Bears Business Brief: Help your workplace wellness program work for your organization

By: Lori Peterson

Lori Peterson

Although there is uncertainty surrounding the future of the Affordable Care Act, health care costs will almost certainly continue to rise. Workplace wellness programs, a popular method companies employ to help reduce health care expense, are now used by more than two-thirds of US businesses. Now a $6 billion industry, questions have arisen about the efficacy of some of these initiatives. Which programs should your organization pursue, how should the impact be measured and how can management and employees benefit?

Many workplace wellness programs have two components — lifestyle management and disease management. The lifestyle component focuses on employee health risks such as smoking and obesity. Generally, support is offered to help reduce risks associated with developing chronic conditions. Disease management programs are designed to encourage employees to manage chronic conditions so they can take better care of themselves. Some estimates indicate that at-risk employees can consume 50 percent of a company’s health claims expense.

An extensive 2013 RAND Wellness Programs Study determined that wellness programs had little, if any, immediate effect on the amount employers spent on health care. Other recent studies confirm those outcomes. However, there are other ways these programs contribute to employee health (e.g. avoiding amputation from diabetes, reducing heart attacks from heart disease and reducing pneumonia from emphysema). All of these contribute to savings through reduced emergency room visits and hospital admissions. Some risk factors take years to develop into a chronic condition, and not all participants with a risk factor later develop a disease. Therefore, determining the return on investment can be complicated. Organizations with years of experience running such programs suggest it may take three to five years to see a return on investment.

Employee buy-in is critical to a program’s success. Employers cannot force employees to live healthier lifestyles, and even thinly veiled penalties may hurt employee morale if employees see shifting costs and an unsupportive workplace environment rather than a long-term corporate wellness goal. Wellness programs have backfired when previously happy employees became anxious about losing their jobs. For example, employees reported feeling that when someone noticed them eating something unhealthy or smoking a cigarette they would be seen as a bad employee and less attractive to the organization.

Transparency will help employees trust the workplace wellness program and the employer’s motivations. When employees can see the true costs of health care coverage the organization bears, along with projected increases, they will have greater motivation to participate. Offering incentives to support the creation of new habits will be more successful than offering penalties or forcing activities on employees. It is also important to protect participant data and avoid discriminating against people with health conditions who may not wish to share their health information.

When organizations explore the total return on wellness, the numbers beyond claims expenses will be important. Organizations may realize reduced absenteeism, greater engagement, improved productivity, reduction in unscheduled paid time off, greater retention, fewer worker’s compensation claims and increased employee satisfaction — all which may contribute to the organization’s bottom line.

Lori T. Peterson, Ph.D. is an assistant professor of management at Missouri State University. The views expressed in this article reflect those of the author, have been distributed for educational and informational purposes only, and should not be construed as investment advice or a recommendation of any specific security, strategy, or investment product.

This article appeared in the April 29, 2017 edition of The News-Leader and can be accessed online here.