Cutting Costs Is Top Reason for U.S. Wellness Programs

By Kathy Gurchiek Nov 20, 2009
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Boosting productivity is the goal behind employer-sponsored wellness programs in five of seven regions of the world, a way to cut health care costs in the U.S., and a morale-boosting tool in Asia, according to a new global survey of more than 1,100 organizations.

Buck Consultants, a worldwide HR and benefits consultancy, released a report Nov. 16, 2009, from its third annual global wellness survey. Barry Hall, a Buck principal who directed the survey, discussed the findings during a Nov. 18 webcast discussion.

Survey respondents were senior or mid-level professionals from Asia, Africa, Australia, Canada, Europe, Latin America and the U.S. who were responsible for corporate wellness strategy, execution and measurement. They represent more than 10 million employees in 45 countries.

“We’re seeing really a convergence of most of the world outside the U.S. around productivity and presenteeism. … In the past [productivity] wasn’t quite so universally at or near the top” as a strategic objective for wellness programs, Hall said.

“In some instances it’s a widening of the gap between the U.S. and the rest of the world in terms of what the key priorities are” for wellness programs.

It’s not surprising that wellness is one of the areas that U.S. employers are looking to as a way to address rising health care costs, he noted.

“U.S. employers are really struggling with the cost of providing health care to workers,” Hall pointed out. “The cost for health care in the U.S. is among the highest in the world, and employers pay on average about 80 percent of that, so it’s a business issue, it’s a competitiveness issue globally for U.S. employers.”

Globally, only 22 percent of all respondents measure the financial outcomes of their wellness program on their health care cost trend rate. However, among U.S. respondents who have done so, 43 percent reported a cost reduction—typically 2 to 5 percentage points annually.

It might not sound like much, Hall said, until one considers that this represents “a significant savings on the massively growing health care bills of many employers.”

Top Health Risk

The United States differs in other ways from the rest of the world regarding employer-sponsored wellness programs, according to findings from the survey, which was conducted May-July 2009.

While stress was cited consistently as the top health risk driving employer wellness programs elsewhere in the world, the top health concerns in the U.S. and Latin America were a lack of exercise and poor nutrition.

Stress is a key contributor to productivity loss, presenteeism and absences, so that’s consistent with regions of the world where productivity is the top strategic objective of wellness programs, Hall noted.

The U.S. and Latin America’s ranking of a lack of physical activity as the top health risk that wellness programs targeted might “reflect some greater focus on obesity in those parts of the world,” and perhaps different employer attitudes toward stress in those countries, Hall said.

There is increasing evidence, he noted, that people put their work and family ahead of themselves. For the employer, if the wellness objective is to address personal issues such as weight loss, nutrition and smoking cessation, this means that “you may need to help people deal with stress and work and family issues first before they will put their attention on those [personal issues].”

Top Wellness Program Elements

From a list of 30 program elements, employers in the U.S., Latin America and Canada ranked immunization/flu shots as their top wellness component. Biometric health screenings—blood pressure, cholesterol and body fat screenings, for example—were No. 1 in Africa and Asia. Discounted gym and fitness club membership was the top wellness program priority in Europe.

Other currently popular wellness components include employee health fairs, health risk appraisals, executive screening programs, on-site health classes and health web sites. Unlike other respondents, employers in Asia ranked company-sponsored sports teams as a top element to their wellness programs.

Program elements currently low in prevalence but expected to grow rapidly in the next one to three years: cycle-to-work programs in Asia, Latin America and the U.S.; on-site personal health and lifestyle coaching in Canada; healthy vending machine options in Europe; and caregiver support in Africa.

The growing emphasis on environmental sustainability likely will influence the cycle-to-work trend, the report predicted.

Other findings:

  • Wellness programs are most prevalent in North America, where 77 percent of responding employers offer them.
  • Among employers with workers in multiple countries, 41 percent said their wellness strategy was global. That’s up from 34 percent in 2008.
  • Among multinational employers that don’t have a global strategy, 56 percent cited a lack of global oversight of the employer’s health care strategy.
  • Technology is the fastest-growing wellness program component. It includes online healthy lifestyle programs and providing employees with an electronic summary of their health information.
  • The majority—37 percent—said incentives are moderately successful in motivating employees to participate in wellness programs and to make lifestyle changes.
  • Financial incentives are most typically offered for completing health risk or lifestyle questionnaires (56 percent), workplace health challenges (47 percent) and biometric health screenings (43 percent).

Incentives

Financial incentives are most prevalent in the U.S., where 56 percent of U.S. employers surveyed said they are offered, and in Asia (42 percent).

Employers in other regions say they plan to start offering wellness incentives. Among Latin American employers, for example, 17 percent now offer financial incentives but 41 percent plan to offer them. In Africa, 26 percent of employers offer incentives and 41 percent plan to offer them.

Incentives usually take the form of gifts, merchandise, raffles, free or low-cost prevention services, cash and subsidized gym membership.

The value of financial incentives, in U.S. dollars, ranged from under $10 per employee to $2,000 per employee, but in the U.S., the average was $163 per employee. That’s up from $145 in 2008. In the U.S., the cultural attitude drives a greater use of incentives, and there is more of a connection to an awareness and tie-in to health care costs, Hall pointed out.

The soured economy has caused 24 percent of employers to cut back on their wellness services, but 19 percent have increased their wellness services. Among employers who cut back on wellness programs, it was consistent with other budget cuts. The majority of respondents, though, said they have not cut wellness programs.

“Wellness programs are largely holding their own in this challenging environment. It’s a difficult time, but we’re not seeing them as the first thing to be cut,” Hall said.

“Wellness is globally relevant. … It’s relevant both to organizations and to individuals,” he said. “[For] organizations, it’s about improving performance, competitiveness of the organization. For individuals, it’s about improving quality of life for every person that works for the organization and their families.”

Kathy Gurchiek is associate editor for HR News. She can be reached at kathy.gurchiek@shrm.org.

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