| A Worksite Wellness White Paper |
The Health &
Economic Implications of
Worksite
Wellness Programs
An American
Institute for Preventive Medicine Wellness White Paper
For CFO's, HR Executives, Benefit Managers, Medical Directors,
& Wellness Professionals
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Founded in 1983, the American
Institute for Preventive Medicine is an award winning,
internationally recognized authority on the development and
implementation of health promotion, wellness, medical self-care, and
disease management programs and publications.
We have helped over 13,500 organizations reduce health care costs
and absenteeism, while helping over 15 million employees or members
improve their health and well being. Our products educate, motivate,
and change behavior.
Click
here to download our Wellness Catalog.
To
receive a free medical self-care Return on Investment Analysis
which shows how much your company will save by implementing a self-care
program, email us with your number of employees / members. (aipm@healthylife.com)
To
receive a free Wellness Wizard which shows how many of your
employees / members have various risk factors, the extra costs
associated with them, and the cost savings if the risk factors are
reduced, email the Institute with your number of employees. (aipm@healthylife.com)
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Annual Employee / Member Health Care Costs
In 2008, U.S. health care costs
will total approximately $2.2 trillion or 16% of the gross domestic product. It is projected
that companies will pay an average of $9,312 per employee for health care. Employees
are increasingly being asked to pay a greater share of these costs. This share has
increased from $1,284 in 2003 to $2,040 in 2008 – a 59% increase in only 5 years.
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Source: Towers Perrin 2008 Health Care Cost Survey
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Health Insurance Premiums vs. Other Indicators
The cost of health insurance has
far and away outpaced the rate of inflation and workers’ earnings
over the past 2 decades.
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Source: Kaiser Family Foundation, 2005
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If Food Were Health Care
If food prices had risen at the
same rates as medical inflation since the 1930’s, we would be paying
an astronomical amount for common grocery items as evidenced below.
1 dozen eggs $ 80.20
1 pound apples $ 12.23
1 pound sugar $ 13.70
1 roll toilet tissue $ 24.20
1 dozen oranges $ 107.90
1 pound butter $ 102.07
1 pound bananas $ 16.04
1 pound bacon $ 122.48
1 pound beef shoulder $ 43.57
1 pound of coffee $ 64.17
10 item total $ 586.56
Source: American Institute for Preventive Medicine, 2007 |
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Health Care Share of Total Benefit Spending
Health care spending has also taken
up a greater share of benefits spending accounting for 44% of total
benefit costs in 2006.
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How Companies are Responding to Increased Health Care
Costs
Employers have made a variety of
adjustments to deal with increased health care costs, including increased copays, higher
deductibles, and switching providers. These changes are a supply management approach. Although
initially they had encouraging effects, during the last few years, they have been more limited in
reducing the health care costs. An alternative approach is demand management. This focuses on the
employee and helps them live a healthier lifestyle and be wiser health care consumers. Wellness
programs are the key component of this strategy.
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Source: Society for Human Resources Management, 2006 |
Percentage of Employers Offering Wellness Programs
Companies of all sizes implement
wellness programs with the larger ones showing a slightly higher percentage. On
average, 62% of all companies offer a wellness program.
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Source: Society for Human Resources Management, 2006 |
Risk Factors for Every 100 Employees / Members
Companies want to know what type of
risks their employees face. Having employees fill out a Health Risk
Assessment (HRA) can accomplish this. Separate from that, however, there
are government statistics that show how many risk factors exist for every
100 employees. Unless your work force is very different from national
demographics, you can expect to be experiencing similar percents within your employee
population.
The American Institute for Preventive Medicine developed the Wellness
Wizard™ to help companies understand how these statistics apply to their
employees. It also provides you with a cost breakdown for the risk factors and
what the savings would be based upon a reduction in those risks. The
Wellness Wizard™ is available at no charge by simply letting the Institute know
how many employees you have.
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25 have cardiovascular disease
12 are asthmatic
6 are diabetic
26 have high blood pressure
30 have high cholesterol
38 are overweight
21 smoke
31 use alcohol excessively
20 don’t wear seatbelts
24 don’t exercise
44 suffer from stress
Source: Department of Health and Human Services, 2007 |
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The Cost of an Unhealthy Lifestyle
A major reason for the surge in
wellness programs is that employee lifestyle counts for
a vast majority of health care claims costs.
• 87.5% of health care claims costs
are due to an
individual’s lifestyle.
