Corporate Wellness Program Return on Investment Study

Corporate Health and WellnessEvent

Return On Investment

In-depth analysis of over 50 studies combinedwith Health Fairs Direct’s 14 years of industry

expertise providing positive ROI strategiesalong with common errors that effect ROI

results

John BuckleyHealth Fairs Direct, Inc.18 Hamilton St, Suite 1Bound Brook NJ 08805

(732) 563-9756 x:[email protected]

18 Hamilton Street, Suite 1Bound Brook, NJ 08805

(732) 563-9756www.healthfairsdirect.com

Corporate Health & Wellness EventReturn on Investment

ByHeath Fairs Direct

EXECUTIVE SUMMARY

The cost of healthcare to corporations in America is going sky high. Over time,corporations have come to realize that the conventional method of directingresources exclusively for treating those who are already unwell or disabled is nolonger economically sound. It is clear that the old way of thinking is one of thereasons for the spiraling treatment expenses most corporations face each year.

An increasing number of employersacross the country are utilizing apreventative route to healthcare byproviding wellness programs thatinvolve on site screenings andconsultations to better predict thepotential health challenges of theiremployees. This information is nowbeing used to direct "symptom" basedintervention programs within thecorporation itself.

There is no denying the fact thathealthy employees boost a company’sbottom line. Research clearlydemonstrates that by encouraging healthier choices among their employees,corporations are reaping long term savings in terms of less sick days, fewer claims anddeclining disability days. Apart from these measurable indicators, companies thathave developed a wholesome wellness cultures also stand to gain from intangiblefactors such as job satisfaction, employee retention, recruitment, and employeeengagement.

The Most Important corporate asset is a Healthy Workforce becausea company is only as healthy, energetic and productive as its

employees are. Without a healthy workforce there wouldonly be a sick company. John Buckley CEO

With the growth of the wellness industry over the past two decades professionalindustry players have devised newer methodologies and tweaked older ones to suitdifferent organizational needs. There are a number of elements and methods



available for employers to gauge their corporate wellness quotient. Each organizationmust enlist options available and choose the program tailored best to achieve theirlong term goals and objectives.

Keep in mind that your employees are your greatest asset and they need to be caredfor; "maintained". Keeping your employees healthy is actually more important thanmaking sure your corporate fleet or office equipment is well maintained. After all,employees are the essence of any corporation.

This report is based out of numerous research articles written in the area of corporatewellness practices and wellness studies performed at organizations like Johnson andJohnson, Citibank, DuPont, Bank of America, Tenneco, Duke University, The CaliforniaPublic Retirees System, Procter and Gamble, Highmark and Chevron Corporation aswell as reports from Major Medical Insurance providers such as Cigna, United HealthCare and Aetna.

ROI Quick Reference Guide

Here is a quick overview of which programs offer the best ROI. Details of what wasmeasured and which companies were studied for each ROI category can be found laterin this report.

The values are an average of the various studies taken into consideration for thepurpose of this report. Each value in the table below is the amount earned for every$1 spent on the program.

2. Health Risk Assessments $6.04…Delivered in a Full Service Health Fair

3. Fitness Programs $4.90

4. Wellness Coaching $4.50

5. Smoking Cessation $3.50

6. Flu shots $2.51

7. Weight $1.17Management

1. Comprehensive Online Wellness Portal $17.50…With Challenges, HRA, Education, Incentives, Activity Tracking, Etc.



It should be noted that the ROI from HRAs have the highest impact as they are alwaysdone in conjunction with Health Fairs and other interventions such as newsletters,workshops, telephone coaching, financial incentives, regular feedback, etc. Healthpromotion experts believe that HRAs produce the best results when delivered atcomprehensive health fairs and are followed-up with other wellness activities.More details on ROI for specific programs can be found in later sections of this ROIreport.

SUMMARY OF COST Vs SAVINGS

With healthcare costs on the rise it is becoming increasingly imperative to keepemployees healthy. You can try to hire healthier employees in the future butwellness programs are the only way to increase the overall health and wellbeing ofyour current workforce. According to a policy paper “Workplace Health Promotion”commissioned by Partnership for Prevention, December 2008, most comprehensivecorporate wellness programs, over a three-year period produce an ROI ranging forabout $1.40 - $4.70 for every $1 invested.

Extensive research suggests that implementing wellness programs and conductinghealth fairs at the workplace not only reducesdirect health care expenses, but it alsoensures a more productive workforce,reduction in employee absenteeism andturnover, increases employee retention andfewer workers’ compensation claims, amongother things. While these factors may seemimmeasurable, studies in this area haveproven that will create savings for thecompany in the long run.

The chart on the right demonstrates thereturn per dollar invested for seven well-known companies that implemented ©1992, IRSA, the Association of Quality Clubs

comprehensive wellness programs.

Now, ask your CFO what they would be saving if they implemented comprehensivewellness programs 5 years ago. Then ask what they want to save in the next 5 years.

Reduce AbsenteeismThere are numerous factors that control a person’s health and wellbeing, rangingfrom a minor infliction like a cold or flu to a major one like a heart disease ordiabetes. Any of these could cause an employee to take time off work. A well-rounded and comprehensive wellness program can therefore help reduce absenteeismand save costs to the company.



