Forget Return on Investment, how about Returns on Innovation (ROI). Wellness programs act as a catalyst for new ideas, creativity and innovation. Typically, company execs use return on investment (ROI) as a performance metric and decision-making tool. A positive ROI sustain a project. A low ROI could 86 your project. Innovation, on the other hand, is difficult to quantify. Much of the value of innovation is dependent on the company’s culture. Nonetheless, wellness programs can be a springboard for new ideas making them a worthy investment.
Employer Sponsored Wellness
The idea behind employer-sponsored wellness programs goes back several decades. When employers became aware of the rising costs of offering health care benefits, companies sought ways to measure their return on investment. Lifestyle related health dysfunctions contribute to rising health insurance costs. Eighty-seven percent of medical claims are due to individual lifestyle behaviors. Since 2001, premiums have increased 131%. A study out of Harvard found that for every dollar spent on wellness programs a company’s medical cost fell by $3.
Company’s evaluation of their investment in their wellness program focuses on reducing healthcare cost. The hypothesis is healthy employees use less health care services. Thus wellness programs were designed to help employees become healthier. Programs educated employees on healthier choices of food, smoking cessation counseling and incentivized physical activity. In addition to health benefits, companies noticed that wellness programs play a role in productivity, workplace engagement and increased profits.
Self-Reporting and the Obesity Paradox
Self-reporting calls into question the validity of outcomes and creates a major problem for tracking success. Employee’s reluctance to share medical information skew outcomes if not outright misleads. Scientifically discovered outcomes are preferred because self-reported data cannot be verified. Outcome data is reliable, the process can be duplicated and the results confirmed by others. Employees tend to lie about their health and exaggerate results to gain rewards and perks.
Financial incentives, cash rewards, trips and premium discounts are a few of the hidden cost associated with many programs. It is standard practice for employers to offer incentives and rewards to induce employee engagement. These are all problematic in determining investment returns. Reporting on data obtained from incentivized employees, whom self-report their achievements are a credibility challenge.
There are some major fallacies in studying wellness that is embedded in the general consciousness of those examining the information. First is the Obesity Paradox. We reported on this phenomenon in April 2016 (http://healthoutcomes.org/2016/fit-and-fat-and-the-obesity-paradox/). The paradox reveals that size is not a good predictor of health. Being unhealthily “thin” and healthy overweight is possible. People who are thin or skinny but have low lean muscle mass have higher mortality rates than overweight people with a high lean muscle mass.
A person’s size is secondary to cardiovascular fitness and physical activity. Cardiovascular fitness is the single greatest predictor of overall health than everything else is, including smoking. A wellness program that is focused on weight loss and smoking cessation is missing a major determinant of health outcomes. For best results, wellness programs should encourage employees to increase physical activity. Furthermore, physical activity acts as an incubator for new ideas. Boosting employees, physical activity levels accompanied by a culture that promotes innovation equals increased profits.
Employers vs Employees; Cost Shifting
Employees struggle to use their healthcare benefits because out of pocket expenses are too high. Nearly 25% of Americans surveyed last September (2016) who had coverage through employer plans exchanges reported problems paying family medical bills in the previous 12 months, according to the Urban Institute’s Health Reform Monitoring Survey. Respondents to the survey indicated that their deductibles were so high they would rather suffer through an illness than see a doctor. It is time to rethink why company costs are going down.
As employers shift more of the health care premiums to their employees and offset the increased cost by raising deductibles, many employees find they are paying for coverage they cannot afford to use. Health insurance has been rising faster than inflation, which is why employers adopted this strategy. Employee healthcare benefits are the fastest growing expense for businesses. Many businesses feared that health insurance cost would overtake profits.
As Americans take on higher deductibles and higher co-pays, they are taking on insurance risk they cannot afford. This issue affects even those in upper-income brackets, who also want to keep their health insurance cost low only to discover they cannot afford to use their coverage.
Companies seeking to examine their return on investment may be surprised by how they achieve returns. They are benefiting because of cost shifting and self-reported data. Cost shifting gives the appearance that the investment is paying dividends. Self-reporting produces unreliable results. In reality, companies are not measuring their investment but seeing the benefits of cutting cost. #ROInnovation
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