Source: Indiana University-Purdue University, Fort Wayne
(IPFW) Study, 2006 |
Benefits of Worksite Wellness Programs
Companies receive many benefits
after implementing a worksite wellness program in addition to reducing
costs. They include increases in employee morale, improved employee health,
reduction in workers compensation claims, reductions in absenteeism,
and increases in productivity.
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Source: National Business Group on Health, 2005 |
Issues Most Affecting Employee / Member Productivity
Research is being conducted on
productivity and its relationship to health. This is due to the fact that employee
productivity is influenced by a number of factors, the most important of which is stress,
followed closely by chronic medical conditions, and lifestyle medical conditions.
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Source: Watson Wyatt, 2005 |
Rising Health Care Costs Worry Employees / Members
Rising health care costs are a
major concern for your employees. In fact, many employees are more worried about
paying for health care than they are about losing their job, terrorism, or
stock market losses.
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Source: Kaiser Family Foundation, 2005 |
Cost of Presenteeism
Another concern among employers is
the issue of presenteeism. This refers to the fact that employees may be at
work, but due to health concerns, they are not working optimally. Many HR
executives consider it a problem in their companies.
• Annual cost to companies of over
$180 billion / year
• The per employee cost is between
$22 and $157 annually
• Persistent problem at over 50% of
workplaces
• In 2006, 56% of HR executives
viewed it as a problem vs. 39% in 2004
Sources: The Center for Work and Health, 2003
Journal of Occupational and Environmental Medicine, April, 2004
CCH, Riverwoods, IL, 2006
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The Cost of Unhealthy Behavior
A great deal of research has been
conducted on the excessive costs experienced by an employer when
their employees live an unhealthy lifestyle. Studies conducted
at Steelcase and Dupont exemplify this. Although the costs for various
lifestyle behaviors, such as smoking and obesity vary from company to
company, the data clearly show risk factors are associated with extra costs.
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1 American Journal of Health Promotion, 1991
2 American Journal of Health Promotion, 1993
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High Risk Employees Cost More
The Health Enhancement Research
Organization (HERO) study involving over 46,000 employees from 6 large
companies reinforced the fact that unhealthy lifestyle is responsible for
increased costs. It also showed that 2 psychological problems – depression and stress –
are the highest cost drivers.
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Source: Goetzel, Anderson et. al. Journal of Occupational and
Environmental Medicine, 40; 10. October 1998; 843-854. |
Return on Investment In Worksite Health Promotion
A review of scores of published
studies on worksite wellness found that the Return on Investment is $3.48:1 due to reduced medical
costs and $5.82:1 due to reduced absenteeism.
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1. Source: Aldana, SG, Financial impact of health promotion
programs: a comprehensive review of the literature, American Journal
of Health Promotion, 2001, volume 15:5: pages 296-320.
2. Source: Aldana, SG, Financial impact of health promotion
programs: a comprehensive review of the literature, American Journal
of Health Promotion, 2001, volume 15:5: pages 296-320.
3. Source: Chapman, LS, Meta-evaluation of worksite health promotion
economic return studies, Art of Health Promotion, 2003, 6:6, pages
1-16.
4. Source: Chapman, LS, Meta-evaluation of worksite health promotion
economic return studies: 2005 Update Art of Health Promotion, 2005,
p. 1-16.
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Association of Risk Levels with Several Corporate Cost
Measures
Research conducted at the
University of Michigan has shown that low risk employees (1 – 2 risk factors) have
lower costs for short term disability, workers’ compensation, absence, and health
care costs whereas high risk employees (5 or more risk factors) have higher
costs.
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Source: Wright, Beard, Edington, JOEM 44(12): 1126-1134, 2002 |
Wellness Program Savings
A three year study conducted at a
health system in Minneapolis found that health risks decreased after the
implementation of a comprehensive worksite wellness program. This led to increased
savings due to reduced health care costs, absenteeism, and workers’
compensation claims each year of the program.
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Source: Fairview Alive Program Evaluation (StayWell, 2004) |
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Physician Office Visits Annually
The most successful wellness
programs include a medical selfcare program to reduce unnecessary use
of health care services. According to research,
approximately 25% of all doctor visits are deemed to be unnecessary. With the
average doctor visit cost of $101 per visit, employers are spending a
great deal of money needlessly.
Total visits to non-federally
employed, office based physicians
• 964 million
• Approximately 3.3 visits/person
Source: National Ambulatory Medical Care Survey-2006
Unnecessary Visits
• 25% or 241 million
Source: Dunnell, K. and Cartwright, C. Medicine Takers, Prescribers
and Hoarders
Average cost - $121/visit
Source: U.S. Department of Health and Human Services,
2006
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Emergency Room Visits Annually
The data regarding emergency room
visits is even more compelling. Approximately 55%
of all E.R. visits are unnecessary. At an average cost
of $560 per visit, the unnecessary costs are quite
high. The American Institute for Preventive Medicine
can provide your company with a free Medical
Self-Care Return on Investment Analysis to show what
your company’s savings would be after implementing
a medical selfcare savings.