Number of Health Risks and Excess "Work Loss" Days Due

to Sickness or Injury

2 2 2 2 2 2 2 2

0.0

0.5

1.2

1..92.2

2.8

3.4

0

1

2

3

4

5

6

0 1 2 3 4 5 6 7

No. of Health Risks

Wo

rkL

os

sD

ay

s(N

o.p

er

ye

ar)

2.5

Base Work

Loss Days/

Year

Excess

Work Loss

Days/ Year

n=5,142 emplo yees So urce : Summary o f 10 mid sized U.S

The average employee takes 3.5 sick days per year at an

excess cost (over persons with no risks) of $272 per year

A 2005 survey by The Art of Health Promotion reports that companies whoincorporated wellness programs realized a 30 % reduction in medical and absenteeismcosts in less than four years.

A review of scores of published studies on worksite wellness found that the Return onInvestment (ROI) is $5.82 for every $1 invested due to reduced absenteeism alone.(American Institute for Preventive Medicine Wellness White Paper, 2010)With regular health checks through wellness programs employees can reduce theirrisks. The more risks employees have the higher the number of ‘work loss’ daysclaimed. As risks go up, absenteeism goes up and so do healthcare costs.

Increase ProductivityOften employees are at work despite an ailment or illness, which invariably reducestheir productivity. During this time at work, while the illnesses spread to coworkers,it further reduces productivity of the group. One person arriving at work with earlysymptoms of the flu can spread the flu to 25% of the workforce if vaccinations are notoffered at the workplace.

The top three ailments that lead to this decreased performance at work are –headaches, back pain and arthritis. All three of these can be prevented or helpedwith regular exercise. (Journal of the American Medical Association, Nov. 2003).Lower back pain alone causes American workers to miss 100 million work days eachyear, according to Wellness Council of America (WELCOA). In addition, poor physicalcondition which increase the probability of accidents and often leads to injuries andincreased worker's compensation claims.



Number of Health Risks and Productivity Loss

1 2 1 2 1 2 1 2 1 2 1 2 1 2 1 2

16%

14%

9%7%

4%2%

0%

0

5

10

15

20

25

30

0 1 2 3 4 5 6 7

No. of Health Risks

Pro

du

cti

vit

yL

os

s(%

)

13%

Base

Cost

Excess

Productivity

Loss

n=26,375 Source : J Occup Environ M ed 2006

The average employee has 2.2 health risks, resulting in productivity losses of about $2,000 per year

After starting a fitness program, the Canadian Life Assurance company realized a fourpercent growth in overall productivity. Further, 47 percent of program participantsfelt more alert, had better rapport with their colleagues and generally enjoyed theirwork more.

Swedish investigators observed that mental effectiveness was significantly better inphysically fit workers than in non-fit workers. Fit workers committed 27% fewererrors on tasks involving concentration and short-term memory, as compared withother workers. The ability of an employee to effectively focus on the task at hand isinversely related to the number of health risks the person has.

Increase Job SatisfactionProductivity is the key to job satisfaction. Productive and effective workers tend tobe more confident in themselves and their job. Successfully accomplishing projectshelps improve individual attitudes. The absence of illness, injuries or other healthproblems allows employees to perform better on a regular basis.

A positive attitude, morale boost and high energy levels, all go a long way in workeffectiveness and hence improve job satisfaction. A 1993 study on a group of lawenforcement personnel who merely participated in health screenings showedincreased levels of job satisfaction.

Employee RetentionEmployees tend to stay at jobs that they enjoy and leave those that they do not like.When an employee is not feeling well at the office, be it from akes, pains orconsistent illness, they relate being at the office to being ill. So, unhealthyemployees tend to transfer their bad feelings onto other employees and the company



as a whole. They tend to create more problems, make more errors and consistentlyunderperform, all the while blaming the "company" for how they feel.

All of these side effects of being unhealthy contribute to employee turnover. Just asdisease is contagious, so can a bad attitude and you can see turnover happening inwaves as a result.

In one survey, 78% of employees said they would participate in a company-sponsoredwellness program; over 50% said that a wellness program would encourage them toremain at their current job. (American Association of Occupational Health Nurses,April 2003)

Disease PreventionAccording to a 2002 report of the Centers for Disease Control and Prevention, 40% ofall deaths are caused by Heart Disease and Stroke. Complications from Diabetesand illnesses related to Obesity are the second largest expense to our health caresystem. These diseases are increasingly afflicting the American population and can beprevented with timely care and action. Prevention is much less expensive then illnessmaintenance or interventional treatments. The Northeast Utilities System in its first2 years of starting a wellness program (1994 -1996) saw a $1,400,000 reduction inlifestyle and behavioral related medical claims.

Investments made in preventing acute and chronic illness experienced by the U.S.workforce will have a significant impact on the overall productivity of Americanbusinesses. The total amount of corporate dollars lost to behaviorally relatedemployee health issues are hard to directly calculate but their negative impactdramatically affects the corporate bottom line.

