Employer Sponsored Wellness Programs

Employer Sponsored Wellness Programs: Cost Savings and Improved Health Outcomes Gregory Galloway Wrtg 3012 Nona Brown University of Utah

Employer Sponsored Wellness Programs

Employer Sponsored Wellness Programs: Cost Savings and Improved Health Outcomes Abstract The majority of insured Americans receive their insurance through employer sponsored health plans. Employers and employees that participate in these insurance plans have seen a steady increase in premiums and costs over the years. As a result, employers are looking for ways to control and lower these ever-increasing operational costs. In recent years employer sponsored wellness programs have been recognized as an effective long-term strategy for controlling these health related costs. For this paper a review was conducted on past literature to analyze the impact of wellness programs. In general, employers that have implemented worksite health promotion programs for their employees have reported increased worker productivity, satisfaction, a reduction in medical claims, health care costs, and health insurance premiums. Moreover, participants of these programs report overall better health and health outcomes.

Introduction Almost everyone in the United States has experienced the rising costs of health care. Furthermore, employers that provide health insurance as a benefit to their employees have experienced these costs first hand. For instance, as reported in the Kaiser Family Foundation/Health Research & Educational Trust Annual Employer Health Benefits Survey (2011), premiums for family coverage under employer health plans have increased 113% since 2001. Additionally, Kaiser (2011) reported that the average annual premiums for employersponsored health insurance in 2011 are $5,429 for single coverage and $15,073 for family

Employer Sponsored Wellness Programs coverage. Compared to 2010, premiums for single coverage are 8% higher and premiums for family coverage are 9% higher (p. 17). These rising costs are increasingly passed down to employees through higher premiums and other additional cost sharing mechanisms. Obesity and many other lifestyle diseases are serious public health issues that have

contributed to increasing health care costs over the last few decades. Moreover, obesity has been shown to be one of the major risk factors of many chronic diseases. These chronic diseases are the leading cause of illness and death not only in the U.S. but in the world. Reducing morbidity associated with these behavioral and lifestyle choices have become a priority in the United Sates and for many employers. As a direct result of these increasing expenses, employer based health promotions or Wellness Programs have become a popular tool for many employers to curtail and reduce health care costs and to combat alarming rates of morbidity from chronic disease in recent years. Additionally, employers offering wellness programs report an increase in productivity and a decrease in missed days from work, while employee participants in the program report improved health and health outcomes. Furthermore, in a commentary found North Carolina Medical Journal author Dee Eddington (2006) stated that, The economic and personal value of a healthy and productive worksite and workforce is indisputable by most measures of success (p. 425). A healthy employee is a valuable resource in any organization. Wellness programs, with their promise of cost containment and positive health outcomes have fueled recent research on the subject. This paper will examine the effectiveness of employer health promotions and wellness programs at reducing cost, producing positive return on investments (ROI), and reduction in absenteeism and related costs, and improving employee health and health outcomes. Current research and literature indicate that organizations that have

Employer Sponsored Wellness Programs implemented successful employee wellness programs have experienced the aforementioned outcomes. Additionally, this paper will review key design features of successful workplace wellness programs. Beverly Neville (2009), in her research of worksite health promotion, noted that the majority of the adult population in the United States is employed; the worksite is an important

health promotion mechanism where a large portion of the population can be educated on healthy behaviors to reduce the prevalence and burden of many chronic diseases and conditions. Moreover, researchers Koffman et al. (2005), in their research that was presented in the American Journal of Preventive Medicine, stated that because most Americans receive health care through employer-sponsored benefits, employers have a vested interest to promote individual health behavior (p. 114). A national disease prevention and health promotions initiative sponsored by the United States Department of Health and Human Services (USDHHS) titled Healthy People 2010 indentified two specific goals for worksite health promotion: Increase the proportion of worksites that offer a comprehensive employee health promotions program to their employees and increase the proportion of employees who participate in employer-sponsored health promotions activities (USDHHS, 2000). This initiative led to an increase in research on the effectiveness of worksite wellness programs. Discussion Cost Savings In the article Financial Impact of Health Promotions Programs: A Comprehensive Review of the literature found in the American Journal of Health Promotion, Steven Aldana

