared their perceived ‘return on investment’ of the programs they currently have in place.

According to the “Workplace Wellness Programs Study” by researchers at the RAND Corporation, these programs only have a modest effect. This runs contrary to claims made by wellness firms that sell workplace wellness programs to employers. The report found that people who participate in wellness initiatives lose an average of only one pound a year for three years. Another finding is that employee participation in such plans “was not associated with significant reductions in total cholesterol level.” Smoking-cessation programs show some potential, but only “in the short term.”

RAND is a very reputable research organization and delivered this congressionally-mandated analysis to the U.S. Department of Labor and the Department of Health and Human Services. The report was released in conjunction with the final wellness regulations on May 29, 2013.

This 165-page report is extensive. Most likely, both skeptics and supporters of wellness will find ammunition to support their cause. As for me, I just appreciate having a reputable organization perform a relatively non-biased analysis with nothing to ‘sell.’

This report may help stabilize, to a more realistic level, any pre-conceived expectations each of us may have about wellness programs.  That is my hope…and expectation. What about you?

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The ROI of Wellness

In our latest 2012 Study, Iowa employers were asked about Health and Wellness initiatives they are offering to their employees. As demonstrated below, organizations with less than 250 employees are far less likely to have wellness initiatives in place at their worksite. A few major reasons for this great chasm deal mostly with cost and time. Smaller employers have fewer resources (both in time and money) and desire to spend such resources on other pressing issues.

David P. Lind Benchmark

Employers were asked what type of “return on investment” (ROI) did they observe over the last two years of having a wellness program. As the next slide demonstrates, this response varies wildly based on organization size. Most likely, larger employers spend a great deal more time attempting to assess the ROI on such programs, and they appear to be more bullish on the results compared to their smaller counterparts. As you might imagine, there are many different ways to calculate a return on investment with wellness programs – in fact, the specific process used will determine the outcome. I believe the slide below is more about the “perception” Iowa employers have when assessing the payout of such programs. Keep in mind that a return of $1 simply means a “breakeven.” Any reported amount beyond $1 means the program provides a positive return.

David P. Lind Benchmark

The questions for this particular module of our Study were developed in collaboration with the University of Iowa Healthier Workforce Center for Excellence. This module attempts to learn if Iowa employers are achieving what the Institute of Medicine in 2005 proposed under its Employee Total Health Management Program.

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Wellness – Size Seems to Matter

David P. Lind BenchmarkSize really does matter – it appears.

For many years, we have asked thousands of Iowa employers whether they offer some type of wellness initiative, and if so, what components do they include in their program. From our 2011 Study, we do know that Iowa employers offer the following wellness initiatives:

  • 44 percent offer Medical Information to their employees through a website, newsletter, etc.
  • 26 percent of Health Screening Programs
  • 23 percent offer Smoking Cessation Programs
  • 22 percent offer Chronic Disease Management Programs
  • 21 percent offer Health Risk Assessment Programs
  • 21 percent offer Health Club discount/reimbursement Programs
  • 18 percent offer Weight Control Programs

When we look a bit closer at these numbers, we see a very consistent theme (found in all past studies) – smaller employers are clearly less likely to embrace wellness initiatives (see below).

 David P. Lind Benchmark

A few primary reasons that smaller employers do not offer wellness initiatives relates to cost and time. Smaller employers have fewer resources than their larger counterparts, and therefore desire to spend their time and money on keeping their business, well, in business! For the typical small Iowa employer, focusing on the basics of their business is paramount to surviving in these harsh economic times.

Due to sheer cost, offering health insurance might be considered a ‘necessary evil’. But offering health coverage allows the employer to compete with other employers for qualified workforce talent. From our studies, we know that smaller employers are less likely to offer health insurance to their employees. Compared to larger Iowa employers, small employers tend to receive higher rate adjustments to their health plans, year after year. From this, small employers are forced to drastically change plan designs that shift additional costs to employees through higher deductibles and copayments. When employees have to pay more through higher cost shifting, many may forgo (or delay) seeking health care services altogether. This unintended consequence can be detrimental to the long term interests of small employers.

It may be time for smaller employers to reconsider offering sensible wellness initiatives – perhaps not to expect immediate relief in health insurance premiums, but to promote a healthier, more productive workforce. Size should not really matter when it comes to having a healthy workforce.