Do Wellness Initiatives Yield An ROI?

Do Wellness Initiatives Yield An ROI?

“An ounce of prevention is worth a pound of cure” is the saying, and Corporate Wellness initiatives, in more than 77 percent of large firms, are proving this by the pounds saved every year.

While corporate wellness programs are created with the best of intentions, when it comes to business, it is all about the returns. Since money is poured into these programs, it is quite natural that companies would like to see a bit of it come back. So let’s get to it: What is the hard return on Corporate Wellness programs?

Way better than you may think!

Studies and Hard Numbers

A RAND Wellness Program study, which included almost 600,000 employees, collected observations on the wellness initiatives and made these conclusions. The study concluded that disease management and lifestyle management initiatives taken up by corporations reduced average health care costs of employers by $30 per month. The disease management programs in particular, led to nearly 30% reduction in hospital admissions. Considering the ratio of reductions in health care costs to program costs for the disease management initiatives the ROI was $3.80. This means that for every dollar that the employer invested in the program he saw a return of $3.80. That’s pretty darn good, plus the added benefit of your employee’s health, what’s holding you back from implementing a program?

corporate wellness programs return on investment graph

Photo Credit: http://www.rand.org/

The Harvard Business Review brought out an article that included the findings of a study on a random sample of 185 workers and their spouses from one company. The participants received cardiac rehabilitation and exercise training to see the affect on their health. The finding were: “Of those classified as high risk when the study started (according to body fat, blood pressure, anxiety level and other measures), 57 percent were converted to low-risk status by the end of the six-month program. Furthermore, medical claim costs declined by $1,421 per participant, compared with those from the previous year.”

More Than Numbers

Those were just the numbers. There are other factors, though not quantifiable yet, that have a bearing on the return. The Society of Human Resources discussed an additional productivity benefit from the lifestyle management component, which they call the Employee Positivity Factor.

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As we have seen, ROI is usually calculated keeping into account absenteeism, health cost to company and attrition; but what about actual productivity? Employees who come to work not feeling well or tired have a lower productivity vs. employees who come energized and focused. Maintaining a healthy employee is important in return to your company; The Employee Positivity Factor plays a huge role in ROI.

Studies agree. For example, a 2011/2012 Towers Watson and National Business Group on Health report showed that companies with effective wellness programs achieved a 40 percent higher industry-adjusted average revenue than those without or with less effective programs.

Employee wellness programs that contribute to the emotional and physical wellbeing of the employee increase employee productivity, ushers in a positive work environment and ultimately brings in the magic words – ROI.

Real Life Success Story

The corporate wellness program in Johnson and Johnson is a sterling example. Their initiatives have been around since 1995. Some of the positive outcomes they have seen include the percentage of employees who smoke decrease as well as an increase of individuals who workout and remain physically active. It is estimated, and the J&J’s leaders are saying it, that these programs have over the last 10 years cumulatively saved the company $250 million on health care costs. That’s an incredible amount of money and a fine example of how corporate wellness initiatives not only benefit the health of the individuals at your company but also save you a good amount of money.

So to the question, Do Corporate Wellness programs really bring in a good ROI, that’s a resounding YES.

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