5 Case Studies Provide Evidence that Companies Save Millions on Wellness Programs

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If you think getting senior management to invest money in safety initiatives required by law is difficult, imagine how hard it is to get them to pry the corporate wallet open for a non-required wellness program. But studies have shown that such programs keep workers healthier and thus ultimately improve companies’ bottom lines. Here are five case studies demonstrating the return on investment (ROI) some Canadian and US companies have realized from their wellness programs that you can use to win management support for such a program at your company.

Defining Our Terms

By “wellness program,” we mean any company program designed to improve workers’ general health. Such programs typically include onsite fitness classes, health fairs, lunch-and-learn sessions with health and fitness professionals, discount gym memberships, etc.

Case Study #1: Husky Injection Moulding Systems

Husky Injection Molding Systems, based in Ontario, is well known for its wellness program, which includes a health education program, on-site fitness centre and other initiatives, such as a company naturopathic doctor. Husky estimates that it saved $8 million overall based on its $4 million investment in the wellness program. Benefits include:

  • An absenteeism rate of 2.25 days per worker, compared to the industry average
  • An annual drug cost per worker of $153, compared to a sector average of
  • 0.77 injuries per 200,000 hours worked in 1998.
  • of 9.6 and the Canadian average of 5.7;
  • $495; and

Case Study #2: Coors Brewing Company

Since 1981, Coors Brewing Co. has operated a worker wellness program that initially featured onsite exercise equipment, health education courses and health screenings. In 1986, it funded a cost-benefit study to determine the program’s bottom line value. Some of the study’s key findings:

  • For each dollar invested, the program returned between $1.24 (worst-case scenario)
  • and $8.33 (best-case scenario). The average return was $6.15 for every dollar invested;
  • The program saved the company at least $1.9 million a year by decreasing medical costs, increasing productivity and reducing sick leave; and
  • Although the company was operating an elaborate program, its annual cost was recouped with the participation of relatively few workers (approximately 15%) and accounted for less than 5% of the company’s annual healthcare budget.

Case Study #3: Midwest Utility Company

The University of Michigan conducted a nine-year study of the wellness program of a utility company located in the Midwest. The study took into account all bottom line costs for implementing the wellness plan, including indirect costs such as recruitment and costs for changing menus. It also looked at lost work time as well as pharmacy and medical costs.

Over the nine years, the utility company spent $7.3 million on the program—and showed $12.1 million in savings from it. Thus, it reaped an overall net savings of $4.8 million in worker health and lost work time costs for that time period.

Workers also benefitted financially. Those who participated in the wellness program for all nine years saw their drug and medical costs increase by $96; the costs for those who participated in some of the years rose $230; and for those who never participated, those costs jumped by $355. Because the program cost $100 per year per worker whether the worker participated or not, a participation-related savings of $257 and $125 was seen by workers who participated in all years and those who participated in just some years respectively.

Case Study #4: Motorola

Motorola’s company wellness program benefits more than 30,000 workers, family members and retirees. The program’s features include:

  • No cost membership for active workers to “Wellness Centers,” which are essentially gyms (retirees pay a small fee);
  • $240 to help cover the cost of membership at a qualifying fitness centre for workers at locations without a Wellness Center;
  • Flu immunizations; and
  • Health education classes.
  • Some of the benefits that Motorola has seen from its wellness program:
  • Workers who regularly used onsite Wellness Centers or alternate fitness centers saved the company $3.93 for every $1 it spent;
  • Participating workers cost $6.5 million less in lifestyle-related medical expenses than non-participants; and
  • The annual cost of healthcare for wellness program participants rose only 2.5%, compared to 18% for non-participants.

Case Study #5: Johnson & Johnson

Johnson & Johnson had a study conducted to determine the ROI for its wellness program. The study included a financial analysis of medical insurance claims for 18,331 workers who participated in the “Health & Wellness Program” from 1995 to 1999. The study concluded that the reduced healthcare costs attributed to participation in the wellness program amounted to annual savings of $225 per worker from reductions in hospital admissions, mental health visits and use of outpatient services.

In addition, the study evaluated worker medical expenditures for up to five years before and four years after the program began. It concluded that Johnson & Johnson’s savings averaged $85 million a year for the four-year period after the program began. Overall, the company realized the following benefits from its wellness program:

  • A 27% decrease in health care costs;
  • A 15% increase in productivity; and
  • A 22% decrease in absenteeism.

Costs of Not Having a Wellness Program

You can also sell a wellness program to senior management by showing how unhealthy workers cost the company money. For example, statistics on wellness programs show that:

  • Every smoker costs a company $2,500 per year in increased absenteeism, lost productivity, increased insurance costs and increased facility maintenance;
  • Workers who drink excessively cost companies an extra $597 per year; and
  • Workers who are sedentary and don’t exercise at all cost their companies an extra $488 per year.

University of Toronto Study on Wellness Programs

As additional ammunition, you can cite a report from the University of Toronto that documents the savings and financial benefits companies receive when their workers are healthy, including:

  • Fewer workplace injuries and so fewer insurance and workers’ compensation claims;
  • Improved productivity;
  • Reduced absenteeism;
  • Reduced turnover; and
  • Improved attitudes and higher staff morale.

The University of Toronto report also provides evidence of how a wellness program will generate a positive ROI. The report discusses a selection of US workplace health promotion initiatives that had a positive ROI of up to $8.81 for each dollar invested in the programs. And the same is true for Canadian programs. Examples:

  • At BC Hydro, an internal cost benefit analysis of its 10-year wellness program showed that the program returned a savings of $3 for every dollar spent; and
  • A review of the results of Canada Life Assurance Co.’s wellness program found that, over a decade, each dollar spent on health promotion reaped a reward of close to $7.

Insider Source:The Case for Comprehensive Workplace Health Promotion,” The Health Communication Unit at the Centre for Health Promotion, University of Toronto.