Corporate Wellness ProgramsNateUniversity of Phoenix RES 110 Mr. Baker Jul 07, 2004 Corporate Wellness Programs Corporate wellness programs are critical to the fiscal fitness of organizations in the United States today. Corporate wellness programs vary in their methods, but the end goals are the same: decrease medical costs and increase employee productivity. Healthcare costs now consume over 50% of corporate profits and continue to increase at nearly 12% a year (Powell, 1999, p. 15).
This dramatic rise in costs has caused employers to look for innovative ways to combat the costs.
In addition, larger companies now operate with more employees in smaller a space, which creates more stress and allows for ailments to spread faster. Corporate wellness programs focus on a proactive to employee health, as 80% of all ailments are preventable (Prevent a Disease [PD], 2000, 3).
I will provide you with an overview as well as, some specific examples of these corporate wellness programs and the results they produce. Rising insurance costs are one the primary reason employers are investing in corporate wellness programs more than ever before. Companies spent nearly $348 billion on employee healthcare premiums in 1997 according to a study conducted by (Kuttner, 1999).
A quick overview of health insurance is necessary to better understand the methodology behind corporate wellness, starting with the fact that all insurance companies exits to make a profit.
They review the company’s utilization each year (how much they paid out for all employees at the company) and weigh that against premiums collected (how much they took in from employees. ) Then they figure out their additional costs to administer the program and a fair profit. So if there are a lot sick people, rates are going to go up a lot. If there are more healthy people the rates will still go up but only 4-5% (to account for inflation).
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So the company either needs to pass those costs along to the employee or figure out how to lower those costs, which is where corporate wellness comes in. The initial part of successful corporate wellness programs is employee evaluation and assessing risk factors. People that are most commonly in the high-risk group are those that are smokers or overweight. That group is responsible for the majority of absences as well as the utilization, so it is very important that program has specifically tailored programs to encourage their participation. The thought is not only are the high-risk people being targeted, but you can also make the most appreciable gains by involving them. Often these programs offer a bonus tied to documented use of these programs.
Generally employees would meet with a consultant to set up a diet and fitness program and they have some type of code to enter to document their usage. In addition, monthly or quarterly evaluations with the trainer would occur so they ensure it’s effective. Another approach has been a work team approach, where the manager encourages his group to workout together achieving personal goals as well as fostering a more productive work environment. In addition, employers also offer confidential counseling and other methods to help combat smoking as well as psychological conditions. These methods have been successful in involving high-risk employees and reducing their risk factor significantly. Corporate wellness programs have a number of aspects and some are more comprehensive than others but they all primarily focus on preventative care.
The most effective preventative tools are proper diet and exercise, which is generally the same thing people hear each time they go to the doctor. Study after study concurs, people that workout and observe a healthy diet, live longer, more productive lives. These same people are healthier more productive employees, so by giving employees free or discounted access to facilities that accomplish those tasks is a sound investment. A good example of this is at Johnson and Johnson where they reduced their absenteeism rate by 15% and cut their hospital costs by 34% within 3 years of introducing their wellness program, according to Human Resources Executive. These are the type of results more than justify the cost to the employer.
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Another important area where corporate wellness programs have shown to be effective is at reducing short-term disability expenditures. Short-term disability (STD) not only costs the company in the way of premiums but it creates personnel problems. They generally aren’t certain how long the employee will be out for and they are legally obligated to keep them, so you hope they are in an easily replaceable position. One example of this is a study of 1628 employees, which showed those who were wellness program participants were back 6 days sooner than those who were not. These findings represented a savings in excess of $1, 371, 000 over a 2-year period (Serxner, Gold, Anderson & Williams, 2001).
This clearly demonstrates the programs effectiveness.
I know all the aspects of the corporate wellness program seem to be effective but are they cost effective? After pouring through figures it is nearly unanimous that corporate wellness does pay. To illustrate my point I have included a chart below that shows some statistics from some large employers below. As you can see they all were able to get nearly a 2 to 1 return on their investments (PD, 2000, 3).
Overall corporate wellness has proven to be a very cost effective program and employers of all sizes can benefit. Employers that can’t cost justify building their own workout facilities can partner with a health club for a lot less than an insurance premium to administer a wellness program for them. The key to successful corporate wellness program is getting employees to participate and realize it will benefit them immeasurably for the balance of their lives.
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In addition, a healthy workforce with these types of programs also boosts moral creating even more productivity. I also believe that if employers communicated all the benefits to employees they could further stimulate use of the programs. An effective incentive would be a profit sharing program for cost savings in healthcare between program participants and non-participants. That would give the employees ownership of the problem at the root and help them understand future premium adjustments as well. The cost Americans spend on annual healthcare is over 2 trillion dollars, while American companies payout 60% of that, in annual premiums (Iglehart, J. K, 1999).
Corporate wellness programs have helped companies offset these costs along with improving their employees’ body, mind and spirit, while creating a more productive employee for them and adding to their profit. The bottom line is that corporate wellness programs work and create fiscal fitness for all to share in. References Centers For Disease Control (2000, July 2000).
Health Statistics July 2000. Retrieved June 28, 2004, from web J. K (1999).
The American health care system — expenditures. The New England Journal of Medicine, 340 (1).
Kuttner, R (1999).
The American health care system — employer sponsored health coverage. The New England Journal of Medicine, 340 (3).
Prevent Disease (2000, June 1999).
Corporate Wellness. Retrieved June 28, 2004, from web DR (1999).
Characteristics of successful wellness programs. Employee Benefits Journal, 24 (3).
Serxner, Gold, Anderson & Williams (2001).
The impact of a work site health promotion program on short-term disability usage.
J Occup, Environ Med, 43 (1).
