Study Could Make Employers Sick Over Wellness Plans

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Discussion
Jan 08, 2014

If you noticed HR people at your place of business looking a bit queasy in recent days it may be because they read the findings of a new RAND Corporation study, which found popular employee wellness programs do not actually result in employers saving money.

The programs, which focus on helping employees adopt healthier lifestyle choices, have been touted as a means to reduce sick days, increase productivity and ward off major (costly) illnesses.

The study’s authors based their conclusions on a review of a 67,000 people who were eligible to participate in PepsiCo’s "Healthy Living" program over a seven-year period. RAND’s researchers examined both the lifestyle component of the program as well as disease management. The conclusion, published in the journal, Health Affairs, was that while healthcare costs were down $30 month for participants, virtually all of the savings were directly connected to disease management, which led to a 29 percent reduction in hospital admissions.

"Cutting one hospital admission saves a lot of money," Soeren Mattke, the study’s senior author, told The New York Times.

Maria Ghazal, a vice president of the Business Roundtable, told Reuters that its members are "as enthusiastic as they have ever been about these programs." Ms. Ghazal said the programs not only help control costs but help in employee recruitment and retention.

What are your thoughts on corporate wellness plans? Do the RAND Corporation’s findings affect your view on the plans and their value to employees and employers?

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5 Comments on "Study Could Make Employers Sick Over Wellness Plans"

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Mark Heckman
BrainTrust

I refer back to some of the best thinking I’ve seen recently on the topic of corporate health by Steve Burd, former CEO of Safeway. In his view, when company and associates are in a conditional partnership with their health and well being, it will control healthcare costs by providing incentives for healthy behavior.

While the RAND study indicates that much of this benefit does not manifest in immediate cost savings for the company, I would argue that over longer periods of time and especially with the projected increase in healthcare premiums for most under the “Affordable” Care Act, that these types of programs will become increasingly popular.

Li McClelland
Guest
Li McClelland
2 years 7 months ago

I’ve participated in one such plan, and have discussed wellness plans with people I know in several other large companies who have. From my admittedly non-official investigation, the employees do not feel that the money spent on the program is well spent (they’d rather have it visible in their paychecks) and the companies have not seen bottom-line benefits or increased employee health to make all the administrative expenses, execution outlay costs, and employee education time worthwhile.

A lot of things that start with very good intentions look much better on paper than when they’re put into real life. Company wellness plans may be in that category. I think it’s possible though that these plans are more feasible and suitable in small companies with a similarly situated employee base, than in conglomerates.

Craig Sundstrom
Guest

“Healthcare costs were down $30 month for participants.”

What more needs to be said? Maybe the savings aren’t significant, and maybe they aren’t manifested in the way expected, but unless costs go up, I don’t where there is a problem.

Ralph Jacobson
BrainTrust

Although I realize this is a sample of only one, I have participated in my employer, IBM’s Healthy Living program for years. The incentive of a rebate is enticing to many. The outcome of actually feeling better because I exercise and eat better is very compelling. I like the program and I believe it helps some employees at least think about their health whereas they may not otherwise.

I am not all that surprised at the study findings. I think life is what you make it, and employers like mine should continue to offer these programs to help get employees to put down the snack and get off the couch.

Mike Osorio
Guest
Mike Osorio
2 years 7 months ago

Even without demonstrable financial benefits, organizations have a societal obligation to provide healthy environments, which includes incentives for healthy behaviors. Particularly as corporations become ever more powerful macro economical entities vs. governments, there is a further obligation to drive healthy living. Of course the average employee would like the money spent on wellness programs added to their paychecks. This is why governments and large organizations must affect behavior through legislation and required programs. This includes wellness programs, automatic 401K enrollments, and more.

The study does point to logical tweaks that could be made but overall, the concept of incentivised wellness choices is positive for both the employee and the organization, financially and in terms of engagement.

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