Wellness Programs Deliver Minimal ROI: RAND Study
Wellness programs are all well and good as long as employers understand why they are paying for them and what outcomes they can realistically expect.
One thing they shouldn’t expect: saving a lot of money on healthcare benefits for employees.
That’s what the RAND Corp. concluded after reviewing wellness programs at eight companies. Seven of those that participated in the study (representing 600,000 employees) provided recent data to RAND, while the eighth, a Fortune 100 employer, provided a decade of data for RAND to sift through.
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These employers attempted to manage healthcare costs and employee health in two ways: via wellness programs that focused on helping employees with lifestyle issues (smoking and obesity being the top two); and with disease management support for employees with existing chronic conditions.
What RAND found was that the disease management programs had a much higher return on investment than did the wellness programs.
The gap was huge: ROI for disease management was $3.80, but just 50 cents on the dollar for wellness programs.
As RAND stated, “the two component programs reduced the employer’s average health care costs by about $30 per member per month (PMPM). But disease management was responsible for 87 percent of those savings. … Furthermore, only 13 percent of employees participated in the disease management component, compared with 87 percent for the lifestyle management component. Put differently, the much higher participation in the lifestyle management component contributed only slightly to the overall savings.”
RAND doesn’t suggest employers abandon wellness programs in favor of disease management initiative. It just wants to underscore that disease management pays off sooner and with a larger dollar impact. Offering wellness programs as a sign of concern about employee well-being is a good motive. Offering them in an attempt to significantly reduce employee health costs would be a mistake.
RAND had three recommendations for employers that emerged from its study:
- “First, employers need to be clear about their goals for the wellness program. The RAND Wellness Program Study has shown that lifestyle management can reduce health risks such as smoking, obesity, and lack of physical activity. Our analysis of the Fortune 100 employer’s program also shows that lifestyle management can reduce absenteeism. Thus, if an employer wants to improve employee health or productivity, an evidence-based lifestyle management program can achieve this goal. But employers who are seeking a healthy ROI on their programs should target employees who already have chronic diseases.
- “Second, given the lack of financial return from the lifestyle component, employers need to pay attention to cost. Screening all employees for health risks and offering one-to-one counseling and coaching to those with such risks is expensive, but other interventions, such as offering healthy food choices and launching educational campaigns to use the stairs, are not.
- “Third, execution really matters. The findings presented here are derived from leading employers with a strong organizational commitment to wellness and substantial experience with running programs. Learning from them how to engage employees and achieve fundamental behavior change would be prudent for employers who want comparable results.”