Doing Well: What's the Real Value of Employee Wellness Programs?

The first scholarly interrogation of the relationship between health and the workplace was published by Bernardino Ramazzini, an Italian physician and professor born in 1633. In 1700, Ramazzini published “De Morbis Artificum Diatriba,” or “Diseases of Workers,” the book that would earn him the title of “the father of occupational medicine.” In the book, Ramazzini recorded and proposed treatments for common ailments associated with workers in 52 different occupations. He observed, for example, the high rates of mercury poisoning that affected Venice’s mirror makers — at the time, most mirrors were manufactured by dipping sheets of tin foil into vats of mercury and then pressing the sheets underneath glass. (This type of mirror-making practice didn’t cease until the late 19th century, nearly 200 years after Ramazzini, thanks to workplace reforms brought on by the Industrial Revolution. All the mirrors now in your home are probably safe.)
Now, imagine you’re a mirror manufacturer in early 1700s Italy. You run a good business, so you have several employees. But there’s a workplace inefficiency that’s vexing you, as it would any business owner — high turnover. You see, all of your employees are gradually losing their peripheral vision, then their coordination, then their ability to speak, and then they’re dying. You call up Ramazzini. (Well, not “call,” but talk to.) “Ram,” you say, because you’re on a nickname basis with him in this fantasy, “what’s my problem? Why do I have all this turnover?”
“Well that’s obviously mercury poisoning,” Ramazzini says. “Probably from all those vats of mercury you have lying around.”
What’s a business owner to do? You’re tired of having to train a new employee every time a mercury-addled one can no longer work. Hopefully, you’d have more sense than mirror manufacturers did between 1700 and 1890 — you’d realize that it’s probably worth investing in a different manufacturing process, or at least getting your employees some protective breathing masks.
Ramazzini’s motivation for studying workplace health was medical, of course: knowing a patient’s risk factors makes him or her easier to diagnose. But business owners have come to see the bottom-line value in investing in their employees’ health. For much of the 20th century, that meant employer-sponsored health care — taking on a business expense to recruit good employees and make sure they stay healthy enough to work. But investing in wellness programs — paying for disease management, gym memberships, yoga classes, health coaching, smoking cessation classes, etc. — can have an even bigger long-term payoff for businesses, if they do it right.
 

Looking at the payoff

Wellness programs as they’re currently used came about after the 1996 Health Insurance Portability and Accountability Act, which allowed employers to offer financial incentives to employees who participate in a wellness program. The first limit, set in 2006, capped incentives at 20 percent of the overall cost of a group health insurance plan; the second limit, passed as part of the Affordable Care Act, capped incentives at 30 percent, with the possibility of being raised to 50 percent at the discretion of the Department of Health and Human Services.
But wellness programs are far from standardized. Companies can work in whatever wellness initiatives they think fit. A smaller company may not offer any incentive for participating, but they may allow employees to leave work early for a group fitness activity, for example — that’s a wellness initiative. In a 2015 Deloitte survey, employees of companies with wellness programs reported that 46 percent offered a financial reward for participating, while another 26 percent offered subsidies, such as a discounted gym membership, for healthy lifestyles. 26 percent also offered non-monetary rewards, like points or recognition.
These variables make the exact benefits of wellness programs difficult to quantify. Cost savings for some components of a wellness program, like chronic disease management, come in the short-term and are pronounced — companies that help employees manage heart disease have fewer heart attacks. But other benefits, like gym memberships, are harder to see in a balance sheet. You don’t know which otherwise healthy employees would go on to develop health problems without the benefits, and it’s hard to find truly representative control groups to measure against. And again, the modern corporate wellness program is only a couple decades old, so the data showing truly long-term benefits is still relatively scant. A study published in Harvard Business Review in 2010 showed that Johnson & Johnson saved $2.71 for every dollar spent on their employee wellness program from 2002 to 2008. Another study, published by the Rand Corporation, showed a return of only $1.50 for every dollar spent. The vast majority of that was in disease management rather than lifestyle management, which would include something like a free gym membership. The report did note that long-term benefits are more difficult to calculate. Also, obviously, $1.50 is still more than $1.00.
As to be expected, business owners are wont to avoid spending money without having a concrete idea of a return. Tom LaFantaine is the manager of Optimus, a wellness-minded fitness center that shares many of the same preventative goals as employee wellness programs. In fact, Optimus is owned by TIG Advisors, formerly The Insurance Group, and TIG employees all have access to the gym.
In 2007, TIG and Optimus tried to engage businesses in a wellness program supported by INTERxVENT, a company based in Georgia. They felt comfortable with the proof of results in the program, but LaFantaine says local businesses weren’t biting. “Most CFOs wanted to know how much we could save them in three months — they always seemed to be focused on quarterly profits,” he says. “It simply doesn’t work that way.”
Business owners looking for evidence might turn to the Truman Memorial Veterans’ Hospital, which was one of seven veterans’ hospitals selected to pilot test the “Whole Health” program, a patient-centered care approach that shares a preventative philosophy with many of the most robust employee wellness programs. Whole Health pairs VA patients with health coaches, who help veterans reorient their health around life goals — so rather than asking “What can I do to quit smoking?” patients ask “What can I do to continue working productively into my 60s?” and create a health plan from there. The hospital supports them with classes, check-ups, and coaching as needed.
“At any other health center,” says April Leverett, manager of the Whole Health program, “it’s basically a disease-driven model — you may come in twice a year for a physical, but predominantly visits occur because somebody has a chronic disease, and it’s either out of control or they’re trying to get on top of it, so the discussions are more around managing their disease. We want discussions about improving their life.”
The fact the VA is investing in an approach that shares many components of employee health plans — fitness classes, health coaches, etc. — should encourage businesses to take a closer look. After all, as the insurer of all its patients, the VA has the same financial interest in lowering health care costs that business owners have.
“Just like the employer ones, where you’re not going to see the cost benefits that year maybe, or maybe even in five years, down the road, you will,” says Heather Brown, strategic partnership officer at the hospital. “I think that’s good of the VA to look very far ahead and say we’re going to start here, building this model of health, and we know we’re going to see cost benefits down the way, we just don’t have the exact numbers. Just like how most companies won’t.”

