If your business success depends on people, then you ought to care about the health and wellness of those people. It’s a little obvious.
But how much should you care? Enough to spend some money? The return on investment debate rages in the business of wellness, so let’s take it on.
First, a quick primer. Here’s a simple look at why companies started implementing employee wellness programs in the first place.
Stuff You’ve Read 100 Times So I’ll Keep It Short
The short answer every wellness vendor (including me) wants desperately to give is that investing in prevention and wellness provides large, measurable, short-term returns on investment. And it does.
You’ve probably heard that…
- Employer health costs have more than doubled in the past 10 years
- Chronic disease (the vast majority of which is avoidable) accounts for 75 percent of US healthcare spending
- We could realize an 80 percent drop in health care spending if we radically change unhealthy behaviors and aggressively treat chronic diseases
(Sources and resources: the Almanac of Chronic Disease, 2008 Edition, the Henry J. Kaiser Family Foundation site, and http://www.chronicdiseaseimpact.com/)
By now you are probably both nodding in agreement and shaking your head side to side – at the same time. Be careful – this motion can and will hurt your neck. You know this already; the question is what to do about it.
First, take a deep breath. Know that wellness does work. Take comfort in knowing that companies investing in wellness get:
- 26.5% lower health costs
- 25.3% fewer sick days
- 40.7% reduction in workers’ comp costs
- 24.2% lower disability management costs
The cumulative effect is a 5.8x ROI — with pretty nominal initial investment.
(Think 0.25% of your health insurance bill, for starters).
(Source: Proof Positive: An Analysis of the Cost-Effectiveness of Worksite Wellness, Sixth Edition, 2007)
If you actively screen your population and manage risks and conditions, while encouraging healthy habits, your company will save money. Period. In fact, “Our system now does not incentivize anyone to get preventive careexcept for the employer. The employer is the only one who benefits from healthy people,” notes health cost guru Dr. Dee Edington.
The smartest minds in healthcare have staked their reputations on these savings. Evidence-Based people, like Surgeon Generals, Secretaries of Health, the folks at Mayo Clinic, the Cleveland Clinic and Johns Hopkins (organizations that actually make money when you go to the hospital), Chief Medical Officers, and on and on.
So we have a serious problem; bad health is bad for people and profits. Fortunately, we have a tangible solution that can start solving that problem right now. And, as a bonus, the positive return is five times more money coming back to us than we put in. And yet, having said all this, I feel the need to embrace one of my company’s core values and “Speak Plainly.”
ROI is not always as simple as we wellness people would have you believe.
What Wellness People Avoid When Discussing ROI
ROI is very hard to measure anywhere in business. Most businesses, no matter how hard they try or how well-intentioned they may be, are not rigorous scientific settings. Look around you. Is everything feeling controlled, labeled and 100% data-driven? Probably not. Why? Most likely, it can’t be. In most businesses, the sheer number and interdependence of variables, the lack of statistically valid control groups, office politics and other factors make truly scientific measurement – of anything – a daunting task.
Data guides our decisions, but it can’t make them.
ROI is hard to measure in business in general, but it gets worse: measuring ROI in wellness is (gulp) especially hard to measure, for at least seven reasons:
- Cost analysis is hard (and expensive). Big, sophisticated companies analyze risks, costs, claims and clinical data, often with the help of healthcare analytics companies and health plans. Safeway, Johnson and Johnson, EMC – all of these great companies publicize the economic benefits they’ve achieved (like $150 million savings annuity for Safeway). But most companies that haven’t cracked the Fortune 500 don’t have the wherewithal to copy the big boys (and girls)
- Benefit analysis is hard (and expensive). Wellness produces more than one type of measurable benefit or “outcome” (health, productivity, employee retention, job performance, sick days, safety incidents, etc…). It is not like search marketing, where all metrics (page views, clicks, conversions, sale amount) lead to two simple numbers: sales revenue and program profitability
- We can’t agree on what causes outcomes. Causal relationships vary based on whom you ask. Psychologists may say self-leadership. Pharmaceutical companies may say “taking your meds”. Smoking Cessation companies may say “quitting smoking.” Prevention experts may tout resilience, peer support and flu shots. The rest of us may go along with “following doctor’s orders.” All are correct, for some people, sometimes
- Outcomes like health, well-being, productivity, and profits are – in most cases – highly statistically correlated. This makes causal arguments complicated, at best. I know this because untangling statistical relationships is a big part of what we do at our company, Limeade. (Learn more by emailing us at firstname.lastname@example.org)
- Wellness initiatives are not the only factors affecting outcomes. Even the easiest outcome to measure — health costs — depends on inflation, work culture, hiring and benefits strategies, broker/plan commissions, specific health plan choices (co-pay amounts, spousal coverage, provider network fees, generic drug policies, etc.) and more. These are hard to control for in statistical studies. Productivity requires even broader systems thinking – for two reasons:
- We know of at least 20 factors which meaningfully contribute to productivity (only a few of which are “health risks”)
- Productivity is measured in so many ways (by self-report, by financial metrics like revenue per employee, by “time at work,” and others)
- Separating one wellness initiative from another is difficult. OK, so you saved 20% year-over-year with a wellness strategy. Was it due to a better health risk assessment completion rate, better blood-sample-based risk screening, better routing to resources/interventions, better resources/interventions, an influx of healthy single people, a new health plan, or more engaged leaders? Clean lines are hard to draw
- Some outcomes take longer than others to show up. When you quit smoking, there may be instant productivity bumps (higher energy level, fewer smoke breaks, higher birth-weight babies) – but other payoffs (e.g. avoiding lung cancer and chronic respiratory disorders like emphysema) may materialize more slowly
So What the Hell Are We Doing Here?