PROGRAMS THAT PRODUCE THE BEST ROI

Not all worksite wellness programs are created equal and there is no one-size-fits-alloption available. It is observed that there can be much variation in program designand execution without sacrificing ROI. While no particular health promotion initiativecan be identified as the one that produces the best ROI, there are a set of bestpractices that have been identified from a series of benchmark studies known to havebeen a part of effective programs. These include:

Organizational commitmentIncentives for employees to participateEffective screening and aggregate reportingEasy access to wellness resources (Local practitioners, in-house lectures,consultations, fitness programs.)Effective implementation of programs based on aggregate reporting of riskfactors.



Showing Cost Savings from Your Wellness Program

-3 -2 -1 0 1 2 3

Previous Years Start Follow-up YearsA

nn

ualh

ealt

hc

are

Co

sts

($)

No Wellness Program Wellness Program implemented

Defected healthcare cost

due to welness program

Projected cost without

a welness programSavings

Source : D. Edington University o f M ichigam Conference 2006

Ongoing program evaluation, adjusting based on changes in risk factorsAppropriately funding corporate wellness initiatives

Most researchers believe that fora corporate wellness program tobe sustainable and yield goodresults in terms of beneficialROI, the program must beongoing for a few years. It is notunusual for positive impact fromcorporate wellness initiatives tobe noticed only after three tofour years of programimplementation.

As per discussions during the conference on worksite wellness conducted by theUniversity of Michigan Health Management Research Center in 2006, cost-containmentof a wellness program is closely dependant on employee participation. For a programto be cost-effective and improve health in the workplace, it should be designed so asto attract at least 80 % of the workforce. It should also include as many spouses anddependants as possible for maximum impact.

The best way to ensure a high participation rate is through incentives that driveparticipation in the corporate wellness program. The Johnson & Johnson Health andWellness program initiated in 1979 saw an almost 100 % participation. One of thereasons for this was a significant incentive of $500 provided for employees who tookpart in various aspects of the program. The most common incentives include cashpayments, reduced medical co-pay costs, rebate on program costs, gift cards,merchandise and prizes.

Researchers have also observed that best practice employers implement severalinterconnected programs and policies that support workers’ health improvement.These employers provide workers with affordable health insurance and ready accessto recommended clinical preventive services, health promotion programs. The mosteffective method of connecting employees with local health and wellness resources isthrough professionally run Health Fairs that include local practitioners to educateemployees on their services. This is a must for any successful ROI initiative.

These companies also offer health risk assessments (HRAs) and health screenings toindividual workers and sometimes family members as well. This is followed by helpingthem with risk-appropriate behavior change programs that may include motivationaltalks and interviews, goal setting, and training. Over the years, as the Johnson &Johnson wellness program evolved, it was restructured to integrate employee health,occupational medicine, disability management and health promotion along withcomprehensive Health Fairs and Wellness Events. The program was estimated to



Number of Health Risks and Excess Healthcare Claims Cost

1 1 1 1 1 1 1 1

0.00.3

0.71.0

1.5

2.5

3.3

0

1

2

3

4

5

0 1 2 3 4 5 6 7

No. of Health Risks

He

alt

hC

laim

s(R

R)

2.0

Base

Cost

Excess

Cost

n=205,216 Source : University of M ichigan study, 2006

The average employee has 2.2 health risks, nearly doubling healthcare

costs

save the company an average of $224.66 per employee per year, (1984 dollars) aboveand beyond the cost of the program, for the four years examined after itsintroduction.

In-House Medical Screenings are also an imperative aspect of an effective worksitewellness program. It is needed to determine high healthcare cost risk factors in whichongoing programs are designed. Some of the most common health risk factors arehigh blood pressure, high cholesterol, high blood sugar, obesity or overweight,smoking and physical inactivity. These risk factors could lead to heart disease,stroke, diabetes and other lifestyle diseases plaguing the United States. People withthese risk factors tend to have higher health care claims that those without these riskfactors.

Research shows that costs go up twice as fast with an increase in risks than they godown with lowered risks; as there is often residual negative health implicationsassociated with health risks. Thus, low-risk maintenance (through health promotionand prevention) is the most important strategy and offers the greatest cost savingsand positive (ROI) than risk reduction and disease management.

When planned well, these programs are tailored to accommodate individual needs.For example, the internet is convenient for some employees but not for others andinternet based information is already readily available and not commonly used bycorporate employees. So adding more internet based information sources offers littlein terms of ROI. Additional modes of communication must be used, such as in-personor telephone wellness coaching, printed materials and, most importantly, in-houseinteractive "health fair" style events.



Many organizations have also introduced a variety of modalities that support healthimprovement efforts. For example, company policies directed at reducing smokingrates include banning smoking on company grounds and reimbursing employees forparticipation in smoking cessation programs. The Coors Brewing Company whichstarted its employee health program in 1981 offered a better rate for supplementallife insurance for employees who refrained from tobacco use (meaning that a 50-year-old employee who smoked paid twice as much as a non-smoker for the samecoverage).

ROI SPECIFICALLY FROM FLU SHOTS

According to Centers for Disease Prevention (CDC) estimates, on an average 5 to 20 %of the American population gets the flu and more than 200,000 people arehospitalized from seasonal flu related complications. These figures are testimony tothe fact that flu vaccination can be categorized as a mandatory health precaution andmust be supported by corporations if they expect to maintain a healthy andproductive workforce.

