Human Capital Briefs

Company Wellness Programs Don't Really Save Money

April 08, 2013

If you run a large organization or its human resources department, you are probably starting to wonder if your financial commitment to wellness programs makes sense. Your consultants and vendors assure you that they save lots of money. Yet you still have plenty of obese workers, and recent academic literature overwhelmingly reports no savings from the programs.

The answer matters, because these programs constitute an expensive combination of surveys, screens, and additional doctor visits and tests (all on company time) — plus incentives to encourage participation that now average $521 per employee.

Just asking your benefits consultants three simple questions will solve this conundrum.

1. We are spending a lot of money to improve the cardiac health of our employees, which saves us money only if we reduce heart attacks and related events. How are cardiac events trending?

A wellness program can reduce health spending only by avoiding wellness-sensitive medical events such as heart attacks. So knowing the company-wide rate of and spending on these events before and after program implementation is both basic and critical.

However, even though your company may be spending close to $1,000 per employee to avoid these events, don't be surprised if nobody knows how they are trending or how much you shell out for them.

Instead, you'll hear that the overall cost of medical claims has been falling, and even though there's no tracking of these events, the wellness program must be responsible. It's not just your team thinking this; the Affordable Care Act's so-called "Safeway Amendment" to promote wellness was inspired by Safeway's zero health-care-cost trend, which Safeway attributed to wellness. Besides being overly broad, that attribution was wrong: Safeway's zero trend predated its wellness program by three years, the trend started rising again after the program was implemented, and its wellness-sensitive events didn't decline significantly relative to the U.S. average.

2. If health risk assessments (online questionnaires about personal health) are so worthwhile, why do we have to pay people to take them?

A store that paid its customers $521 apiece to eat kelp would "sell" a lot of it — mostly to people who would go throw it away. By comparison, some employees see health risk assessments (HRAs) as such an invasion of privacy that they refuse to complete them even when offered incentives. And there are serious questions about how many people who do take them answer the questions honestly. Many people lie to their own doctors. So why wouldn't they lie to you? (Of course, you don't read these responses. They are anonymous and even if they weren't, privacy laws would probably prohibit you from looking at them. But your employees don't know that. After all, you can read their private emails.)

Then there's the issue of whether HRAs really do offer much insight. If you take one, you'll learn that you need to stop smoking, lose weight...and buckle up! A "prevention-oriented" HRA like the one I took will also recommend about $500 of tests, exams, and vaccines (including one to prevent meningitis, which is not recommended for most adults). Males may also be instructed like I was to get a PSA test, a screen that the U.S. Preventative Services Task Force no longer recommends. And if like me you accidentally check off "seven or more" prescription drugs despite reporting no diseases, you'll be relieved that your HRA report does not recommend reviewing your drug regimen with your doctor.

3. What is the ROI in reduced health spending?

You might wonder how paying employees to fill out — and sometimes lie on — forms that recommend more, sometimes obviously inappropriate, spending on health care in the short term without tracking the declines in the specific events that are supposed to decline could yield a positive ROI. However, vendors will show you a high ROI simply by (1) comparing the cost trend from the motivated participants to the cost trend for the unmotivated non-participants and (2) counting only people whose risk factors declined while ignoring employees whose risk factors increased. They also credit wellness for all cost declines, even those unrelated to wellness.

If this seems like a flawed way to measure ROI, it is. But wellness vendors are inveterate optimists. They have to be, since there is often zero medical or economic justification for their claims.

 

 

This blog first appeared on Harvard Business Review on 03/08/2013.

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