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When choosing among vendors in the fast-growing wellness market, first assess your needs.
There's an explosion occurring in the wellness industry. Growth is being spurred by the shift toward wellness and prevention in the design of employer-sponsored health care benefits and by federal health care reform legislation, which allows higher incentive payments to employees in company-sponsored wellness programs.
This trend, while positive for wellness vendors, creates a tough challenge for HR, benefits and wellness leaders as they navigate a fast-growing market. Yet, with the right resources, they can plot an effective course.
"Wellness is currently the biggest area of growth in benefits, and it's primarily fueled by employer demand," says Barry Hall, global wellness research leader at Buck Consultants LLC's Boston office. "If you're a well-known employer, you may be contacted every day by wellness vendors trying to convince your company of the value of their programs. Some employers are getting bombarded with marketing."
The exact size of the expanding industry is hard to measure, but the total annual amount companies spend on wellness is estimated to be in the billions. Buck Consultants began tracking wellness and health management providers in 2008. The growing database identifies more than 200 vendors targeting medium and large employers. "There are wellness vendors coming out of the woodwork," Hall says. He expects more to be added to the list this year.
An informal 2006 tally of the corporate wellness field in
The American Journal of Health Promotion estimated it to be a $550 million industry. Assuming 30 percent annual growth, Michael O'Donnell, Ph.D., the journal's editor-in-chief, at that time predicted the field would reach $1.6 billion in revenue in 2010 and $5.8 billion by 2015. Today, he acknowledges that the economic recession caused small cutbacks in some existing corporate wellness programs and may have stalled implementation of some new ones. "But employers' confidence in the ability of wellness programs to moderate medical costs increased, as did their need to save money," he says. "Many employers plan to expand their programs in 2011; we are seeing the same trend in many countries."
The Patient Protection and Affordable Care Act will provide employers with new incentives to help workers stay healthy: Starting in 2014, the cap on premium discounts will increase from 20 percent to 30 percent. Employers can use these discounts to entice employees to participate and meet certain goals in company wellness programs. The federal government is expected to issue guidelines that could allow employers to bump the incentive up to 50 percent in special circumstances. Small businesses with fewer than 100 employees are now eligible for grants to implement new wellness programs.
Investing in Wellness: How Much?
Most mid-size and large U.S. companies invest in employee wellness programs, spending, on average, nearly 2 percent of their total annual health care claim dollars, according to an employer survey conducted in 2009—before health care reform was enacted—by Fidelity Investments in conjunction with the National Business Group on Health.
Of the 121 U.S. companies surveyed, each of which has more than 1,000 employees, 91 percent reported that their willingness to invest in wellness programs would remain, regardless of any changes made by health care reform. In fact, health care reform legislation includes wellness provisions that could drive the growth of employer-provided wellness services.
Most surveyed companies have an average 21 programs in place focusing on prevention, lifestyle wellness, condition management, communication and education. Forty-five percent of the respondents spend almost the same amount of money on programs aimed at prevention and lifestyle wellness as on programs that manage conditions after the onset of disease or illness.
The National Business Group on Health calculates its estimates of corporate spending on wellness programs by dividing the money an employer spends on health improvement programs per employee annually by the total it spends for claims for doctors' office visits, medications and hospital stays per employee annually. The figure excludes costs associated with employee incentives, on-site health centers and HR staff dedicated to wellness programs.
These costs include all incremental expenses paid to third-party administrators on behalf of the programs as well as expenses related to in-house program activities: staff, overhead, advertising, printing, and financial incentives or prizes for employees.
All told, according to an October 2009 report by Kalorama Information, a medical markets research publisher, typical annual costs of running wellness programs range from $30 to $140 per participant, with most programs in the $60 to $100 range.
Map a Wellness Strategy
So, how can HR and benefits professionals be confident that the wellness providers and health promotion programs they choose are sound and follow best practices for this growing industry?
Making wellness program choices is no easy feat, says LuAnn Heinen, vice president of the National Business Group on Health (NBGH) in Washington, D.C., and director of its Institute on Innovation in Workforce Well-being. "There is a very robust spectrum of offerings," she says. "There may be no one right answer."
But general methods and best-practices guidelines are available. Based on interviews with wellness experts, health promotion researchers, and HR and benefits leaders, common themes and advice emerge about the best ways for employers to navigate the wellness market.
Assess your needs. Do this before you research vendors, Hall says. "Don't be swayed by what looks good but might not be what you need." Start by examining the biggest health risks in your employee population—the ones that cost the most in medical claims and productivity.
Health risk appraisals can identify prevalent risk factors, and claims analyses from your health care provider can add to that information. Look at group data you collect from screenings, too. Consider your demographics: An employee group made up of many young women may benefit from prenatal care education, while an aging workforce may need heart-health interventions. The types of jobs your employees do, and the stress and physical requirements of the work, also influence program choices.
Ask your employees. It's easy and inexpensive, Hall notes.
