The importance of wellness in reducing overall healthcare costs is much in the news.
However, recent studies show that less than one in three firms embrace the concept, despite evidence that wellness programs positively impact healthcare utilization rates, improve employee attendance and reduce turnover.
For many managers, wellness programs are viewed as a nuisance and part of the consumer directed healthcare movement that they can do without.
Yet, wellness efforts can be an effective tool to reduce total healthcare benefits.
As in most situations involving company benefits, the Chief Financial Officer (CFO) is the primary decision maker.
For the CFO, the bottom line is still: can an investment here drive bigger profits?
With an increasing number of healthcare insurers offering wellness options, the case can be made that wellness investments will return significant dividends.
The question for a manager is --- does the extra work needed to convince employees to participate in a wellness program worth the effort.
Equally important, what are the arguments that will sway them:
First, let’s look at the positives.
- Wellness programs are an important tool in reducing healthcare utilization rates with results running anywhere from 5-23%.
- Absenteeism goes down in almost every company with a wellness program in place with the numbers ranging from 2-10%.
- Employee turnover also slackens although no one has yet figured out why.
There are negatives to wellness efforts.
The most glaring being that they require additional time and resource investment to be truly effective.
Worse, in this era where companies look to quarterly and yearly numbers, wellness programs require time to work.
The ROI (Return-on-investment) is measure in years rather than months and is reflected in so-called “soft” areas such as utilization and absenteeism.
For everyone involved, when a company adopts a wellness program, there is extra work and extra involvement.
In a nation increasingly focused on its healthcare activities, being proactive may be a way of building a better workforce.
Many company managers have told Information Strategies, Inc. (ISI) about their efforts vis-à-vis wellness.
For many, the experience was not pleasant. Convincing management and then employees to install a wellness program is a long-term process.
As the nation’s businesses prepare for this year’s enrollment season, it probably is too late for 2008 but must be on the agenda of companies for the years beyond.
For others, the results were gratifying: increased client loyalty, referral to other companies and sales of other types of insurance.
In all cases, the companies involved focused on one thing--- reducing their overall healthcare costs.
Arecent survey conducted by ISI and aimed at HR managers, the need to install wellness was ninth on a list of priorities they said were needed to reduce their benefits costs.
However, in firms that had installed them, six of nine respondents said there were benefits to be had.
Most interestingly, seven of nine respondents with installed efforts said they were encouraged by their agent/broker to look into the benefits of wellness programs.
In follow-up interviews, these HR leaders said they were more apt to recommend their programs to others because of their experience with wellness programs.
The downside to this was that those HR leaders with poor results or negative feelings towards their wellness efforts put much of the blame on the agent/broker and the insurance provider.
Napoleon’s adage that success has many fathers but failure is an orphan is working here as well.
In ISI’s surveys it is appears that many firms with 100-500 employees can earn significant savings through wellness efforts.
For firms below 100 employees, the results are far less tangible due to the smaller size of the labor pool.
Conversely, it appears that smaller firms have a better atmosphere for building heavily interpersonal programs that involve all levels of management.
For the company champion there is always the risk that attends offering something new or different.
The critical constituency for wellness programs is the employees themselves.
As more and more of the healthcare insurance burden shifts to the employee, programs that mitigate their costs are becoming more important to the ultimate consumer.
One way of making wellness programs effective is by having effective channels foir teaching employees to be healthier and more proactive in managing their own health.
The nation as a whole agrees that weight loss and smoking cessation are two key programs that can reduce lifetime illness.
While companies don’t have a responsibility to micro-manage their employees’ health, they have a vested interest in improving the bottom line.
Respondents from managers, to agent/brokers, to healthcare insurance providers tell ISI that they get positive feedback when programs succeed not only for employers but employees as well.
As one agent said: “The wellness program in one company improved the health of the top managers to such an extent that I could finally get them eligible for key-man life insurance at a reasonable rate.”
With healthcare insurance rates still rising albeit slower than in recent years, it is important that companies offer their clients as many options as possible.
Despite the extra work needed, wellness programs are an effective option for many companies and it behooves everyone involved in the healthcare benefits area to look into how they can benefit from this trend.
Wellness as part of the healthcare benefits package will grow in coming years benefiting all.