Let me summarize. Everyone likes ROI. Everyone claims Wellness has ROI. But ROI is hard. In wellness it is even harder.
And yet we are “all in” on this bet. Why? (Or, as my wife would ask: “WWWHHHHHYYYYY????”)
We start with a different question. Instead of “what are the costs and how can we reduce them?” we ask: “Have we really maximized our potential for fitness, vitality and everything else that makes companies buzz with energy?”
The question is fundamentally different. By pursuing it, we’ve concluded that the actual ROI of wellness – especially the right kind of wellness – is much higher than people think. Working on the answer to this question is also just a lot more fun.
Think back to the figures supporting a 5.8x ROI for wellness programs: LOWER health costs, FEWER sick days, REDUCTION in workers’ comp, LOWER disability comp costs. The fact that “things suck a lot less with wellness” is well-supported by the data.
But can we legitimately throw words like BETTER, STRONGER and MORE into the wellness ROI soup? Think about better employee engagement at work. Stronger and more loyal employees and customers. MoreRevenue.
These things are hard to measure. But just because things are hard doesn’t mean they are not worth doing. Trying to measure and improve important things, even if they come in complex and interdependent systems, is worth it. “The link between a company’s employee engagement and its bottom line is real: the more engaged the workers, the higher the sales and profits,” summed up Business Week’s Michelle Conlin in her recent article “Is Optimism a Competitive Advantage.”
Think about the value of your company’s brand. It’s “what people say about your company when you are not listening.” It is what engages people at an emotional level. Brand, like wellness, is an integrative concept, measured by the financial premium it delivers. Like wellness, brand is hard, but not impossible, to measure. And it takes great companies with great courage to invest in it.
They ”Just do it.” 😉
Actually, I have to admit: even though I use the word 34 times in this article, I hate ‘wellness’. Insofar as it defines a market category in which we sell our service, I guess it’s OK. (Better than no category at all, I suppose). But screw ‘wellness’.
The word itself is wimpy, vague, ineffectual — even if what it does is not. Can we for one second think a little bigger, be a little bolder? Let’s be positive for a second and call it something else. How about ‘abundant sustainable vitality’? Awesomeness. Butt-kicking juice.
ROI ‘To Do List’
I will leave you with a few simple recommendations. Do these things and you will get your ROI:
- Decide if people provide your competitive advantage. If not, don’t bother with wellness. If wellness programs do not directly contribute to your 3-year business plan, please don’t bother. If they don’t build your brand, skip ’em. As Paul Larsen of V1 Global Consulting notes: “Wellness is not an HR program or initiative; it is a state of mind organizations need to embrace in order to compete in global business”
- Choose the culture you want. Culture will form with or without you – so be intentional about your engagement strategy. Align wellness and benefits strategies with your leadership philosophies and business strategies. Consider whether the “you’re fat and we want you to get thin so we can save money on insurance” approach will prove engaging. Find a delightfully easy-to-use, engaging approach that encourages competition, peer support and overall excellence
- Show you care. The #1 predictor of employee engagement – which in turn is a top predictor of profitability – is the response this simple question: “Does my employer/manager sincerely care about my well-being?” Provide well-being programs that, in every element of their delivery, scream the message: “We care about you and your well-being! This will save you a fortune on replacing disgruntled and departing employees. Your competition is at war for your best employees and prospective employees. Do you have every weapon you need in order to do battle?
- Measure! Go get your 5.8x (or 10x or 2x) ROI from delivering the standard wellness blueprint – assessments, screenings, engaging programs, incentives and reporting. Demand workforce business intelligence about everything that ties to the performance, productivity, well-being and health of your people. After all, your people are the lifeblood of your business. If someone can integrate all this information in one dashboard for you, how much would you pay for it?
- Get your money’s worth. Maximize the value in related services you are already paying for (think EAP, training, health plan programs, state-sponsored smoking cessation programs, employee surveys, etc). And don’t forget to automate and accelerate wellness activities (yoga classes, Weight Watchers, etc…) that you’re employees started and love. Use data to make strategic decisions that avoid spending money on, say, diabetes if it could better be spent on depression, work-life balance or the sense of team people feel when they show up for work. (Do you think your customers might notice this?)
- Do the right thing. Type 2 diabetes is very nasty. Heart attacks aren’t so great either. Is there anything you can do to help people have healthier babies? Employers of choice live their values, and provide meaning beyond a paycheck
OK – choose your own message for “high-performance company.” But please don’t make it just about cost savings. These are human beings you are dealing with. Fire us up!
Then let’s make some money.