Fully Invested

In the 2010 Harvard Business Review paper, researchers found that a wellness program’s success was largely dependent on how much it was embedded in company culture. As part of its wellness efforts, one of the companies they researched, Healthwise, instituted an every-other-week tradition of sharing healthy snacks with other employees. “One executive calls it ‘adult recess,’” the authors wrote, “an investment that ‘pays back in spades’ by creating opportunities for cross-team connections.”
“What makes an effective wellness program?” LaFantaine says. “A comprehensive wellness program has to be integrated into the company culture and supported by the executive staff.”
Columbia College, while eschewing direct financial incentives, has created a number of wellness initiatives to create a culture of wellness among employees. Faculty and staff have 24/7 access to the campus recreation center, even when students aren’t on campus, and many walk or run on the track at the school’s soccer field. “That’s available even when teams are practicing,” says Sam Fleury, the school’s public relations director, “although you do have to be a little more careful then.” If they want in on the competition, faculty and staff can compete on intramural sports teams alongside students. Early in his tenure, President Scott Dalrymple started a successful intramural volleyball team.
The school also hosts an annual health fair in which the HR staff brings around 40 local vendors to campus to connect with staff, faculty, and students. The school also hosts the “Walk Our Way to Wellness” contest across its nationwide campuses every year, where teams log all the steps they take in one day and compete to earn prizes. All these little things have built wellness and health into the workplace culture — Fleury says he’ll even take “walking meetings” when the weather is warm, doing business by walking around the track with a colleague.
“I think, when you exercise and you take some time to do something for yourself, you come back to your desk more energized,” Fleury says. “When I go on a walk for 20 minutes, I think more clearly than if I sit in front of a computer for three hours.”
Even with small, low-risk wellness initiatives, the college has contributed to a culture of wellness that, at the very least, helps employee morale. “I think it’s just another way to bring people around campus together with something that makes them feel better and feel like a part of something,” Fleury says.
Scholarly research on wellness programs has tended to focus on big companies with institutionalized processes, but for small to medium-sized businesses, an effective wellness program can mean something different to different companies. Ultimately, it’s about creating something that both management and employees can be enthusiastic about.
“The value is obvious,” LaFantaine says, “Improved employee health, reduced expenditures, and, perhaps, enhanced profits by creating a more productive workforce.”