CIGNA has 34,000 USemployees in 250 USoffice locations. Throughits Flu Shots Program,CIGNA saved an overall$33 per employee whoparticipated in theprogram, with a 3:1 ROIfor it. This resulted in29% fewer lost days forflu shot recipients versusones who did not take aflu shot.

In 2001, Motorola’s Fluimmunization program earned them a $1.20 to $1.00 ROI. This was part of a 3-yearstudy conducted for their wellness initiative which included disease management, fluvaccinations, cancer screenings, smoking cessation, health screenings and riskassessments, 24x7 wellness coaching, back care, on-site/ external wellness centers,children aerobics and nutrition and stress management. About 13,159 individuals(employees, dependents, retirees and contractors) participated in their corporate fluvaccination program, which was a 45% increase of participants from 2000. 86% of theparticipants responded that they were satisfied with the program overall andappreciate the convenience of the program.

A study conducted at McKesson Health Solutions experienced a return on investmentof $2.51 for every $1 spent on the influenza program for their employees. The



research further goes on to point that people who received just a flu vaccinationrelated mailing experienced a 2.87 % lower rate of flu-related inpatient bed-days anda 7.25 % lower rate of flu-related emergency department visits. This research studywas published in the American Journal of Managed Care, November 2008.

As part of its wellness program in 2000, Motorola organized a flu vaccination programwhich resulted in positive ROI, reduced doctor office visits and hospitalization costsand labor savings due to vaccinating their employees. The company saw animmediate ROI of 1.2 per dollar spent on the vaccination program and long termsavings contributable to improved morale and increased productivity.

The CDC reports that in the U.S, influenza typically contributes to approximately $ 1to $3 billion in direct medical costs each year and higher indirect costs amounting toabout $ 10 to $15 billion. How much is your company paying to cover these costs?

A typical case of the flu restricts the patient to bed for three to four days andrestricts activity for a week or so longer. Productivity in the workplace is alsochallenged by delayed reaction time and lowered physical energy and strength. Anattack can reduce reaction times by 20 to 40 % far beyond the initial sickness andrecovery period. Additionally, many patients tend to return to work before thealleviation of all symptoms, which impairs effectiveness, further effects productivityand tend to repeat the cycle by infecting others.

ROI SPECIFICALLY FROM SMOKING CESSATION PROGRAMS

Tobacco is the leading cause of preventable death in the United States and a reasonfor serious health problems. About 10 per cent of smokers live with smoking relatedillnesses and are a heavy cost to the company through health costs and reducedproductivity. There is compelling research on the benefits from implementing smokingcessation programs. Studies prove that the cost savings from such programs isimmense, through reduced absenteeism and reduced costs arising from disease anddisability.

A 2010 study by the American Lung Association and Penn State University, found thathelping smokers quit has favorable benefits to states that implement it. The studyfinds that if states were to invest in comprehensive smoking cessation benefits, theywould receive on average a 26% return on investment. This would mean that for every$ spent by the state on the smoking cessation program, it would reap a benefit of$1.26. Some states would see a higher return that others. They include the District ofColumbia ($1.94), Louisiana ($1.47), Massachusetts ($1.43), Maine ($1.41), Ohio($1.41) and North Dakota ($1.41). The study deduces monetary gains by consideringlower medical costs due to fewer smokers, increased productivity and reducedabsenteeism and premature death due to smoking.



UNUM Life insurance company recorded an estimated annual savings of $132,000 to$237,000 from its smoking cessation program with a return of $1.81 for every dollarspent on it.

A combined research conducted by the Center forHealth Research and America’s Health InsurancePlans (AHIP) found that smoking cessationprograms earned investments of $.18 - $.79 permember per month and would generate an ROI of$1.34 - $2.05 after five years. This study waspresented in the 13th World Conference onTobacco or Health in 2006.

CIGNA offers its smoking cessation program to allits employees and its benefits eligible family members who wish to quit smoking.CIGNA estimated a savings of $949 in health care costs for each successful participant,with a return on investment of 9.5 to 1.

Implementing an Effective Smoking Cessation ProgramAccording to the CDC, employers should offer a minimum of 2 smoking cessationattempts per year for implementing a successful tobacco cessation program. Ideally,these smoking cessation attempts are offered at the office during work hours.Multiple methods should be offered with an emphasis on "natural"treatments/methods.

Hypnotism should be avoided as it lowers the overall awareness level of theindividual by implanting its "hidden suggestions" below the level of consciousness.These "suggestions" override the individual's analytical ability as they force theindividual to operate on the implanted suggestion automatically. Because theirbehaviors are being dictated from beneath their level of consciousness, even ifsuccessful in quitting, they will not be learning how to achieve personal control oftheir health or how to make positive behavioral changes.