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(2001), in reviewing data from employer wellness program approaches, discovered a relationship between high health risks and the related costs of health care and absenteeism. Moreover, after a review of previous studies and literature he reported health promotions programs were effective and were associated with lower absenteeism rates and lower health care costs. A review, conducted by Koffman et al. (2005), estimated that employers in the United States paid an average of over $18,000 per employee per year in costs associated with lost productivity, medical costs, absenteeism, and workers compensation. Previous research has noted cost savings for employers that have implemented wellness programs. For instance, in a survey conducted by the Utah Department of Health (UDOH) in 2005 it was estimated that for every dollar spent on a worksite wellness program, an organization would see a savings of $6.00 in reduced costs related to heath care (2007). Additionally, in another study found in the February 2010 issue of Health Affairs, in an article titled Workplace Wellness Programs Can Generate Savings authors Baicker, Cutler, and Song (2010) reported that medical costs fall by about $3.27 for every dollar spent on wellness programs, and absenteeism costs fall by about $2.73 for every dollar spent. Employer wellness programs offer an organization a positive ROI in dollars spent on these types of programs. A wellness program benefit provider located in Utah, called Orriant, conducted a multicompany study to examine the impact of a wellness program on the health claims of the majority of the employee population, healthy and unhealthy. Four different employers: a nationwide automotive dealer, a regional grocery chain, an industrial equipment supplier, and a county government were selected for the study. They reviewed insurance claims over a four year period; additionally, more than 64 percent of insured adults participated in the wellness program.

Employer Sponsored Wellness Programs Moreover, Darrel Moon (2011), in a report of the success of Orriants wellness programs found

in Chief Executive.net, reported that the results of the study demonstrated a significant financial benefit to organization bottom line. The total paid claims per wellness participant dropped to $2,269 compared to $6,187 for non-participants. Additionally, in the same article Moon (2011) stated that Emergency room claims, hospital claims, pharmacy claims all showed a steady decline among wellness participants versus a steady rise in the claims of non-participants. In addition, an article found in Health Affairs titled Recent Experience In Health Promotion At Johnson & Johnson: Lower Health Spending, Strong Return On Investment, authors Henke, Goetzel, McHugh, and Issac (2011) reported that Johnson & Johnson experienced a 3.7 percent lower average annual growth in medical costs compared to the comparison group. Additionally, they also noted that Johnson &Johnsons annual average percentage increase in medical and drug costs was 1.0 percent, which was lower than the 4.8 percent average expected increase in costs, estimated from the experience of the sixteen comparison companies (p. 494-495). Johnson & Johnson have experienced lower costs associated with health care as a result of their wellness program.

Health Outcomes Research into employer wellness programs has shown a correlation between participation in these programs and improved health habits, health outcomes, and reduced health risks. Researcher Larry Chapman (2004) in his article Expert Opinions on Best Practices in Worksite Health Promotion found in the American Journal of Health Promotion called the worksite one of the most influential places where health behaviors can be improved through health promotions and education. In addition, authors Koffman et al. (2005) reported that in a study conducted by

Employer Sponsored Wellness Programs

Heaney and Goetzal, in their review of 47 studies for 35 different programs, concluded that there were positive health outcomes associated with a comprehensive worksite health-promotions. Research published in the journal Health Affairs, by authors Henke, Goetzel, McHugh, and Issac (2011) reported that employees [that participated in wellness programs] had a lower average predicted probability of being at high risk for six of the nine health risks examined: high blood pressure, high cholesterol, poor nutrition, obesity, physical inactivity, and tobacco use. The most favorable trends were for tobacco and obesity risks (p. 495). Employee participation in wellness programs result in better reported health and health outcomes in many disease risk factors. In a study by researchers in 1996 to review what impact a wellness program for Salt Lake County Employees had on health risk factors, researchers Poole, Kumpfer, and Pett (2001), found marked improvements in employees that participated in the program in cholesterol levels, body fat, physical activity, smoking prevalence, blood pressure. A follow up study by Neville (2009) of the same employee wellness program 10 years later also revealed the same netted results, she reported that the largest improvements in body mass index (BMI), cholesterol, blood pressure, and cholesterol were found in those employees with the highest level of obesity, heart disease compared to normal baseline measures. Key Elements of Successful Employer Health Promotion Early employer health promotions and worksite wellness programs were minimal in intent and focus. With the alarming increase in chronic and lifestyle disease and the increasing costs employers face as a result of these disease; employer sponsored wellness programs have evolved and research has been conducted on what components of various programs make them effective and successful. In 2005 the Utah Department of Health (UDOH) conducted a survey of

