Typically, wellness programs are associated with efforts to reduce health care costs and to increase productivity. Yet, the benefits of healthy workers transcend reduced health care costs, including Workers' Compensation and lower absenteeism. Healthy workers are less prone to injury and when injured, recover quicker than unhealthy workers. Conversely, out-of-shape workers are at a higher risk for injury and healing is often delayed and complicated by other health factors. If workers are able to change and modify their lifestyle and reduce their health risks, medical costs will decline.
While this may seem intuitive, the connection between wellness and Workers' Compensation has been slow to take root. Separate risk management departments overseeing Workers' Comp and Group Health, concerns about expanding the employers' liability for work-related injuries, a focus on workplace safety rather than workers' health and a number of small companies with high Workers' Comp costs that do not offer health insurance have all been contributing factors.
A recent University of Michigan study of a Midwest utility company's workplace wellness program found that over nine years, the utility company spent $7.3 million for the program and reaped $12.1 million in savings. Medical and pharmacy costs, time off and Worker's Compensation factored into the savings. The study, which took into account a number of costs, including indirect costs of implementing wellness programs, such as recruitment and the cost of changing menus, showed that wellness programs work long-term even though employees aged during the course of the study.
Overall, the program cost the employer $100 per employee. The cost of lost work time, Workers' Compensation, and pharmacy and medical expenses among employees who participated each year increased by $96, compared with a $355 increase among employees who did not participate.
This is good news for employers. Amid heightened cost pressures and leaner staffs brought about by the prolonged economic downturn, employers need to reduce all types of absences and maintain productivity. While employers tend to focus their energies on controlling health care costs since the dollars are highly visible and more easily shifted, there are significant opportunities to control other costs with wellness programs.
On average, employers can see a 30% reduction in Workers' Compensation and disability claim costs according to a review of 42 published studies involving the economic returns of wellness programs. Moreover, wellness programs will reduce the costs of absences that, according to the 2010 Kronos/Mercer Survey on the Total Financial Impact of Employee Absences add up to 8.7% of payroll costs, more than half the cost of health care.
Of course budget and company size will dictate the type of program a company can undertake. However, there are five steps that all companies should take before launching a wellness program
Know your cost drivers. Analyze Workers' Compensation, health care and absenteeism data to identify common issues and trends. Understand the legal regulations governing wellness programs.
Examine the physical and cultural framework in which the wellness program will operate. Consider opportunities for on-site physical activity, partnerships with community wellness providers, local gyms or health and nutrition classes, on-site vending machines and cafeteria, etc.
Identify the interests and motivation of employees as well as barriers to employee participation through surveys, wellness committees and analysis of past efforts.
For several years, businesses have been shifting more of the costs of health insurance to workers through premiums and higher deductibles. Since 2005 workers' contributions to premiums have gone up 47%, while wages have increased only 18%. Employees are feeling the pinch. Show them how usage affects premiums and how wellness efforts can reduce usage.
A wellness program will not succeed without the ongoing support of management. Communicate the goals of the program and assess the commitment of supervisors and management.
When implementing a wellness initiative, senior management will want to see a return on investment. Establishing a consensus on the goals or metrics upon which to measure the success of the program will help shape the program and ensure its success.