Other Measures Employers Can Take to Assist in Smoking Cessation

Communicating to employees the types of cessation benefits that are availableto them via their health plan

Adopting a long-term approach to smoking cessation that supports multiple quitattempts and multiple quit methods IN THE WORKPLACE

Promoting a workplace that discourages smoking and encourages a healthylifestyle (e.g., incentives to achieve and maintain optimal health)



ROI SPECIFICALLY FROM WELLNESS PORTALS

Research has shown that the return on investment (ROI) form a comprehensive onlinewellness portal averages around $17.50 per dollar spent on it. So far, it has shown toyield the highest ROI among the wellness program initiatives listed in this report.What makes an online wellness portal a success is the various components it includes,such as health challenges, health risk assessments (HRA), education, wellnesscoaching, incentives, activity tracking, etc.

It is noted to cost about $20 to $30 per employee per year and has year roundwellness activities reinforcing a culture of health and wellbeing within the company,while addressing a wide range of wellness issues. A portal also tends to attract a widerange of participants with its social media aspects and its combination of virtualwellness aspects with live activities where employees can receive instant recognitionand appreciation for positive behavior changes.

It can include ALL of the employees regardless of location or country and can be theorganizational hub for all of a corporation's wellness activities. With built incommunication tools, it tracks and keeps a record of aggregate health data that canbe used to direct wellness dollars to create the greatest impact as well as create arecord that the company can use to prove ROI year after year.

ROI SPECIFICALLY FROM OBESITY MANAGEMENT PROGRAMS

An obesity management program instituted to reduce weight and improve health riskfactors among employees produces an ROI of $1.17 per dollar spent, says a reportbased on a study in the Journal of Occupational and Environmental Medicine publishedin its September 2008 issue.

Researchers from the University of Georgia analyzed 890 obese employees whoparticipated in a weight loss program. They received coaching and other services tosupport their efforts to lose weight, improve eating habits, and increase physicalactivity.

The program provided telephone coaching to participants and access to educationalmaterials through a health improvement web site. While the coaching services werecustomized for each participant, all participants received a standard set of services,including access to a personal health coach for up to 48 sessions, written materials tosupport the coaching sessions, a personal health improvement plan, exercise planningsupport, nutrition education, and web-based health trackers.

The researchers used an ROI model to estimate savings that can be achieved throughsuch a program. The review of financial gain was made with this model estimatingchanges in medical costs and worker productivity resulting from reduced health risks.



Tracked over a period of a year, participants had reductions in seven out of 10 healthrisk factors like bad eating habits and lack of exercise.

This research project did not measure other ROI factors such as reduced absenteeism,increased productivity, improved energy and morale to name a few.

ROI SPECIFICALLY FROM FITNESS PROGRAMS

There is more than enough said about the importance of exercise and physical activityfor the sake of good health. With the tomes of studies on this topic, one can safelysay that a lack of exercise is a critical health risk factor that can have a dramaticeffect on your health and life.

As corporate America realizes the importance of physical fitness, more and morecompanies are incorporating fitness programs into their wellness initiatives. Theresults of a well-structured fitness program are seen in the form of reducedabsenteeism, lower healthcare costs, reduced turnover, lesser sick leave and positiveReturn-on-investment. According to Health Promotion Advocates, a consortium ofgroups and individuals committed to health and fitness, for every dollar spent onwork-site wellness and fitness programs, a company saves $5.82 in absenteeism costsand $3.48 in medical costs.

Blue Cross Blue ShieldBlue Cross Blue Shield,Indiana found its corporatefitness program to producea 250% ROI. For every dollarinvested in the program(over a five-year period),the corporation gained$2.51.

Coors Brewing CoThe Coors Brewing Companystarted its corporate fitnessprogram in 1984. Six yearslater, this initiative returned $6.15 for every dollar invested in it. The companyreported annual returns ranging from $1.24 to $8.33 for each dollar spent on thefitness program over a six year period.

Kennecott Cooper CoOver a four-year period for every dollar invested in its fitness program, KennecottCooper earned an ROI of $5.78.



Equitable Life AssuranceIn the first year of its corporate fitness program, Equitable Life Assurance realized anROI of $5.52 for every $1 invested in the program.

Canada Life InsuranceFor each corporate dollar invested in physical activity, Canada Life earned a return of$6.85 in reduced turnover, productivity gains and decreased medical claims. The long-term employee health and worksite fitness program also saw a 4% increase inproductivity.

ROI SPECIFICALLY FROM HEALTH RISK ASSESSMENTS (HRA)

Health risk assessment (HRA) is something that employers use to design programmingthat effectively targets current health risk factors. It is also used to measure the longterm impact of wellness initiatives. Ideally an HRA should be conducted twice a yearover a period of 3 to 5 years. Wellness experts believe that best results are achievedwhen HRAs are followed-up by health promotion and wellness programs.

Below is a compilation of Wellness programs in various firms where HRAs have beenused with other medical interventions and have seen positive ROI.