Employer Sponsored Wellness Programs close to 500 companies in Utah in order to measure their compliance of the program guidelines with Healthy People 2010. From the survey results it was noted that there are five elements critical for a successful employer wellness program:

1. Funding for worksite wellness programs should be included in company budgets. 2. Wellness programs should be linked to other health related offerings such as employee assistance programs (EAP), onsite health screenings, and nurse or insurance sponsored health advice lines. 3. Policies should be established by the corporation to institute a physical and social environment that supports and promotes a healthy lifestyle. 4. Programs should include both primary and secondary health education programs. 5. A committee of employees should be created to address the health needs of the employees (Neville, 2009). In another study published by the Wellness Council of America (WELCOA) listed seven of the most common components of employer health promotion programs: 1. Senior level organizational support 2. Establishing a cohesive wellness team. 3. Data collection 4. Drafting a yearly wellness plan 5. Selecting appropriate health promotion interventions. 6. Creating and supporting and healthy and health promoting environment 7. Careful evaluations and analysis of outcomes (Neville, 2009). The Salt Lake County employee wellness program has resulted in lower costs associated with health care and participants have experienced positive health related outcomes. Because of the reported positive results, Salt Lake Countys program is an example of a well-established employer wellness program. Neville, in her analysis of previous research and literature of effective wellness programs constructed 10 elements for the process evaluation of countys wellness program: 1. Management and environmental support 2. Multiple health issues addressed 3. Communication of health messages 4. Cultural and social factors 5. Health screenings 6. Referrals to other health care services

Employer Sponsored Wellness Programs 7. Incentives 8. Individual Focus 9. Planning and evaluation 10. Involvement of partners (Neville, 2009). Neville (2009) reported that the greatest strengths of Salt Lake County wellness program are the financial incentives, annual health screenings, and addressing multiple health issues. Moreover, in the article titled Heart Healthy and Stroke Free: Successful Business Strategies to Prevent Cardiovascular Disease found in the American Journal of Preventive Medicine, Koffman et al. (2005) reported that incentives such as: free or subsidized gym memberships, lower health insurance premiums for controlling health risk metrics, and gift cards for completing health risk assessments and health improvement classes were effective tools for increasing program participation and for rewarding health behavior goals.

In the same article the importance of medical screenings and health risk assessments as a component in an effective wellness program was noted. Additionally, Koffman et al (2005) reported that one study showed a minimal cost health screening and referral program will likely reduce blood pressure in about one quarter of high risk (p. 115). Nevilles (2009) study of Salt Lake Countys program also documented this as an effective component of employer wellness programs. Furthermore, authors Goetzel et al. (2007) in their article Promising Practices in Employer Health and Productivity Management Efforts: Finding from a Benchmarking Study detailed the importance of addressing multiple health issues in a successful wellness program. Moreover, Goetzel et al. (2007) stated that promising practice employers based their [health productivity management] offerings on data derived from multiple sourcesat the same time, addressing certain core behavioral factors such as physical inactivity, poor diet, and smoking was central to all HPM (p. 120). In addition, Koffman et al (2005) reported that many studies have

Employer Sponsored Wellness Programs shown that individual risk factor follow-up education and screenings have proven to be an effective intervention in helping participants control various health risk factors.

