Successful workplace wellness programs depend as much on clear-headed program objectives and cost estimates as they do on participation among employees, according to a multiyear study released last week by the RAND Corp., a nonprofit research institute.
RAND's study analyzed nine years' worth of employee health care costs and wellness participation data supplied by Purchase, N.Y.-based beverage giant PepsiCo Inc. It warned employers not to presume that all types of wellness and health management initiatives will generate positive financial returns, but also noted that reductions in health care costs are not the sole metric by which wellness programs can create value for employers.
Disease management component key
According to RAND's study, PepsiCo employees who participated in both the disease management and lifestyle management components of the company's Healthy Living program generated an average reduction in annual health care costs of $1,920 per employee, primarily due to a 66% reduction in hospital admissions.
A detailed analysis of the program's performance from 2003 to 2011 revealed that most of the reduced costs were driven by participation in the disease management component, which focused on improving medication adherence and self-care knowledge for employees with at least one of ten specific chronic conditions. Those initiatives generated a return of $3.78 for every $1 invested, the study said.
By contrast, the study found that PepsiCo's lifestyle management initiatives — which include activities and educational programming on weight management, nutrition, fitness, stress management and quitting smoking — had not had any statistically significant impact on employees' health care costs.
“While workplace wellness programs have the potential to reduce health risks and cut health care spending, employers and policymakers should not take for granted that the lifestyle management components of the programs can reduce costs or lead to savings overall,” Soeren Mattke, the study's lead author and a senior natural scientist at RAND Corp., said in a statement accompanying the report.
Overall, the lifestyle management component of PepsiCo's wellness program generated a return of just 48 cents for every dollar spent on the program, driven mostly by modest reductions in employee absenteeism, according to the report.
RAND's study did not examine the extent to which PepsiCo's wellness program affected employees' health management behaviors, such as exercise frequency and prescription adherence.
Align program components with primary goals
Researchers noted that reducing health care costs is just one of several motives employers commonly cite for implementing workplace wellness programs. Other goals include improving the overall health of their workforce, attracting and retaining talent and reducing absenteeism and presenteeism. The research findings highlight the importance of aligning a program's components with the company's primary wellness goals.
“If the primary objective is cost control, they should focus on interventions for higher-risk employees, such as those with multiple risk factors or manifest chronic disease,” researchers said in the report. “Conversely, if the objective is to improve workforce health, investment in evidence-based lifestyle management programs may be warranted.”
The report also said employers that pursue health care cost savings as a primary wellness objective must be realistic about the total cost of their program's components.
“We may have overstated the true (return on investment) because our estimates of program component costs were confined to vendor fees,” RAND researchers said in the report. “Specifically, we did not have information for the following cost items that affect ROI: the cost of PepsiCo's program staff, the cost of employees' time required for program participation, and any costs generated by false positives through extended screening.”