SOURCE INTERVENTIONS USEDALONG WITH HRAs

HRA and MedicalTesting Offered At

ROI (FOR $1)

Health Care Setting(10-year study)

Newsletter, self-carebook, self-directedchange materials,workshops, financialincentive

Health Fair $6.52

Blue Shield, CA (1-year study)

Newsletter, self-carebook, self-directedchange materials,coaching line, regularfeedback

Health Fair $6

Bank of America, CA(2-year study)

self-directed changematerials, regularfeedback

Health Fair $5.96

Procter andGamble, OH (3-yearstudy)

Newsletter, self-carebook, telephonecoaching, workshops

Health Fair $6.75

Chevron, CA (2.5-year study)

Newsletter, telephonecoaching, workshops

Health Fair $6.42

Citi Bank, NA (3-year study)

Newsletter, self-carebook, telephone

Health Fair $4.64



coaching, workshops,regular feedback

Combining HRA with health data from wellness initiatives will help improve caremanagement, determine the population health profile more accurately, and establishhealth priority needs and design custom made health promotion plans.

ROI SPECIFICALLY FROM WELLNESS COACHING

The CEO of Wellness Coaches (WCUSA), Jay Vandegrift defines wellness coaching as aseries of conversations or discussions, interactions between coach and client intendedto elicit the client’s best thinking and decision making to create and accomplish realand sustained improvement in risky lifestyle behaviors like weight loss, smoking,sedentary lifestyle, etc. Wellness coaching can be face-face, telephonic, electronic ora hybrid of all three. The process includes an initial conversation and an ongoingseries of follow-up conversations. The initial conversation includes introductions,overview of the process, expectation and ground rules, clarifying priorities and goalsetting. The market for telephone coaching services ranges from $4-$8 peremployee/month. Onsite face-to-face services can range from $8-$10 peremployee/month. More comprehensive and specialized coaching services can run upto $20-$25 per employee/month.

According to WELCOA, an employee health and wellness program directed at bringingabout behavior change among employees has an ROI that ranges anything between $3and $6, averaging to about $4.5.

An independent study of return on investment (ROI) conducted by Hummingbirdreported an impressive ROI. The study found a $5.5 for every $1 invested in wellnesscoaching programs. The program indicates approximately a 23% cost savings after 6months based on typical costs of health risk factors.

In 2004, Sargento Foods saw a dramatic ROI of more than $13:$1 for the health andwellness coaching program that was implemented. The company avoided more than$573,200 in health claims cost during that year.

HOW TO CALCULATE ROI

There are many factors that affect this magical number, which is the reason whycorporations would conduct worksite wellness programs in the first place. Accordingto wellness expert Randy McCaig, measuring the impact of these programs provides asignificant amount of value, from aiding to gain management’s buy-in to reducingcorporate costs and increasing employee productivity. McCaig who is also Director,Product Management and Employee Wellness Programs at Canadian based MedisysHealth Group, believes that a company should collect the following information priorto launching its wellness program.



Aggregate results of health testing (cholesterol, glucose, HDL, LDL, bloodpressure, weight, waist measurements, BMI, etc.)

Number of smokers Drug costs Sexually Transmitted Diseases (STD) causes, costs and rates Absenteeism rates Turnover rates Employee satisfaction, morale & engagement

The return on investment of any initiative can simply be calculated by dividing theprofit or savings of the initiative by the total investment in the initiative. While thereare many other variables that come into consideration, but the basis of thecalculation is the formula mentioned above.

Smoking Cessation ROI CalculationIn 2006, The Conference Board of Canada estimated an employer’s cost of an individual smokerto be $3,376 in decreased productivity and increased absenteeism alone when compared to anon-smoker (two smoking breaks per day outside of regular break times and two more sick daysper year).

(Number of people that quit * $3,376)______________________________(Investment in the cessation program)

Note: This calculation does not take into account the positive effects on presenteeism, drug costsin the future, and STD/LTD costs related to illnesses from smoking.

ROI calculation for initiatives targeting absenteeism (accidents, injuries, illness, etc.)

(Reduction in the number of employee absence days * employee’s daily salary)________________________________________

(Investment in the targeted initiatives)

Note: This calculation does not take into account elements such as opportunity costs, employeereplacement costs, overtime, reduced productivity, training time, etc.

OBSTACLES IN FUNDING WELLNESS PROGRAMS

Funding wellness programs is by far the biggest challenge in organizing them. “Howmuch is this going to cost us?” is typically the foremost question that members ofupper management will ask when approached for support of a wellness fair.



Most corporations do not have abudget set aside for wellnessprograms as it doesn’t feature ontheir priority list. Scarcely do theyrealize the importance of having ahealthy workforce, which in turnleads to greater productivity andoutput for the company. It is oftenviewed as not practical to "spendmoney on creating healthyemployees" when the cost savingsare not always glairing, such aswhen sales go up or down, or whenbudgets are tight in general.

In many cases when the economywent down at the end of 2008 manycorporations immediately slashed their corporate wellness budget in an effort to "savemoney". This proved to be counterproductive as any perceived savings from stoppingspending on healthy employees was lost several times over in illness relatedabsenteeism, loss of productivity and spiraling morale.

While wellness programs need not be exorbitant in order for them to produce positivereturns, there does however have to be some funds allotted to programming. As arule of thumb, a company should ideally set aside about 2 to 4 % of its overall medicalinsurance budget for employee health and wellness programs. From an investmentperspective, it is realistic to think that if you invest this amount you should returnapproximately $3:1 to $16:1 according to the health management literature.

According to Buck Consultants, on an average, companies paid $220 per employee forwellness in 2010 which is a big leap from $163 spent the previous year. (This peremployee calculation was for the total number of employees, not just those whoparticipated in the wellness programs.)

