The Science

Employees are the most valuable asset of any business. They help produce important business outcomes but they also cost money in terms of benefits. You may believe that deploying wellness strategies makes sense for your company, but you may not be convinced that it's really worth the investment.

At Wellsteps, we've created a series of research-based ROI calculators to help you determine the effect of high impact wellness programs on health care costs, absenteeism, and presenteeism. Each of the three different ROI calculators examines a different employee expense and will help you determine whether investing in wellness strategies makes sense for your company. A high impact wellness program is one that changes the health behaviors of employees, spouses, and dependents. A high impact wellness program lowers health risks, reduces chronic disease prevalence, and helps worksites create a culture of health. WellSteps offers a high impact wellness program.

In order to use any of the ROI calculators, you will need three pieces of information: 1) your company's total health care costs over the past 12 months, 2) the total number of benefited employees, and 3) the percentage change in health care costs each year for the past 5 years. It would also be helpful, but not necessary, if you knew the percentage of your employee population who were smokers, who were obese, and who have at least one chronic disease risk factor.

Once you have entered this information, several projections will be produced. First, you will see the "Cost of Doing Nothing." In other words, if you continue doing business as usual without implementing any wellness programming, what will your employee related expenses look like in the next few years. Remember that our calculators only look at changes in health care costs, absenteeism, and presenteeism. The "cost of doing nothing" projections do not include any estimates of worker's compensation, disability, EAP or other common employee related expenses.

Second, because we have a very good idea of the independent costs of smoking and obesity on health care costs, absenteeism and presenteeism, the ROI calculator can project about how much you would save if you decreased the percentage of employees who are either smokers or obese.

Third, the ROI calculator will project what you would save if you implemented a high impact wellness program. A high impact wellness program helps create a worksite culture of health. Program participants adopt and maintain healthy behaviors, lower health risks and have fewer chronic diseases. The programs typically include a health risk appraisal, specific wellness campaigns and activities, strong leadership support, incentives, and meaningful changes in worksite policies and environments. Participants in these programs become healthier, more productive employees.

We know that not all companies are created equal and we have done our best to consider possible differences as we have constructed these calculators. So while the ROI calculator will yield conservatively accurate forecasts given the operating assumptions, there is really no way to predict the future. In essence, the calculators are as accurate as we can possibly make them and they are based on the best published research but at their best, they are estimates.

In order to determine the ROI of wellness programs, we completed an exhaustive search for reputable, published studies dealing with the economic returns of wellness programs and we systematically reviewed these studies. We included those studies that provided the financial metrics necessary to be included in our prediction model and that met research quality standards. The studies are listed here.^1-28

To project the cost savings of reducing cigarette smoking or obesity, we assumed, unless you knew these figures, that the rates of smoking and obesity in your company were roughly the same as the national averages (20% and 34% respectively). National data also suggest that approximately 60% of employees have at least one risk factor.

For the Presenteeism Calculator, we made several science-based assumptions. First, research indicates that the value of lost productivity is about 3 times greater than health care costs. ^29-33 We therefore conservatively projected the cost of lost health-related productivity to be 2 times health care costs. Second, based on the American Productivity Audit, we estimated that 71% of these costs were associated with reduced performance at work. ³⁴ Third, we used two national datasets to estimate the impact of reducing smoking ³⁵ and obesity ³⁶ on presenteeism costs. Because there is no literature on the impact of wellness programs on presenteeism, we based our projections on the impact of wellness programs on risk reduction ^37-38, the documented presenteeism associated cost differences between high and low risk employees, ^39-40 and salary and benefit data from the U.S. Department of Labor.

