In today’s economy, businesses are continuously seeking strategies to manage and reduce health care expenditures. One increasingly popular approach is the implementation of workplace wellness programs. The core idea is simple: invest in employee health and well-being to prevent future health issues and, consequently, lower health care costs. The American Heart Association (AHA) has already recognized over 1,200 companies as “fit-friendly,” highlighting the growing trend of businesses embracing wellness initiatives.
A 2009 national study by Medco on prescription benefit management trends revealed that nearly 60% of plan sponsors consider wellness programs to be the most significant factor in controlling health care costs over the subsequent 3 to 5 years. In 2008, 65% of organizations had implemented these programs, and this number rose to 76% the following year. Furthermore, over half of the companies without current wellness programs plan to introduce them within the next two years.
The financial burden of alcohol and drug abuse further emphasizes the need for preventative health measures. A 2009 report from the U.S. Department of Health and Human Services estimated that alcohol and drug abuse costs the United States approximately $276 billion annually. These costs primarily stem from reduced productivity and health care expenses related to substance abuse. To offset these escalating costs, employers have been forced to increase employee premiums, co-payments, and deductibles, which can limit access to necessary medications.
However, research suggests that investing in wellness programs can yield substantial returns. A meta-analysis examining the financial impact of workplace wellness programs revealed that for every dollar spent on these programs, medical costs decreased by $3.27, and absenteeism costs fell by $2.73. Given that the U.S. workforce comprises over 130 million individuals, the potential for wellness programs to positively impact employers’ financial performance is considerable.
Initially, employers were hesitant to invest in wellness programs due to a lack of concrete evidence demonstrating their effectiveness.
“Employer wellness program implementation has seen some real peaks and valleys, but over the last 10 to 15 years, repeated studies have verified a positive return on investment when programs are implemented, monitored, and measured appropriately, and more employers are becoming interested,” states Steven Noeldner, PhD, a principal and senior consultant at Mercer Consulting. He further emphasizes that employers are reaching the limits of cost-shifting to employees and are now recognizing the value of proactive approaches to address health care cost challenges.
Employee cost impact from wellness program participation
Figure 1: Impact of wellness program participation on employee health care costs.
Source: Recess Newsletter 2009
The American Recovery and Reinvestment Act of 2009 (ARRA) further supports wellness initiatives by allocating $1 billion to wellness and prevention programs. Additionally, Congress is considering proposals to offer tax credits or subsidies to employers who establish wellness programs that meet federal guidelines.
Sean Brandle, vice president at Segal Co., notes that “Plan sponsors are beginning to accept that in certain instances, wellness programs can produce health impacts on members that could lead to future lower costs.” He adds that reduced out-of-pocket expenses for employees can encourage better adherence to essential drug therapies, ultimately decreasing overall patient health care expenditures.
New surveys indicate that a growing number of employers are willing to invest in employee wellness programs as a strategy to control overall health care costs and potentially reduce spending on specialty drugs.
Can Wellness Programs Offset Healthcare Costs?
Employees participating in wellness programs typically begin by completing a health assessment. The aggregated results of these assessments are then analyzed by management to identify key areas of health needs within the organization. This data-driven approach allows for targeted program development and implementation. While tangible benefits can emerge within one to two years of program initiation, optimal cost savings are generally observed in the third and fourth years.
Beyond direct medical cost reductions, wellness programs offer additional advantages, including decreased absenteeism, enhanced employee productivity, and improved morale. However, effective implementation necessitates consistent and timely communication with employees, along with ongoing program evaluation. Employee incentives also play a crucial role in driving participation. A recent Kaiser Family Foundation survey (2010) indicated a 14% increase in wellness program participation when incentives are offered.
“One of the components that is key to the overall success of wellness programs is the development of a culture of health within the organization,” emphasizes Noeldner. He stresses the importance of both top-down management support and grassroots-level employee engagement. “Wellness advocates serve to promote and perpetuate the services the program is offering.”
Typical services offered in wellness programs are diverse, ranging from smoking cessation and weight management to nutrition education, substance abuse counseling, exercise programs, stress management, chronic condition management, and health screenings like blood pressure and cholesterol checks. Some programs even extend to CPR training and accident prevention education.
Considering these potential health care savings, could employee wellness programs pave the way for improved coverage of specialty drugs within organizations?
“We can’t necessarily draw a direct cause-and-effect relationship that overall healthcare savings will automatically translate to increased specialty drug coverage, but value-based design is a key element in health management,” explains Noeldner. He points out that while specialty drugs may have higher initial costs, they may ultimately lead to better long-term cost savings compared to less expensive alternatives. “Prescriptions should be evaluated based on the total cost of care and treatment for the patient over time, rather than solely on the upfront annual cost.”
In essence, employers aiming for the greatest return on their health care investments should not automatically dismiss high-cost drugs based solely on their initial price. Increased employee participation in wellness programs can contribute to mitigating or even preventing some of the debilitating effects of chronic conditions that necessitate specialty medications.
Brandle from Segal highlights that specialty drugs are an increasing concern for plan sponsors due to their high cost, limited distribution, specialized dispensing, and administrative complexities. Consequently, plan sponsors are carefully examining the benefits of these drugs. “There are certainly many specialty drugs that are critical components of a patient’s healthcare, and more data regarding the benefits of specialty medications can help us make better informed benefit decisions in the future.”
REFERENCES
- AHA (American Heart Association) Work site wellness programs lower healthcare costs, making employees healthier«http://americanheart.mediaroom.com/index.php?s=43&item=832». Accessed Mar. 15, 2010.
- Baicker K, Cutler D, Song Z. Workplace wellness programs can generate savings. Health Aff. 2010;29:304–311. doi: 10.1377/hlthaff.2009.0626. [DOI] [PubMed] [Google Scholar]
- Kaiser Family Foundation Focus on Health Reform: Side-by-side comparison of major health care reform proposals February242010. Accessed Mar. 4, 2010.
- Medco Health Solutions 9 Leading Trends in Rx Plan Management: Finding From a National Peer Study. 2009.
- Recess Newsletter. Wellness @ Work: Scared By The Price Tag? «http://recesswellness.com/newsarchive/hr042209.html». Accessed Mar. 15, 2010.
- US Department of Health and Human Services, Substance Abuse and Mental Health Services Administration 14 short employer cost savings briefs«http://ncadistore.samhsa.gov/catalog/productDetails.aspx?ProductID=17943». Accessed Mar. 15, 2010.