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Total Annual E.R. Visits
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115 million
• 37.8 visits / 100 persons
Source: National Ambulatory Medical
Care Survey-2006
Unnecessary Visits
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55% or 63 million
Source: National Ambulatory Medical
Care Survey-2006
Average cost - $560/visit
Source: U.S. Department of Health
and Human Services, 2006
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Self-Care Studies
In 18 independent studies, the
American Institute for Preventive Medicine’s self-care guides have demonstrated
an average savings of $71.41 per person due to reduced doctor and
emergency room visits in 9 months.
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The Return on
Investment (ROI) for
Worksite Wellness
Programs at Various Companies
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Northeast Utilities
– The company’s Well Aware Program demonstrated a $1.4 million
decrease in behavioral claims, 31% decrease in smoking, 29%
decrease in inactivity, 16% decrease in mental health risk,
and 11% decrease in cholesterol risk. The Return on
Investment was 6:1.
Source: U.S. Dept. of Health and
Human Services, Prevention Makes
Common Cents, 2003.
Motorola
– Program participants experienced
an increase of only 2.4% in health care costs
whereas non-participants experienced an 18% increase in
health care costs. The Return on Investment was $3.93:1.
Source: U.S. Dept. of Health and
Human Services, Prevention Makes Common Cents, 2003.
Union Pacific Railroad
– The company’s wellness
program produced a $53 million
reduction in health care costs in one year.
Source: U.S. Dept. of Health and
Human Services, Prevention Makes Common Cents, 2003.
Wisconsin Educational
Insurance Group
– A medical self-care program and health
education materials produced a Return on Investment of $4.75:1
Caterpillar
– Participants in the Healthy
Balance Program who completed the Health Risk
Assessment reduced their doctor visits by 17% and hospital
days by 28%.
Source: Wellness Councils of
America, The Cost Benefit of Worksite Wellness, 2002.
Dupont
– A study involving 45,000 blue
collar workers found that absences from non-job
related illness decreased 41% at locations where a worksite
wellness program was offered compared with a 5.8%
decline at 19 sites where it was not. The Return on Investment
was $1.42:1 due to reductions in absenteeism.
Source: Wellness Councils of
America, The Cost Benefit of Worksite Wellness, 2002.
Johnson & Johnson
– The results of a 4 year
worksite wellness program involving
18,331 employees demonstrated an overall savings of
$8.5 million annually due to reduced health care costs.
This amounted to a savings of $225 per employee per
year.
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Florida Power & Light
– After an employee wellness program, total health care costs
were reduced by 35%, workers compensation costs were
reduced by 38% per claim, and 82% of employees
reported personal healthimprovements.
Source: Wellness Councils of
America, The Cost Benefit of Worksite
Wellness, 2002.
Xerox Corporation
– A worksite wellness program
revealed a drop in the frequency of
workers’ compensation claims and the average cost per
injury. 5.6% of wellness participants filed claims with an
average cost of $6,506 per injury. 8.9% of non-wellness
participants filed claims with an average cost of $9,482 per
injury.
Source: University of Michigan
Health Management Research Center, 2001.
Citibank
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comprehensive health management program showed a $4.56:1 Return on
Investment in reduced total health care costs.
Source: Journal of Occupational and
Environmental Medicine, 1999, 14(1):5131-43.
Washoe County School District
– Wellness program participants averaged 3 fewer
missed workdays than those who did not participate in the
program. The decrease in absenteeism produced a Return on
Investment of $15.60:1.
Source: Preventive Medicine,
2000; 40:131-7.
Manufacturing Company
– A 6 year wellness program including 2,596 participants saved
$623,040 due to reductions in disability absence
days. This resulted in a Return on Investment of $2.30:1.
Source: Journal of Occupational and
Environmental Medicine, 2002; 44:776-80.
Large Company
– A worksite wellness program
compared 13,048 participants who filled out
a Health Risk Appraisal with 13,363 non-participants.
Overall, the HRA participants cost an average of $212 less on
medical costs than nonparticipants.
Source: Journal of Occupational and
Environmental Medicine, 2003; 45:1196-2002.
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www.healthylife.com
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reserved under International and Pan-American Copyright Conventions.
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