References

1. Aldana SG, Jacobson BH, Harris CJ, Kelley PL, Stone WJ. Influence of a mobile worksite health promotion program on health care costs. Am J Prev Med 1993;9(6):378-83.
2. Aldana SG, Merrill RM, Price K, Hardy A, Hager R. Financial impact of a comprehensive multisite workplace health promotion program. Prev Med 2005;40(2):131-137.
3. Baker KM, Goetzel RZ, Pei X, Weiss AJ, Bowen J, Tabrizi MJ, Nelson CF, Metz RD, Pelletier KR, Thompson E. Using a Return-On-Investment Estimation Model to Evaluate Outcomes From an Obesity Management Worksite Health Promotion Program. JOEM 2008;50(9):981-990.
4. Berg GD, Thomas E, Silverstein S, Neel CL, Mireles M. Reducing medical service utilization by encouraging vaccines: Randomized controlled trial. Am J Prev Med 2004; 27(4):284-8.
5. Bertera, RL. The effects of workplace health promotion on absenteeism and employment costs in a large industrial population, Am J Pub Health 1990; 80(9): 1101-1105.
6. Bowne DW, Russell ML, Morgan JL, Optenberg SA, Clarke AE. Reduced disability and health care costs in an industrial fitness program. J Occup Med 1984;26(11):809-16.
7. Chapman L, et al. Ten-year economic evaluation of an incentive-based worksite health promotion program, Unpublished data.
8. Dalton, BA, Harris J. A comprehensive approach to corporate health management, J Occup Med1991; 33(3):338-348.
9. Davis L, Loyo K, Glowka A, Schwertfeger R, Danielson L, Brea C, et al. A comprehensive worksite wellness program in Austin, Texas: part¬nership between Steps to a Healthier Austin and Capital Metropolitan Transportation Authority. Prev Chronic Dis 2009;6(2).
10. Fries JF, et al. Two-year results of a randomized controlled trial of a health promotion program in a retiree population: the Bank of America study, Am J Med, 1993; 94: 455-462.
11. Fries JF, McShane D. Reducing need and demand for medical services in high risk persons. West J Med, 1998; 169(4): 201-207.
12. Gibbs, JO, et al. Work-site health promotion; Five year trend in employee health care costs, J Occup Med1985; 27(11): 826-830.
13. Golaszewski T, et al. A benefit-to-cost analysis of a work-site health promotion program, J Occup Med1992; 34(12): 1164-1172.
14. Hall-Barrow J, Hodges LC, Brown P. A collaborative model for employee health and nursing education. AAOHN J. 2001;49(9):429-36.
15. Harvey MR et al. The impact of a comprehensive medical benefits cost management program for the city of Birmingham: results at five years. Am J Health Promot,1993; 7(4): 296-303.
16. Henritze J, Brammell HL. Phase II cardiac wellness at the Adolph Coors Company. Am J Health Promot 1989; 4(1): 25- 31.
17. Leigh, JP et al. Randomized controlled study of a retiree health promotion program: The Bank of America study, Arch Int Med, 1992; 152: 1201- 1206.
18. Leutzinger J, Hawes C, Hunnicutt D, Richling D. Predicting the ratio of benefit to cost in a cardiovascular disease prevention program. Manag Employee Health Benefits. 1995:1-10.
19. Maniscalco P, Lane R, Welke M, Mitchell J, Husting L. Decreased rate of back injuries through a wellness program for offshore petroleum employees. J Occup Environ Med. 1999;41:813-820.
20. Mills PR, Kessler RC, Cooper J, Sullivan S. Impact of a health promotion program on employee health risks and work productivity. Am J Health Promot. 2007;22(1):45-53.
21. Naydeck, BL, Pearson JA, Ozminkowski RJ, Day BT, Goetzel RZ. The Impact of the Highmark Employee Wellness Programs on 4-Year Healthcare Costs. JOEM 2008;50(2):146-156.
22. Ozminkowski, Ronald J., et al. A return on investment evaluation of the Citibank, N.A., Health Management Program. Am J Health Promot 1999; 14(1):31-43.
23. Schultz ALC, Barnett T, et al. Influence of participation in a worksite health promotion program on disability days. J Occup Environ Med. 2002;44:776-780.
24. Shephard RJ, et al. The influence of an employee fitness and lifestyle modification program upon medical care costs. Can J Public Health, 1982; 73: 259-263.
25. Shi L. Health promotion, medical care use, and costs in a sample of worksite employees, Evaluation Review,1993; 17(5): 475-487.
26. Stave GM, Muchmore L, Gardner H. Quantifiable impact of the contract for health and wellness: Health behaviors, health care costs, disability, and workers' compensation. J Occup Environ Med. 2003 Feb;45(2):109-17.
27. Thorsen N, Khalil L. Cost savings associated with smoking cessation for low-income pregnant women. WMJ 2004; 103(5):67-9, 73.
28. Wood FA, et al. An evaluation of lifestyle risk factors and absenteeism after two years in a worksite health promotion program. Am J Health Promot,1989; 4(2): 128-133.
29. Edington DW, Burton WN. Health and productivity. In: McCunney, RJ: A Practical Approach to Occupational and Environmental Medicine. Philadelphia:Lippincott Williams & Wilkins. 3rd ed. 2003:140-152.
30. Burton WN, Pransky G, Conti DJ, Chen CY, Edington DW. The association of medical conditions and presenteeism. J Occup Environ Med. 2004;46(6) suppl:S38-S45.
31. Pelletier B, Boles M, Lynch W. Change in health risks and work productivity over time. J Occup Environ Med. 2004;46(7):746-754.
32. Goetzel RZ, Long SR, Ozminkowski RJ, Hawkins K, Wang S, Lynch W. Health, absence, disability, and presenteeism cost estimates of certain physical and mental health conditions affecting U.S. Employers. J Occup Environ Med. 2004;46(4):398-412.
33. Collins JJ, Baase CM, Sharda CE. The assessment of chronic health conditions on work performance, absence, and total economic impact for employers. J Occup Environ Med. 2005;47(6):547-557.
34. Stewart WF, Ricci JA, Chee E, Morganstein D. Lost productive work time costs from health conditions in the United States: Results from the American productivity audit. J Occup Environ Med. 2003:1234--1246.
35. Annual Smoking Attributable Mortality, Years of Potential Life Lost, and Productivity Losses - United States, 1997-2001, JAMA, 2005;54:625-628.
36. Ricci JA, Chee E. Lost productive time associated with excess weight in the U.S. workforce. J Occup Environ Med. 2005:1227-1234
37. Aldana S, Barlow M, Smith R, Yanowitz F, Adams T, Loveday L, Merrill RM. A worksite diabetes prevention program: two-year impact on employee health. AAOHN J. 2006 Sep;54(9):389-95.
38. Aldana SG, Greenlaw RL, Diehl HA, Salberg A, Merrill RM, Ohmine S. The effects of a worksite chronic disease prevention program. J Occup Environ Med. 2005 Jun;47(6):558-64.
39. Burton WN, Chen C, Conti DJ, Schultz A, Pransky G, Edington DE. The association of health risks with on-the-job productivity. J Occup Environ Med. 47(8):769-777.
40. Tsai, SP, Wendt JK, Ahmed FS, Donnelly RP, Strawmyer TR. Illness absence patterns among employees in a petrochemical facility: Impact of selected health risk factors. J Occup Environ Med. 47(8):838-846.