According to the consultancy, the three most popular ways that brought companiesthe most gain were:

Gifts or merchandise to reward employees for healthy behaviors Discounts and subsidies for preventive health services like annual

physicals and Raffles or door-prizes in health-driven contests or competitions

How much should a company allocate towards an effective, comprehensive employeewellness program? This question deems consideration from various sources. TheUniversity of Michigan’s wellness program ROI expert, Dee Edington says, “about $300



- $400, (per employee based on the total population), if you expect good savings anda positive ROI.” He further added that companies that invest adequate amounts intheir wellness programs save at least three times their investment in health-carerelated costs.

The Wellness Council of America (WELCOA) recommends that at least $100 - $150 peremployee per year should be spent on wellness promotion activities and more ifincentives are expected.

Health promotion guru Dr Ron Goetzel, who is also the Director of Cornell UniversityInstitute for Health and Productivity Studies, suggests investing about $150 peremployee per year for an expected $ 450 annual ROI per employee.

Based on what experts have to say, a company can run an effective wellness programfor anything within the range of $100 - $400 per employee per year, (based on thetotal population of the company).

With a great deal of planning and services from outside vendors, a worksite wellnessprogram can be very effective, affordable and also fun for employees. It is best toturn to the industry experts to insure the best products, services while limiting yourpotential liability.

According to the Wellness Council of America (WELCOA), one of the primary bestpractices for corporations to build an effective wellness program is gaining senior-level support and participation. If you need the financial resources to organize acomprehensive and successful wellness program and require proper communication tobe passed on to the rest of the organization, you will need the senior officers to leadthe way.

Furthermore, senior level executives can help link your health promotion objectivesto the business outcome, thereby placing the wellness program as an integral part ofthe organization’s culture.

A company truly supportive of wellness programs will have members of the upperechelons of their management help get rid of hindrances by providing funding,support and will also be actively involved in the wellness program. Wellness programsthat are directed towards early detection and prevention can save big bucks for acompany. For instance, there is about a $100,000 cost difference between detectingprostate cancer early versus late treatment.

In 1987, when the Coors Brewing Company established an on-site cardiacrehabilitation facility it reduced rehabilitation time for post myocardial infarctionpatients. These employees bounced back to full productivity faster. This programalone saved Coors approximately $ 1,390,661 over a six year period.



Health Care Trend Comparision

-5.00%

0.00%

5.00%

10.00%

15.00%

1992 - 2002 2003 2004 2005 2006 2007 2008

Year

%ofHealth

Care

Costs

Total National Average

%

When Coors initiated an on-site breast screening program in 1985, it led to substantialsavings for the firm. They had screened over 2300 women (including employees andspouses). As a result four early malignancies were detected. While the program costthem $63,628, had these cases developed into advanced stages, the cost-to-companywould have been about $289,000 based on direct medical expenses, short-termdisability and human resource costs.

Nothing is Free if there are Backend CostsOften, doctor owned clinics and certain dubious health fair companies offer freehealth fairs or free medical screenings, such as cholesterol of Glucose, which mostcompanies will jump at. This can be quite a trap, since on the face of it, a free healthfair sounds like a wonderful idea, but itin turn could place upon the companyhuge back-end costs if done with thewrong group. This is somethingcorporate firms should steer clearfrom.

The cost savings in the abovementioned examples alone allows forimplementation of a prettycomprehensive wellness program.Having pre allotted budgets forcorporate wellness initiatives will savecompanies from falling into the loop offree health fairs and later suffering thebrunt of heavy back end costs. Moreover, caring for their employees’ health will onlyincrease their prospects of profit making and productive output.



BACK-END COSTS

Your health fair salesman has floored you with his sales pitch. The health faircompany has assured you an out-and-out free and fun event. They promise to do freebiometric screenings, offer free massage therapists and also free lunch for everyemployee. What more could you ask for? How about some Due Diligence to protectthe employees as well as the corporation as such a free health fair will cost yourcorporation and each employees anything from $250 - $650 per employee annually inback end costs.

Conducting a health fair can be quite a daunting task. Further, many companies donot have a budget for organizing one. Moreover, they are looking for a hassle freeevent as the health fair is often the most visible corporate event they will put on forthe year. When a health fair company approaches them and offers to do it for free,many companies pounce at the opportunity. But, little do they realize that they’vefallen for a raw deal and in the bargain end up paying heavier prices.

What you need to knowA large proportion of health fair companies across the country work this way and mostcompanies are drawn by these tempting freebies without questioning what the catchis? The reason is personal profit for the doctor or doctors who own the health faircompany. It is a little known fact that a majority of health fair providers are out-of-network doctors who use corporate health fairs to attract patients for their medicalpractice. In fact the genesis of the health fair industry can be attributed to out-of-network medical practitioners who wanted to market their services to corporateemployees because they could score big with high paying medical insurance.

Since insurance companies onlypass on business to in-networkmedical partners who consentedto work according to insuranceregulations with reduced fees,these more expensive out-of-network doctors are required tomarket themselves moreaggressively.

