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Data analysis is key to determining financial value of wellness programs

Employers sift stats for wellness gold

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Data analysis is key to determining financial value of wellness programs

Among the many things that can undermine employers' efforts to accurately measure the financial return on investment of their wellness programs, perhaps the most common impediment is the statistical complexity of those measurements.

Determining a wellness program's total effect on broader corporate strategies requires examination of a wide breadth of data sets and a thorough understanding of the corollary relationships between them.

Failure in either regard, experts say, would likely threaten an employer's ability to generate any long-term financial benefits through wellness programming, let alone measure those changes.

“The fact is that you've really got to have so many different kinds of data to look at in order to get a truly meaningful return-on-investment calculation,” said Mari Ryan, chairperson of the Worksite Wellness Council of Massachusetts and CEO of Advancing Wellness L.L.C., both based in Watertown, Mass. “It's only when you get to the detailed level that you begin to understand whether there's a cause-and-effect relationship between the programs you're offering and a reduction of risks.”

In many cases, experts say, the underlying deficiency in an employer's wellness methodology to monitor financial return lies in the accumulation of the data itself, both at the onset of a program and at regular intervals after implementation. As a result, employers' evaluations of their programs often are too superficial or too narrowly focused to offer a complete view of a wellness program's total financial value, experts said.

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For example, many employers use health risk assessments and biometric screenings, which can be useful as means of tracking improvements in health outcomes over time. But they often do not correlate those improvements with actual medical claims costs—or, for fully insured employers, premium rate increases resulting from claims filed—during the same period of time.

“Ideally, you want to be able to look at claims on the individual level to be able to map over time whether there's been any change or reduction in claim experience,” Ms. Ryan said “But that's often very difficult to get.”

Another common deficiency in most employers' wellness financial assessments, experts say, is the omission of indirect cost drivers. Aside from effects on physical productivity, which experts acknowledge is likely to be more difficult to measure for employers in professional fields, they say employers frequently neglect the possibility of wellness programs affecting costs associated with employee turnover, presenteeism, disputes between co-workers and other metrics.

“I don't see enough benefits professionals actually taking the time to show those cause-and-effect relationships,” said Bruce Elliott, compensation and benefits manager for the Alexandria, Va.-based Society for Human Resource Management. “It's a lot of mind-numbing data mining, but if you really want to get at the success or failure of a program so that you can start making tweaks to your strategy, you've got to be willing to do the work up front.”

In the absence of such detail, experts say, many employers often highlight reductions in popular wellness metrics, such as program participation and absenteeism, as simpler measures of return on a financial investment. However, experts warn that those metrics by themselves are of little use in identifying an effect on bottom-line finances.

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“Participation is a very good measure of whether or not your program is attractive to your employees, and that's certainly a level of success, but it's not a process measurement,” said Laurel Pickering, president and CEO of the New York-based Northeast Business Group on Health. “A number of wellness programs try to get by on participation measures as proof that the program is working, but the more accurate measure is the clinical data.”

Absenteeism could be even less reliable as a measurement of a program's financial benefit, experts say. Even if employers are able to isolate sickness-related absences taken by employees in a given year—an increasingly difficult prospect, experts said, given the number of companies migrating to paid-time-off models—the mere fact of an employee's absence from work due to illness reveals nothing about the cause of the illness, let alone the total cost of its treatment.

“I'm always very suspicious of that kind of calculation,” Mr. Elliott said. “Without correlating that back to the health plan or some other health-related measurement, you'll start showing a false ROI because you really don't know what's influencing that time off.”

This story is from the December 10, 2012, issue of the weekly print edition of Business Insurance, a special issue featuring wellness program topics across a broad spectrum of employers.

Copies of this issue, which includes a data poster featuring wellness program successes and trends, are available for $100 by contacting our Single Copy Sales department at 888-446-1422.

To subscribe to Business Insurance to receive all future special print issues, click here.

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