We created the WellSteps ROI calculators to help you better understand the impact of worksite wellness programs on health care costs, absenteeism, and presenteeism. Health care costs include all expenses associated with the provision of health insurance to employees. Absenteeism costs include payroll costs during the time in which no production occurred plus the cost of temporary replacement workers. Presenteeism costs include reduced and lost productivity on the job due to any number of factors. Poor health is one of the major drivers in each of these three employee related costs.

These calculators are easy to use. Just start by entering your total health care costs for the past year and number of employees with benefits in the fields to the left. Your health care costs have probably increased over the past few years. If you can, also enter the average percentage increase your worksite has experienced over the past few years. If you aren't sure, the national average is the default. For the presenteeism calculator, also enter the percentage of your employee population with at least one chronic disease risk factor including things like smoking, physical inactivity, poor diet, high cholesterol, high blood pressure, etc. If you don't know, a default value (60%) based on two very good sources of data, is already entered for you.

Next, enter the percentage of your employees who smoke or who are obese. We've entered the national average if you don't know. Lastly, estimate the impact your wellness program might have on employee obesity and tobacco use. A reduction of 10% is a realistic number for both. So for example, a wellness program could reduce obesity from 33% to 30% - a 10% reduction.

Finally, click the calculate button. Your data are used to produce outputs located at the top of this page. The first is projected costs. This is a 6-year projection of your cost trend. We call it the "Cost of Doing Nothing." You can also see the projected cost savings of weight loss and reduced tobacco use. Our favorite output is the impact of wellness programs. Here you can see the potential impact on your cost trend if you start a wellness program.

This calculator is based on the best available science. Click the Science tab to get the scientific rationale. We believe that each calculator provides conservative estimates. From our experience, many companies actually have better outcomes than what we have projected here. Remember that all financial estimators can produce only estimates. We invite you to try each calculator and see how your employee health can really impact the bottom line.