What is the ROI for Workplace Wellness Programs?

By Haley Bass | 08/23/2017

Are wellness programs just a trend, or do they provide actual value for the workplace? 70% of US employers offered a wellness program in 2015, with an expected 8% increase in 2016, according to an Employee Benefits report from the Society for Human Resource Management (SHRM). As more and more companies have invested in wellness programs, the argument about their return on investment (ROI) has grown.

A report by the International Foundation of Employee Benefit Plans determined that most North American employers saved $1 to $3 in their overall health care costs for every dollar spent. These savings come from direct costs, like workers’ compensation claims, and indirect costs, like improved loyalty and increased productivity.

Direct ROI: Less Claims and Costs

The healthier the employee, the less likely they are to file a workers’ compensation claim. And when they do have to file a claim, the duration is much lower than their less healthy coworkers. A wellness program that promotes healthy behaviors can help reduce the risk of workers’ compensation claims and lower their costs.

Several studies have found a connection between poor health and workers’ compensation costs:

  • The University of Michigan Health Management Research Center determined that employees with high health risks had the highest workers’ compensation costs.
  • A National Council on Compensation Insurance (NCCI) study showed that workers’ compensation claims involving an obese employee had significantly higher medical costs than comparable claims involving employees with a healthy body mass index (BMI).
  • Another NCCI project that compared obese claimants to non-obese claimants found that in cases with obese claimants, medical costs were 6.8 times higher, claim duration was about 13 times higher, and the claimants themselves were twice as likely to file a claim in the first place.

A wellness program that helps employees make healthier decisions can help reduce these added workers’ compensation costs.

Indirect ROI: Improved Hiring and Retention

The concern for health and wellness has increased significantly in the last several years, so much so that now 87% of job seekers use an employer’s health and wellness benefits as a determining factor when deciding where to apply. And a survey by OptumHealth found that over 80% of employees whose companies had a wellness program said that the program encouraged them to stay longer with their employer.

By investing in their employees’ health, companies with wellness programs receive an indirect ROI from attracting and retaining great talent. In this competitive job market, having something to give your company a leg up is crucial to hiring the best of the best. And with the cost of replacing an employee as high as 60% of the employee’s salary, investing in a wellness program is more affordable than having to manage a high turnover rate.

Indirect ROI: Increased Productivity

Employees that maintain an active, healthy lifestyle with the help of their company’s wellness program have higher productivity, take less sick days, and are more engaged in their work.

A study by the American College of Occupational and Environmental Medicine found that wellness programs resulted in an ROI of 10.3 work hours per employee per year. With higher productivity rates, employees were able to complete more work in less time. And with better health, employees took less sick days, resulting in an average savings of $350 per employee.

 

While ROI can be difficult to measure, employers who invest in wellness programs for their workforce are finding a return in healthy behaviors, employee productivity, reduced health care costs, and more. These early results are leading more companies to take some action to improve employee health, in hopes of reducing health care costs over no action at all.

You don’t have to spend a ridiculous amount of money on health care if you invest in effective preventive strategies. A wellness program that helps keep your employees healthy and active also keeps them productive and reduces their risk of injury. While sometimes the ROI isn’t direct or obvious, the benefits from investing in employee health can far surpass the initial startup costs. 

Interested in starting a wellness program at your workplace? Contact a Concentra work health expert to learn more about how to keep employees healthy while reducing health care costs.