I am a skeptic, I do not think anything that employers have done have controlled health care costs. Oh yes, they have lowered their costs in some cases, but that only means they have shifted costs someplace else, usually to the employee and in minor cases to providers by lowering payments or restricting access. After all is said and done, once the initial reduction is achieved for one party, costs resume their upward trend as usual. I remember the good old days when pre-admission testing was the key, followed by second opinions for surgery, then we had to lower the length of stay for hospital admission and after that was successful, the cost per day continued to rise. We tried HMOs and PPOs and screwed that up.
Today we are on a quest for major cost shifting on one hand and a dream of a healthy workforce on the other.
The former is known as consumer driven health care or high deductible health plans and the later wellness programs. The former seeks to shift more and more costs to the employee and family in a quest to have them shop for health care as they do a new car. The later claims short-term results by making workers healthy through screening, education and various programs. Nobody can argue with the desirability of helping people stay healthy and if lower costs are a benefit, that is great. The problem employers’ face is understanding what is possible and proving wellness programs do work. Most employers are riding the wave of PR and have no idea if they are now or will ever save money with a wellness program. Two things come to mind that should be obvious to any employer. First, unless dependents are one hundred percent included in the program, employers are missing any opportunity to manage about 60% of their plan costs. Second, any savings to be realized will be years in the future. An obese person to day may have zero health care expenses; a person with high cholesterol may have no symptoms for many years. Will these people be your employee when the expenses actually occur?
Never have so many employers embraced an idea (a costly idea in many cases) without a clear way to measure results and to prove effectiveness.
“We have a 90% participation rate in our health risk assessment (HRA)! Whoopee, could that be because you charge a higher premium if the employee does not participate? More to the point, what does a high participation rate actually achieve? How many employees took action based on the results? How much in healthcare costs were saved or avoided? Did costs go up in the short run because of actions the employees did take? How were the spouses affected? Did absenteeism change because of the new information employees had about their health status?
Intuitively wellness programs are a good thing. I mean, how can they be bad? If an employer wants to provide this kind of assistance, that is also a good thing. However, if you are selling wellness efforts as a cost saving or productivity improvement vehicle…PROVE IT!
Following is an article prepared for Quinnscommentary on this subject. Take a look. If you are interested in measuring a wellness program, you may want to look at their website.
Wellness Program Observations
By Shankar Sahai
Most businesses start with conducting a pilot program while rolling out a wellness program. A very sound strategy indeed. The pilot is planned well, executed meticulously and in most cases, results from it are considered successful. All is well and good! Next, the business either constructs results based on actual performance of the pilot or in some cases forms an “educated” opinion based on the mood of the administrators and executives involved with the pilot. The program is rolled out to multiple sites over the next few months and all is assumed to be going great until after some months the management decides to look into the results from the rollout. In most cases, the management is in for a surprise since the results are not consistent with what was perceived during the pilot. There are several reasons for this, but some of the more important ones are that the general roll-out is not thought through, goals and objectives not well communicated to the responsible parties and not enough done to measure the progress of the program. According a leading source the spending on wellness programs is increased (35%) in 2010 over 2009 but only 35% of companies actually measured the benefits and progress of their programs. (Source: http://www.shrm.org, Dated: Jan 2011)
The attrition rate is often seen as a major benefit for wellness programs in the workplace. It is worth noting the attrition rates in any company are based on several factors. Some of these factors are job expectations, pay, benefits, hiring process (is the right person being hired to do the job?) and many other factors. Wellness programs offered play a role in the overall mix. It’s never easy to isolate the impact of each factor on the attrition considering that no business stands still and certainly the environment around them is constantly changing from the rapidly changing economic reality to the more gradual change in the profile of their customers and applicant pool. The impact of wellness programs varies from one business to the next. In addition, in most cases, even within a company varies from one location to another. Hence, there is almost no trend around wellness programs and attrition that stands out. Each case is unique and must be looked at individually.
Another fact that customers looking for attrition payoff should expect is that an impact is seen around second to third year after rollout. In some cases, there may not be in any impact at all or there even might be a negative impact. In general, it’s advisable for a business with a wellness program to expect substantially lower results after general rollout than the ones seen during the pilot. In summary, most businesses will see benefit from the roll-out of the wellness programs and most will be able to improve the returns by tweaking and targeting their programs more efficiently.
Related Articles
- Three keys to long-range workplace wellness (iowabiz.com)
- U.S. Businesses Spend More on Wellness Programs, But Most Don’t Measure Results (prweb.com)
- Benefit Plans Now Including Wellness Benefits (medicalinsurance.org)
- Often the Only Ingredient Missing in Most Corporate Wellness Programs is the Employee. ConvergenceHealth and WellVentures Combined Strategies Have Solved That Problem (prweb.com)
- Healthy living is paying off for Michigan county (usatoday.com)
- Health Care Reform: How Companies Need To Worry (forbes.com)
QUINNSCOMMENTARY 
I don’t disagree, but are employer plans actually lowering risks ( taking an HRA hardly lowers any risk by itself )? Can employers of a constantly changing population actually benefit? Also, seems like any benefits will take many years to be realized and certainly not the year or two following a new program being implemented.
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Dick
Another provocative article. There is good research to show that lowering health risks reduces health care costs and increases productivity (Dee Edington’s work). What is more difficult to prove is which interventions have a positive impact on health risks.
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