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Conclusion Lifestyle and chronic diseases are increasingly prevalent in the United States. Employers have been affected by increasing costs incurred as a result of these diseases. Moreover, in an effort to control and curtail costs associated with employee medical costs; employers are seeking out programs to help reduce these high costs. Because most of the adult population is employed, worksites present a unique opportunity to combat chronic disease and improve health status while controlling rising health care costs. Many employers, both large and small, are offering employer sponsored wellness and health promotion plans as part of benefits plans. Furthermore, the review of the studies conducted on worksite wellness programs presented strong evidence of costs savings and return on investment for employers. Additionally, these studies reported improved health and health outcomes of program participants when a comprehensive wellness program was implemented. The main findings of this paper are that effective wellness programs contain the following: participation incentives, health screening for participants, and need to address multiple health issues and risk. Successful wellness programs in many companies have produced up to a 50% reduction in employee related health care costs. Moreover, there was a positive return on investment on costs of the wellness programs and the money saved by the employer in reduces medical costs. Wellness programs are an innovative tool for companies and employees to reduce health care related costs and improve health. While there are conclusive studies on the

Employer Sponsored Wellness Programs benefits of wellness programs, additional research should be conducted to further develop effective wellness programs for participants and employers.

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Employer Sponsored Wellness Programs References 2011 Kaiser/HRET Employer Health Benefits Survey (EHBS) (2011, September 27). Employer Health Benefits 2011 Annual Survey. The Kaiser Family Foundation and Health Research & Educational Trust. Retrieved April 29, 2012, from http://ehbs.kff.org/pdf/2011/8225.pdf Aldana, S. (2001). Financial impact of health promotions" A Comprehensive review of the literature. American Journal of Health Promotion, 15(5), 296-319. Baicker, K., Cutler, D., & Song, Z. (2009). Workplace wellness programs can generate savings. Health Affairs, 2009. doi:10.1377/hlthaff.2009.0626 Chapman, L. S. (2004). Expert opinion on "best practices" in worksite health promotions. American Journal of Health Promotion, 18(6), 1-6. Eddington, D. (2006). Who are the intended beneficiaries (Targets) of employee health promotion and wellness programs. North Carolina Medical Journal, 67(6), 425-27. Goetzel, R. Z., Shechter, D., Ozminkowski, R. J., Marmet, P. F., Tabrizi, M. J., & Roemer, E. C. (2007). Promising practice in employer health and productivity management efforts: Findings from a benchmarking study. Journal of Environmental Medicine, 49(2), 111-129. doi:10.1097/jom.obo13e81802ec6a3 Henke, R. M., Goetzel, R. V., McHugh, J., & Isaac, F. (2010). Recent experience in health promotion at Johnson & Johnson: Lower health spending, strong return on investment. Health Affairs, 30(3), 490-99. doi:10.1377/hlthaff.2010.0806

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Koffman, D. M., Goetzel, R. R., Anwuril, V. V., Shore, K. K., Orensten, D., & LaPier, T. (2005). Health healthy and stroke free: Successful business strategies to prevent cardiovascular disease. American Journal of Preventive Medicine, 29(5S1), 113-121. doi:10.1016/j.amepre.2005.07.17 Moon, D. (2011, October 24). Can CEOs find relief from skyrocketing health costs. Chief Executive.net. Retrieved April 29, 2012, from http://http://chiefexecutive.net/canceos-find-relief-from-skyrocketing-health-costs Neville, B. (2009). Long-Term outcomes of a Wellness Program for Salt Lake County Employees Doctoral Dissertation. University of Utah, Salt Lake City, UT. Poole, K., Kumpfer, K., & Pett, M. (2001). The impact of an incentive-based worksite health promotion program on modifiable health risk factors. American Journal of Health Promotion, 16(1), 21-26. UDOH (2007). Utah Behavioral Risk Factor Surveillance System Small Area Report, 20012005. Utah Department of Health. Retrieved April 29, 2012, from http://health.utah.gov/opha/publications/brfss/SA2001-2005/sa2001-2005.html

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USDHHS (2000). Health People 2010: Understanding and improving health, 2nd ed. U.S. Department of Health and Human Services. Washington, DC: US Government Printing Office.