Employers have difficulty measuring impact of wellness programs

March 1, 2010

Employee wellness programs are becoming a mainstream perk at many larger companies, but whether they're worth the time and effort depends on whom you ask.

NATIONAL REPORTS-Employee wellness programs are becoming a mainstream perk at many larger companies, but whether they're worth the time and effort depends on whom you ask.

The latest Principal Financial Well-Being Index found that 45% of Americans working for small- to medium-sized companies favor workplace wellness programs. The survey also revealed 40% of workers are encouraged to work harder and perform better, while 26% miss fewer days of work by participating in such programs.

LuAnn Heinen, vice president of the National Business Group on Health, says 75% to 80% of large employers are offering employee wellness programs with the goal of having a healthier and more productive workforce. For smaller companies, the participation rate is closer to 7%.

"It's questionable how much they help people," Miele says. "In the very, very long term they probably do improve overall health and wellness in a population, but that has not proven out in the data."

The biggest barrier is unwillingness to change behaviors and a lack of commitment by employers to maintain a quality wellness program.

"Americans are tough," Miele says. "They want to smoke and eat bad food. We don't punish people for doing it."

He warns that there's a very high fixed cost to setting up an aggressive, thoughtful wellness program, so employers must understand what the opportunities are realistically.

That said, there are employers implementing successful wellness programs. Procter & Gamble, for example, invests in wellness, including on-site coaches and clinics, fitness centers and a compensation formula.

ONE-FOURTH DO NOT MEASURE

Lee Dukes, president of Principal Wellness Company, the Principal Financial Group, says successful wellness programs have three key elements: a data-driven strategy; effective communication; and meaningful incentives. However, one thing many companies ignore is data indicating what the population needs and wants.

Wellness incentives can range from lower deductibles and copays, which can move a population toward healthier behaviors in the long run, to cash or gift cards, which might drive short-term, immediate behavior, such as participating in a seminar or challenge.

A Fidelity Investments survey created in conjunction with the National Business Group on Health found that mid- to large-sized companies are spending, on average, about 2% of their total healthcare claim dollars annually on wellness programs. Most implemented an average of 21 programs focused on prevention, lifestyle wellness, condition management, communication and education.

But the survey found that 27% of companies do not measure the outcomes of these programs and 65% have no measurable goals for their initiatives. Miele says there are three ways to measure wellness returns: measuring activity; intermediate outcomes; and risk adjustment.

Activity-based measurements look at the total population participation. Well-run wellness programs should have at least 30% of the population participating, including a subset with risk factors. The intermediate outcomes approach looks at the success of a program, such as how many people lost weight or quit smoking.

The risk-adjusted method looks at claims data through a risk model to determine a population's risk. It's an expensive process and does not provide a significant return on investment.

"We have not seen wholesale reductions in risk," Miele says. "It doesn't mean the program doesn't work. Sometimes these things take a lot longer than the wellness vendor would say."

Heinen says a wellness program that is well designed and communicated makes employees feel valued, engaged in their health and supported by their employer to make changes.

Dukes adds that wellness programs can be a win-win for employees and employers. Employers benefit by retaining top talent, energizing employees and reducing sick days. Employees benefit from improved physical health, reduced workplace stress and financial benefits of a healthy lifestyle.

Today most employers with wellness programs want more than a feel-good initiative. They want something that will provide demonstrable results in health status or cost reduction, he says.