Employee health represents a significant burden for organizations in terms of health care costs and loss of productivity. Health risks such as obesity, depression and physical inactivity often lead to poor employee health and the development of chronic diseases such as diabetes. Health risks also tend to increase with age and older employees will soon account for a larger share of the working-age population. As health risks increase in a population, so do health care costs and loss of productivity.
Health care costs in developed countries are astronomically high and continue to rise. And these go hand in hand with highly prevalent chronic diseases that are preventable. These long-term, often slow-progressing chronic conditions some physical, like diabetes and heart disease, some psychological, like anxiety and depression, have serious consequences on employee health and pronounced impacts on workplace productivity and employee wellness programs benefit plan costs.
The numbers are staggering and the costs unsustainable. And the most controllable and preventable factor driving costs for employers and increasing health benefit plans is an unhealthy lifestyle.
Unhealthy lifestyles related to poor diet, lack of exercise and inadequate stress management are key contributing factors. Nearly 1 in 4 Americans have multiple chronic conditions and 50% of the American or Canadian workforce suffer from at least one chronic illness such as heart disease, obesity or diabetes. While some chronic conditions are genetic and outside an employee’s control, too many are due to controllable and preventable risk factors. For example, obesity is a leading risk factor for many of the most common chronic conditions especially diabetes and cardiovascular disease. In 2012 alone, over 22 million people in the U.S. were diagnosed with diabetes at a cost of over $240 billion and the number of diabetic Canadians is estimated to double from 2.7 million in 2010 to 4.2 million in 2020. The cost to the Canadian economy is estimated at $122 billion annually in lost productivity alone.
Despite the indicators that obesity can lead to these costly chronic diseases, it remains highly prevalent globally in both adults and children. Seventy-eight million adults and 12.5 million children are classified as obese in the U.S. at a cost of over $150 billion in direct medical costs. Health Canada reports that 1 in 4 Canadians over the age of 18 were clinically obese in 2014. Only 40% eat the recommended servings of fruit and vegetables and 25% report a high degree of stress. Smoking and sedentary lifestyles add to the overall burden of chronic disease for employers. Unsustainable costs due to absenteeism and productivity losses are widely reported, over $5800/smoker/year, sedentary lifestyle adding 15% to annual health costs,
Organizations globally are realizing that the conventional way of directing resources to treat employees who are sick or injured drains too many resources and is not economically sound. While providing resources to treat sick or injured employees is important, it is equally important to provide resources to help employees lower their health risks and prevent workplace injuries as well as help healthy employees stay healthy. So an increasing number of employers are adding preventive measures in the form of employee wellness programs to reverse or at a minimum slow the trends of rising health costs. And there is good evidence that helping employees get healthier is a good business investment. This is supported by a number of studies that demonstrated that comprehensive employee wellness programs offer a positive return on investment as well as other corporate wellness program benefits.
Best examples of wellness programs that result in positive return on investment among other benefits, include a well- rounded and comprehensive Health Risk Assessment that quantifies the health risks both for individual employees as well as for the organization as a whole, followed by targeted coaching, effective not only for empowering and motivating high risk employees, but also helping the healthier employees maintain their low risk and good health status. A variety of wellness interventions via a wellness platform, in the form of challenges, interactive meal planning, newsletters, and educational articles and videos are usually offered so employees can access the information of interest to them. And to motivate employees, best wellness programs also offer incentives for employees who participate and make a change in their lifestyle to decrease their health risks and improve their health. And the last requirements for best examples of corporate wellness programs that yield benefits for both employees and employers are an effective communication plan and measurement of results, usually via a repeat company-wide Health Risk Assessment.
Healthy employees boost a company’s bottom line. There is much research that shows that by encouraging healthier choices among employees, organizations reap long term savings in terms of less sick days and fewer claims. Apart from these measurable indicators, other corporate wellness program benefits include job satisfaction, employee retention, and recruitment as well as engagement and improved performance and productivity. These corporate wellness program benefits result in improved profitability and return on investment.
Companies in the U. S. and Canada have reported substantial returns on investment. These include organizations such as Johnson and Johnson, Citibank, Dupont, Duke University, Procter and Gamble as well as major medical insurance providers such as Cigna, United Health Care, Canada Life Insurance and Aetna. The return on investment reported varied between $ 2.00 and $ 6.85 for each $1.00 invested. Our research has demonstrated that an increase of as little as 1 health risk factor can result in excess costs of hundreds of dollars.
Other corporate wellness program benefits have also been reported. For example, BC Hydro observed rates lower than the national average in terms of absenteeism and employee turnover and Toronto Municipal workers missed close to 4 fewer days within the first six months of their employee wellness program. Investing in best practices Corporate wellness programs have also been shown to improve an organization’s ability to attract and retain qualified personnel, as these organizations are viewed as employers of choice who care about their employees. In terms of return on investment, this will be the topic of another blog. Suffice to say at this point, that the best practices, comprehensive employee wellness program offered online via a wellness platform has been reported to result on average, in a return on investment of $17.50 per $1.00 invested. Individual employee wellness program components have also been studied with the following average return on investment values:
Employees are a company’s greatest asset and they need to be cared for. Investing in their health is the hallmark of champion companies and is good both for the employee and the company. It fosters creativity, engagement, high level of energy, happiness and job satisfaction – key ingredients of a profitable business.