The price is (not) right

In an effort to maintain comprehensive employee health benefits while controlling rising health care costs, employers increasingly are relying on an array of wellness programs aimed at creating a healthier workforce.

This trend should continue to gain momentum with employers given the larger incentives built into the Patient Protection and Affordable Care Act. Yet, many employers have implemented these programs without first developing an integrated strategy that clearly outlines targets and goals.

This is one of the findings of a recent survey of 121 large U.S. employers conducted by the National Business Group on Health and Fidelity Investments.

The survey provides insight into the breadth of, and financial investment in, health improvement programs that employers have implemented, as well as the challenges employers face in measuring the success of these programs.

The survey revealed three key findings:

1. Employers are investing in numerous health improvement programs.

2. Few employers set measurable goals or are able to calculate the return on their investment in these programs.

3. Employers underestimate the investments they make in health improvement programs.

The survey shows that employers have invested in an average of 21 different health improvement programs, administered by several different vendors.

These programs include disease prevention, lifestyle change, condition management and educational campaigns.

Employers are spending roughly the same on programs that help maintain and improve health, such as prevention and lifestyle efforts, as on programs that help manage health after onset of an illness or disease.

The challenge for employers is determining what the right mix of spending is. For example, a strategy focusing on condition management is logical if an employer has a large population that has particular chronic diseases or illnesses.

However, if the employer's workforce is relatively healthy, then focusing more heavily on lifestyle modifications might be a wiser investment, considering the impact that likely lifestyle changes could have on the health of the workforce as it ages.

Measurement valued but rarely done

Measurement is critical to gauging the value of health programs, but only 35% of employers indicate they have measurable goals and/or targets. As a result, few employers know the return on their investment across all their health programs, and many (42%) rely on a collection of vendor assessments to measure success. This approach can result in a potentially confusing array of methodologies that may overestimate the total impact.

Employers should consider determining the outcomes that they want before they decide on the programs. Figuring out what types of results an employer wants can drive which types of programs it will implement.

In addition to rigorous clinical measures, employers should include common sense metrics, such as number of health screenings, adherence to medications for chronic conditions or percentage of the population that is tobacco-free.

If an employer has a population with a high prevalence of a particular disease such as asthma, focusing on decreased emergency room visits among a constant population in the program is a logical metric. Lastly, employers must make sure vendors report data in a way that allows for tracking of the goals.

Employers underestimate investment

Accurately calculating the total investment in health improvement is perhaps the greatest challenge employers have, especially since many programs are often bundled with other services. The study quantifies the employer investment in health improvement, based on employer responses about which programs they offered and market data on the cost of these programs.

We estimate that employers spend an average of 1.8% of medical claims on health improvement programs. These investments were consistent across companies of different sizes (see Figure 2.)

The 1.8% estimate represents the average level of investment that employers are currently making. However, the level and focus of investment that is right for one employer may not be appropriate for another employer, and individual company characteristics should be considered when deciding how to invest.

Investing in employee health has the potential to reap substantial benefits for employers, but there are numerous challenges - including coordination of multiple programs, communication to engage people in the program, and development of measurable outcomes and accurate financial calculations - that must be addressed before the best outcomes can be realized.

Employers who are able to identify desired outcomes, and implement strategies and programs to achieve these outcomes, will ultimately be the ones that see improvement in their workforce's health profiles.

Karen Marlo is director, benchmarking and analysis with the National Business Group on Health. She is responsible for overseeing the development and implementation of benchmarking tools and research related to employee health and wellness. She can be reached at

Adam Stavisky is senior vice president with Fidelity Investments Benefits Consulting, where he leads the East region for the company's employee benefits consulting business. He can be reached at Follow EBN on: Twitter | Facebook | LinkedIn | Podcasts

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