Comprehensive Analysis Demonstrates that Workplace Wellness Programs Save Money and Reduce Absenteeism

Whether they have implemented a wellness program or are considering doing so, employers consistently ask the same questions:  Do wellness programs really reduce benefit costs?  If so, by how much? Do such programs reduce absenteeism? How can we measure the benefits versus the costs of such programs? 

Companies have endeavored to gauge the economic benefits of wellness programs by gathering empirical data over a period of years. A number of consultants have published studies primarily based on the outcomes for individual employers.  To date, however, employers have not had access to a comprehensive study that examines the collective experience of many employers and provides concrete data regarding the tangible economic benefits of a wellness plan.  Recognizing the need for a comprehensive analysis, Katherine Baiker, a professor of health economics at Harvard’s School of Public Health, along with David Cutler, a Harvard economics professor, and Zirui Song, a doctoral candidate at Harvard Medical School, analyzed data from 36 studies to provide a comprehensive assessment of the impact of wellness programs on both health care costs and employee absenteeism. Of the studies analyzed, 22 examined healthcare costs, 22 examined employee absenteeism, and eight examined both.  Although the studies covered a variety of industries, 25% of businesses were in financial services, and 22% in manufacturing.  80% of wellness programs included a health risk assessment, and most also included self-help educational materials.  The programs studied had existed for at least three years and focused on weight loss, fitness, smoking cessation, as well as one or more of the following: stress management, back care, nutrition, alcohol consumption, blood pressure, and preventive care.

The report, “Workplace Wellness Programs Can Generate Savings,” concluded that, on average, employee health care costs fell by about $3.27 for every dollar spent on employee wellness programs. The 22 studies on absenteeism reflected a slightly more modest, but nevertheless significant, return on investment. Monetizing the reduction in absentee days using the 2009 average hourly rate of $20.49, the report found that absentee-day costs fell, on average, by $2.73 for every dollar spent on wellness programs. 

This report confirms that wellness programs provide a tangible economic benefit to employers.  Before jumping in, however, employers should understand that legal pitfalls abound, particularly in the area of mandatory wellness programs that encourage or require employees to improve their health. For guidance on compliance issues and help navigating the potential legal landmines, see Double Whammy – EEOC ADA Opinion Letter and GINA Interim Final Regulations Restrict Health Risk Assessments in Wellness Initiatives and Employer Mandated Wellness Initiatives: The Continuum from Voluntary to Mandatory Plans.

This entry was written by Gregory Keating.