Health Information
Some employers look to cost sharing, cost shifting, managed
care plans, risk rating, and/or cash-based rebates or incentives. But these
methods merely shift costs. Only worksite health promotion programs such as
Health Fairs, health education and wellness programs stand out as the long-term
answer for keeping employees well in the first place.
Facts about corporate wellness programs.
Details
Good Health Makes Economic Sense
Escalating healthcare costs in the U.S. pose major concerns
for many companies. It is reported that the average employer spends more than
$8,000 per year for each employee’s health benefits, including insurance,
disability and workers’ compensation (Occupational Health Management). The cost
of U.S. healthcare benefits increased 15 percent in 2002 and another 10 percent
in 2003. Mercer Consulting’s 2003 survey of costs of employer-sponsored
healthcare plans found that the average total cost of health benefits for active
employees (which includes all medical and dental plans offered) rose from $5,646
per employee in 2002 to $6,215 in 2003. These costs are expected to rise
annually at the rate of 13% to 15% over the next five years; for small
businesses, the cost will climb much higher. Drug prescription costs are
increasing at a rate of 17% to 20% annually, according to benefit consulting
firm William M. Mercer, Inc. (2002). Continued increases in healthcare costs are
prompting companies to seek innovative ways to promote employee health while at
the same time containing costs.
Health and wellness programs can produce a range of
business benefits to companies, including the following:
- Reduced medical costs and disability costs: Many
companies have found they can significantly reduce the cost of employee
healthcare benefits by proactively promoting health, safety, and wellness.
According to a 3-year study conducted by Motorola comparing costs for
employees that participated in its Wellness Initiatives compared to those
that did not, for every $1 the company invested in Wellness benefits, it
saved $3.93. The company estimated that in 2000, its Wellness Initiatives
saved the company $6.5 million in avoided healthcare costs and $10.5 million
in avoided disability payments.
- Reduced Absenteeism: Numerous studies have found that
employee wellness programs can significantly reduce employee absenteeism.
For instance, Control Data Corporation estimates it has reduced costs of
absenteeism by $1.8 million annually through implementation of its StayWell
Program.
- Enhanced Productivity: Many studies have linked health
risks with reduced employee productivity and to no surprise found that
healthier workers are more productive. As an example, a study conducted by
First Card Chicago NBD Corp. of 1,000 of its customer service
representatives, found that those workers with fewer health risk factors
such as smoking and obesity were more productive.
- Enhanced Recruitment and Retention: A 2003 survey
commissioned by the American Association of Occupational Health Nurses Inc.
found that 60% of employees consider wellness programs an incentive that
greatly added to their decision to remain with their current employer. Other
studies have also linked employee health and wellness programs with improved
workplace morale and enhanced retention rates.
Active employers report that worksite health and wellness
programs save money. Studies show that participating companies in these
programs have up to 50% lower medical costs, 46% less absenteeism, and 20%
declines in disability costs (see reports below).
What’s more, as listed by Business Week, many major
insurers, such as Metropolitan Life, Prudential, John Hancock, Travelers and
Aetna , offer reduced insurance premiums to companies with wellness programs. A
representative of Sun Life of Canada, which offers a 5% discount, said, “We want
to recognize and do business with employers who value healthy workers.”
Business Case Studies Show the Dollar Value of Wellness
Steelcase: In the longest-running evaluation of a
wellness program, Steelcase observed 4,000 employees from 1984 through 1995.
The company found among employees who dropped from high-risk to low-risk through
the wellness program, average annual health claim costs dropped 53%. “It’s
evidence for the decision-makers within the company to say, ‘Yes, this is a
cost-saving measure’,” says Jonathan Showstack, UC San Francisco.
(Associated Press)
Johnson & Johnson: An independent evaluation of
Johnson & Johnson’s wellness program discovered mean annual inpatient cost
increases for non-participants were nearly twice those for participants in the
wellness program. The study also found lower cost increases in hospital
days and admissions among the program participants. (JAMA)
Pitney Bowes: A study revealed 9% savings in medical costs.
Wellness Programs Lower Health Risk
Depression:
Depressions costs
U.S. employers over $44 billion per year, mostly in absenteeism and lost
productivity (“Morning Edition,” National Public Radio, October 7, 1999).
Two-thirds of patients with
undiagnosed depression visit a primary care physician more than six times a year
with physical complaints (Healthcare Demand and Disease Management, September
1997).
People experiencing a major
depressive disorder are 27 times more likely than others to have a work
disability. Yet a National Mental Health Association survey showed only half of
women and less than half of men consider depression a health problem. Wellness
programs help employees confront and manage mental disorders.
Stress:
A 1997 study found
uncontrolled stress was responsible for 12% of all unscheduled absences that
year, double the rate of 1995. What’s more, stress caused nearly half the
workers to respond unethically or illegally. Reported reactions to stress
included: cutting corners on quality control, falsifying
accident reports, abusing sick day policy, and deceiving customers and superiors
on serious matters (Business & Health, November 1997).
Between 50% and 80% of all
reported diseases are stress-related in origin, and nearly half of all
successful executives seriously consider career changes while in their 40’s
because of stress. However, a comprehensive study by the American
Journal of Health Promotion documented that worksite stress management programs
decrease blood pressure and anxiety and increase job satisfaction.
Weight Control:
Obese employees
are more than twice as likely to experience high-level
absenteeism – 14 or more absences due to illness per year (American Journal of
Health Promotion, December, 1998).
The one-third of Americans
who are overweight have double the normal risk for coronary artery disease, but
weight loss can bring that risk back in line. Structured weight control programs
give people the support to make lifestyle changes.
Nutrition:
Employees with
total cholesterol over 200 have 16% more hospital days and
24% more claims in excess of $5,000. Changes in diet can reduce
cholesterol, and for every 1% reduction in blood cholesterol, The Wellness
Letter reported a 2-3% reduction in heart attack risk. Nutrition education
helps people choose healthier eating.
Exercise:
Fitness center
participants stay in hospitals an average 2.1 days less than non-participants
(American Journal of Health Promotion, July/August 1993).
A regular program of
low to moderate exercise reduces heart attack risk by 35-55%, reported The
Wellness Letter. And Harvard Medical School noted that doing aerobic
exercise five times a week decreases the risk of Type II diabetes by 42%.
Fitness programs and incentives raise employee activity levels.
Regular Exams:
Working Woman
observed that every three minutes, a woman in the U.S. learns she has breast
cancer. Yet in a poll of 2,500 women, age 18 and older, a full third admitted
they hadn’t had a clinical breast exam in the past year. Finding cancer
early vastly increases the chances of recovery, and health education
communicates the importance of regular exams.
Smoking Cessation:
The Wellness
Letter (UC Berkeley) reported that smoking doubles a person’s chances of having
a heart attack. Yet within five to 10 years of quitting, the former smoker’s
risk is no different from that of a lifetime nonsmoker. Targeted smoking
cessation programs help people quit.
Safe Habits:
Employees who
fail to use seat belts have 54% more hospital days and 36% more claims in excess
of $5,000 than those who do. One serious car crash can cost an employer
$100,000. Wellness programs make the case for safety.
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