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With health care cost reductions increasingly tied to wellness programs, how can benefits administrators best evaluate a corporate wellness program?

WELCOA President Dr. David Hunnicutt spoke with Dr. Ron Goetzel in Absolute Advantage to understand “the costs of worksite health promotion programs, how such programs can be paid for, what program elements employers should receive for their investment and what types of results worksites can expect based on their investment in health promotion.”

Key takeaways:

• How to evaluate cost: “I like to start by asking employers how much they’re currently spending on healthcare per employee during the course of a year…The next question I like to ask is, ‘How much of what you’re spending on healthcare should be invested in disease prevention and health promotion?' A long pause usually follows this question because most employers haven’t thought about healthcare spending in terms of prevention.”
• Another consideration on cost: “Whether they want to spend their money internally, developing programs and hiring a staff to implement these programs, or whether they want to go with an outside vendor to design and deliver the program. There are pluses and minuses to either approach.”
• Payment models: “There are two common payment models: the per-eligible employee model and the per-participant model.”
• Participation rates: “Employers should expect a high participation rate. And by high participation rate, I’m talking greater than 50 percent… Second, employers should expect that health risk appraisals (HRAs) be administered to every eligible employee… Lastly, employers should expect to receive tailored, targeted feedback and follow-up intervention programs for their employees.”
• ROI: “The average ROI is somewhere around a $3 for every $1 invested. At the most elementary level, if you take the $100 or $150 we’ve been working with, you can expect a $300 to $450 savings per employee, per year. Worksites typically don’t realize these returns, however, until about three years into the program. So, if an organization is willing to wait two or three years, it will be capable of achieving this magnitude of ROI. Again, if it’s a well-designed, well-implemented, science- and evidence-based program with a good staff, achieving such an ROI is very possible.”
• Incentives: “My advice to practitioners is to build an incentive program where there are no additional costs, and incentives are built-in to attract participants.”
• More incentives: “I would also encourage worksites to build performance incentives into health promotion programs. In other words, whether it’s an internal staff or a vendor, there should be incentives for increased participation rates, health improvement outcomes and incentives based on cost neutrality, or even better, cost savings.”
• What senior managers seek from providers: “Senior management is most interested in the rationale or numbers behind investments others ask them to make. In other words, practitioners need to put numbers or evidence behind their arguments—here’s our budget, here’s how much we’re going to spend and based on the following data, assumptions and literature, we believe we can achieve this kind of savings if we do things right.”