Wellness ROI is much more than just health costs

Most of the best business lessons come from running a lemonade stand. And one key lesson I remember is if you spend money, you better make money.

As grown ups, we know that concept as return on investment. And in challenging financial times as well as growth, business leaders must know the ROI of their various business activities.

Take health care. As these costs gain increasing focus from benefits managers to the C-suite (not to mention Wall St. to Capitol Hill), ROI questions remain at the forefront. The issue is particularly sharp around wellness plans.

The ROI focus is the right one. But I’m increasingly concerned that too many leaders fail the lemonade stand test. They take the wrong approach to answer key questions like: What benefits does our wellness plan deliver, and how should we consider them? Too often, ROI calculation comes down to once factor: Cost. Does my wellness spend decrease my overall benefits spend?

By taking the wrong approach, I fear business leaders may get the wrong answers – yes, they may get lemons instead of lemonade.

Properly measuring ROI can be difficult. Surprisingly, many companies simply avoid the challenge altogether: A 2012 ADP study showed that “while 79 percent of large and 44 percent of midsized companies offer wellness programs, over 60 percent of these companies do not measure their return on investment.”

But even the difficult question should be answered. What approach should business leaders apply to properly evaluate their wellness plans?

• Define why you want a wellness plan. Sure, decreasing overall health cost is important. Everyone wants to save money. What about increasing worker productivity? One 2012 study we commissioned showed that participants returned to work up to nine days sooner from workers’ compensation related absences and 17 days sooner from short term disability absences. Other important areas: Company culture, attracting and retaining employees and improving organizational performance and competitiveness.

• Define what makes a “good” wellness plan. Many wellness programs rely on activity measures (e.g., miles walked) and unreliable self-reported data (e.g., survey responses). Once a year employees log into a site, promise to eat better, exercise more and smoke less, and – presto – their health premiums are reduced. Instead, good wellness programs rely on clinical data measurement to prove health goals are met. Effective wellness programs regularly track actual cholesterol levels, blood pressure, glucose and more.

• Keep employees engaged. Great tips can be found in a Wellness Works Hub post that quotes Dr. Risa Lavizzo-Mourey, president and CEO of the Robert Wood Johnson Foundation, the nation’s largest health and health care philanthropy. She says senior management should communicate “a corporate vision with health as a priority, and participates in wellness programs.” She also calls for “relentless communication about program offerings and a culture of wellbeing.”

Her conclusion: “[An] holistic approach requires that the calculations for ‘return on investment’ (ROI) for wellness programs go far beyond how well they reduce health care costs. Companies committed to nurturing a culture of wellbeing look for low turnover rates, a wider choice of top candidates for job openings, fewer absences, and increases in sales and productivity. They measure job satisfaction, recruitment, and retention of workers.”
Any good wellness plan administrator should agree that ROI matters and should help clients establish the right ROI approach. The company leader just needs to know how to ask the right questions.

After all, that’s how you turn lemons into lemonade.

Janice Rahm is executive vice president, product innovation, of Interactive Health.