Does a New Study Underestimate Wellness Programs?

Benefits of health promotion go beyond immediate savings, wellness advocates say

Stephen Miller, CEBS By Stephen Miller, CEBS February 5, 2018

The widely reported results of a new study suggest that workplace wellness programs don't work. But is that the whole story?

The researchers behind the study were based at the University of Chicago and at the University of Illinois at Urbana-Champaign, where they designed and then examined a workplace wellness program available to 3,300 university employees. A control group of 1,534 employees was excluded from the program.

The key takeaways from the first year of the Illinois Workplace Wellness Study: The program failed to reduce health care claims or lower plan premium costs, at least in the short term.

The researchers randomly assigned program eligibility and financial incentives to employees in August 2016, and over 56 percent of eligible employees participated. But at the end of the first year, the researchers did not find evidence that the program had significant effects on total medical expenditures or on health behaviors.

"Ultimately, in the first year of the study, we found virtually no difference in health spending between the control group and the treatment group," said report co-author Damon Jones, associate professor at the University of Chicago Harris School of Public Policy, in a news release. "There was no difference in sick leave; there was no difference in salary or job separation. In fact, gym visits were nearly identical between the two groups and there was no real difference in running participation," he noted.

"The first portion of our study was an initial screening, and we offered monetary incentives to encourage participation," Jones explained. "We found that upping the completion award from zero dollars to $100 increased completion by 12 percent. But we also found that raising the incentive even further did not increase participation, and we just ended up giving more money to people who were already participating."

Advocates of wellness programs in general, however, said that the first-year results didn't reflect the potential benefits employers can derive from encouraging healthy habits among workers.

The study received funding from the National Institutes of Health and the National Science Foundation, among other sources. A report on the first-year results was published in January by the National Bureau of Economic Research. The researchers are continuing to collect data to evaluate effects in the second and third years.

Last year, almost a quarter of employers increased their wellness offerings, the Society for Human Resource Management found in its annual benefits survey.

A Closer Look

The program, like many similar initiatives, was created to encourage preventive care and to discourage unhealthy behaviors such as inactivity or smoking. Eligible employees were offered the opportunity to participate in activities such as in-person classes on chronic disease management, weight management, tai chi, physical fitness, financial wellness and healthy workplace habits.

The program also provided a tobacco-cessation hotline and a self-paced, online wellness challenge.

Workplace wellness programs cover over 50 million workers and are intended to reduce medical spending, increase productivity, and improve well-being, the report noted, yet "limited evidence exists to support these claims."

While Jones and his fellow researchers found no substantial savings in health care claims for wellness program participants, evidence emerged that employers with incentive-based programs may be better able to attract and retain healthier employees.

The results "suggest these programs may act as a screening mechanism even in the absence of any direct savings," the study reported. This is because those who chose to participate tended to be healthier, with lower medical spending prior to the program's launch. "If wellness programs differentially increase the recruitment or retention of these types of employees, then the accompanying reduction in health care costs will save firms money," the researchers speculated.

A Narrow Perspective

"The lack of first-year cost savings should not be surprising since the study focuses on health screenings and wellness activities such as fitness, stress management [and] smoking cessation for all employees rather than targeted strategies for employees diagnosed with costly chronic conditions," said LuAnn Heinen, vice president at the nonprofit National Business Group on Health and director of the group's Institute on Innovation in Workforce Well-Being.

'The lack of first-year cost savings should not be surprising.'

"The ROI for smoking cessation has been shown at many large employers, [but] success may involve repeated or unlimited quit attempts over months and years," she noted. Initially, "employers often struggle to achieve participation in the many and varied programs they offer."

The research also didn't address the manager training, policy and environmental changes many employers have instituted in support of employee health and well-being, Heinen observed.

[SHRM members-only toolkit: Designing and Managing Wellness Programs]

Conflicting Studies on Savings

An often-cited 2014 study by the nonprofit Rand Corp., which looked at wellness programs at PepsiCo, showed that targeted disease-management interventions among high-risk populations did reduce health care claims for those with chronic conditions while broad-based wellness initiatives for the workforce did not lead to a drop in health claims.

Other studies, however, have shown cost savings from wellness initiatives for the entire workforce. Most North American employers that analyzed the return on investment (ROI) of their wellness programs found $1 to $3 decreases in their overall health care costs for every dollar spent, according to A Closer Look: Wellness ROI, a 2012 report by the not-for-profit International Foundation of Employee Benefit Plans.

A 2010 report by a team of Harvard University health economists, published in the journal Health Affairs, found that the average medical cost savings per dollar invested in wellness programs was $3.27. The report's finding was based on an analysis of more than 20 peer-reviewed ROI studies.

Critics contend that findings of significant savings from broad-based workplace wellness programs are suspect—or that direct savings shouldn't be the aim at all.

"The evidence is pretty conclusive that wellness programs with clinically driven components that rely on biometric screening do not provide the returns and cost reductions that employers have been promised for years," said Vik Khanna, a health benefits consultant based in St. Louis and co-author of the e-book Surviving Workplace Wellness (THCB Press, 2014). "If you look at the Fortune 1,000 companies that have made biometric and clinical screening a big part of their wellness plans, the numbers simply do not justify the cost."

Focusing on Engagement

"Increasingly, employers are interested in outcomes beyond health care savings," Heinen said. "Health and well-being are part of a broader workforce strategy that seeks to impact business outcomes such as recruitment, retention, customer satisfaction and employee engagement."

In addition, employers are increasingly aware of the detrimental impact of financial insecurity on employee health, well-being and performance, she noted.

"More and more, we are hearing the term 'well-being' instead of wellness," Heinen said. "Well-being focuses on the mindfulness of what it takes to live a healthy lifestyle, and the mission of well-being programs is to find ways that help stressed, hard-working employees lead happier, healthier and more productive lives."

When employers demonstrate that they truly care for the well-being of their workers, employees tend to respond favorably, Heinen said.

Wellness Program Success Tips

A new employers' guide—with an emphasis on small and medium organizations—focuses on the types of wellness programs that have been shown to be effective. 

FindingFit: Implementing Workplace Wellness Programs Successfully, was prepared by the Interdisciplinary Center for Healthy Workplaces at the University of California, Berkeley, and the nonprofit Transamerica Center for Health Studies. 

"Organization leaders may focus on employee health care costs and not know or understand the link between employee wellness and organizational outcomes such as productivity, absenteeism, turnover and disability," said Cristina Banks, director of the Interdisciplinary Center for Healthy Workplaces at UC Berkeley.

The guide discusses eight types of wellness programs with varying levels of employer involvement and investment, to help organizations find a program that fits their circumstances.

Related SHRM Articles:

Preventive Dental Benefits Save Employers Money, Studies Find, SHRM Online Benefits, January 2018

Should New Blood Pressure Guidelines Alter Wellness Incentives?, SHRM Online Benefits, January 2018

EEOC Wellness Regulations Vacated Effective Jan. 1, 2019, SHRM Online Employment Law, January 2018

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