At online apparel and footwear retailer Zappos.com Inc., for example, employees have a say in wellness program plans, says Celina Enriquez, benefits and wellness orchestrator for the 2,800-employee company based in Henderson, Nev.
"Zappos employees are not afraid to express their opinions," she says. "We get a lot of suggestions for wellness classes that employees would either like to see again, like CPR, or things they would like to see in the future, like on-site traditional yoga classes."
This year, Enriquez will focus on bringing employee suggestions to life. "We are frequently approached by wellness companies trying to promote their products. We always choose our vendors based on how well they will fit in with our company culture," she adds.
Start inside. "Start with your workplace environment, policies and culture," Heinen says. "Make it easy for employees to make better, healthier choices."
Even providing easy access to water and offering healthy beverages in vending machines is a start, along with organizing simple activities for employees, such as lunchtime or break-time walking groups.
More ideas employers can easily execute in-house can be found within the Your Wellness Advantage website developed jointly by the NBGH and the Healthy Weight Commitment Foundation, a coalition of chief executive officers working to reduce obesity rates.
Consider a comprehensive and integrated prevention approach. Experts at U.S. Preventive Medicine Inc. advise employers to look for comprehensive programs that include primary, secondary and tertiary prevention.
This means they cover "wellness from early detection to chronic care management in one program," says Dr. Ron Loeppke, vice chairman of the global preventive health company in Jacksonville, Fla. "The program should be clinical-based and should include sound medical science and behavior-change science. It also should be able to demonstrate that it can enroll employees—you can't help employees improve their health if they aren't engaged—and continue to engage them throughout the year to achieve results."
Narrow the field with accreditation and certification. "It's a bit like the Wild West of health care right now," says Patricia Barrett, vice president of product development at the National Committee for Quality Assurance, a Washington, D.C.-based nonprofit organization that advocates for health care quality. "There's constant change going on in the field and all kinds of claims being made of wellness quality. So, it becomes very difficult for employers."
Working with employers, health plans, vendors and other experts, the National Committee for Quality Assurance launched its Wellness & Health Promotion Accreditation program in 2009. The program assesses health plans and vendors that provide wellness services. It also evaluates how wellness programs are implemented in workplaces, how services such as coaching are provided to help employees develop skills to make healthy choices, and how individual health information is safeguarded. Employers receive a detailed, free report card that can be used to rate the strengths or weaknesses of various parts of their wellness programs. As of winter 2010,
16 organizations were accredited and three more were slated for evaluation.
"We're building a database of value and quality," Barrett says. "It's a good way to narrow down the field and make smarter decisions about what's right for your organization."
In addition, HR professionals can check the Comprehensive Wellness Accreditation standards and measures of URAC, a Washington, D.C.-based independent, nonprofit organization that promotes health care quality through accreditation and education programs. Its standards can be used to evaluate wellness programs that focus on individual health improvement and risk reduction. Specifically, the standards are used to evaluate core components of wellness programs, such as whether risk assessments are used, how the programs are designed and work with existing programs, and how progress and financial returns are evaluated and reported.
Another resource comes from the Health Enhancement Research Organization (HERO), a Birmingham, Ala.-based nonprofit that provides employee health management research, benchmarking and best-practices information. Its Employee Health Management Best Practice Scorecard assesses six fundamental elements of wellness programs based on leading research.
Organizations can also use the best- practice scorecard as a benchmarking tool. For example, when employers complete and submit their scorecards, they will receive free reports that compare their scores to aggregate scores of all employers in HERO's database.
Other resources include the:
Keep up-to-date on what works. "Keeping up with health promotion research can save you years of ineffective, trial-and-error programming," says David Hunnicutt, president of the Wellness Council of America.
That's exactly what Jennifer Pagels did when she was developing wellness initiatives as manager of HR at Trek Bicycle Corp., a Waterloo, Wis.-based manufacturer. She says she dug "into real program design, real results and proven outcomes of other leading companies." As part of her research, Pagels became active with HERO—and now is a member of its think tank, an employer-provider coalition that meets regularly to discuss ideas and recommend employee health management strategies.
Involve others, collaborate. Try a cross-functional team. Wellvolution is a comprehensive employee wellness program from the nonprofit health plan provider Blue Shield of California. Wellvolution was designed by an informal group of 10 Blue Shield leaders, including senior executives from HR, organizational behavior specialists, medical experts and benefit design experts.
This "wellness roundtable" approach works well, given Blue Shield's need to find custom and personal solutions for its employer-clients, members and employees, says Marianne Jackson, the company's senior vice president for human resources.
"Effective wellness programs require cross-functional expertise," she says, adding that the round table will be expanded to include outside experts who currently provide consulting services.
Ask for assurances and guarantees. When contracting with wellness vendors, Hall recommends looking for prior successes and demonstrated results. He says HR professionals should require measurable results and documented outcomes, such as meeting a certain threshold of participation rates. "Vendors realize this trend, and the better ones will work with you," he says.
The author, a contributing editor of HR Magazine, is a business journalist based in the Washington, D.C., area.
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