This gave birth to the health fairindustry. In order to grow theirbusiness, out-of-network doctorswould offer to organize healthfairs at no cost to the employer,thus offering various services forfree to tempt more employees



into their events. These doctor-owned companies can afford to offer thousands ofdollars in freebies as they stand to make tens of thousands of dollars through backendmedical billing to your employees. Had this been the case in any other industry, such“freebies” would be detected as kick-backs and would be banned by corporations.Since the health fair industry is fairly new, the back end profiteering has not yet beenfully exposed and thousands of corporations are routinely taken advantage of.

Soaring CostsAccording to the Actuaries at Lockton Companies LLC, Employee Benefits Specialists,if 10 % of a company’s employees seek out-of-network medical doctors, the companywill see an additional 9 % increase in its next medical insurance renewal. Since mostcorporations share the insurance charges with their employees, everyone in thecompany will be paying more for their insurance benefits the following year.Therefore properly funding a corporation's health and wellness initiatives and banning"freebies" will increase corporate wellness ROI.

In-Network ProvidersIn order to provide its employees affordable medical care, a company’s insuranceprovider prescreens and makes agreements with doctors to offer high quality servicesat reduced costs. So in addition to in-network medical practitioners receiving stricterscreening and approval from your medical insurance provider, these in-networkdoctors agree to accept reduced fees for their services saving the employee and thecorporation money with each service they perform. These prescreened doctors arethe most reliable and cost effective way for companies and their employees to obtainmedical care.

Out-Of-Network ProvidersThere is nothing shady about seeing doctors who are not a part of your medicalinsurance network. It is important to note, that out-of-network providers tend to bemore expensive for your company and employees than in-network providers.

Below is an example of how much more expensive out-of-network providers can be.

Category Service ProcedureCode

In-NetworkCosts

Out-of-NetworkCosts

Differenceper visit(Procedure)

Visitsused forexample

Difference per avgannualtreatment plan

Podiatry Bunionectomy 28292 $581.61 $6500.00 $5918.39 1 $5918.39

Outpatientvisit

99213 $52.00 $175.00 $123.00 3 $ 369.00

Chiropractic Adjustment 98941 $33.00 $100.00 $67.00 20 $1340.00

Exam 99213 $52.00 $175.00 $123.00 2 $ 246.00

Massage 97140 $26.54 $85.00 $58.46 20 $1169.20

Additional expenses based on one employee choosing 2 out-of-network services: $ 9042.59



*Based on 2007 Insurance Rates

The medical billing for an out-of-network provider can cost about 2 to 10 times morethan an in-network provider. For example, if an employee has a $500 deductible andis responsible for 30% of any out-of-network services, they will be expected to pay$3062.78 out-of-pocket for the above services. If your employee went to an in-network practitioner and has a $15.00 co-payment for each office visit they wouldonly have to pay $360.00 for the same series of treatments. Additionally yourinsurance company would have to pay $5979.81 extra. These extra costs will bepassed on to your company in your next insurance premium rate increase.

Since most corporations share their total medical insurance costs with theiremployees, when your company receives a price increase it will pass a part of thisincrease along to each employee. A 10% increase could easily cost each employee$400 to $600 extra by over a 12 month period. Any way you look at it you, yourcompany and your employees will all pay more money whenever out-of-networkproviders attend your health fair.

DUE DILIGENCE

With the right guidance corporations can shop for the right health fair company andorganize effective health fairs for their employees without overshooting their budget.When choosing a health fair, wellness event or screening provider verify everythingthe corporate health fair company claims to be. Make sure you work only with anindependently owned full service health fair company capable of verifying theirownership, licensing and insurance coverage. Only Work With a Full ServiceProfessional Corporate Event Planner Who Specializes in Corporate Wellness!

Be sure to negotiate a deal that doesn’t involve kickbacks. Run from companiesoffering free cholesterol or glucose screenings, a gaggle of free massage therapistsand especially free lunch.These kickbacks are a suresign that you are about tobe taken advantage of andthat you will pay dearly onthe back end.

Insurance FraudDo not agree to acceptmedical providers that will‘waive the deductible’ orthose who claim to "treatyour employees as if they were in-network providers". They will still bill your



insurance company out-of-network rates and may put your employees and yourcompany at risk.

A common practice is for out-of-network medical doctors to offer to NOT BILLCORPORATE EMPLOYEES FOR THEIR MEDICAL INSURANCE DEDUCTIBLE, CO-INSURANCEOR CO-PAYMENT. This is against the medical insurance industry regulations.

The Law:

Long Island Pulmonary Assoc. v. Metropolitan Life Ins. Co.,2/14/2003 N.Y.L.J. 24 (col. 6) (Sup. Court, Nassau Co.2003).

The Nassau Co. Supreme Court granted summary judgment to United Healthcare on acause of action for tortious interference on the theory that a physician that waives co-pays is tortiously interfering with the contract between the insurer and the beneficiary.The New York Comptroller has taken the position that a non-par provider that waives co-

pays is illegally inducing the patient to otherwise seek out-of-network care at a highercost to the insurer. The fact that the waiver circumvents the normal financial impedimentto seeking out-of-network care is the "fraudulent insurance act" that is in violation ofPenal Law § 176.05(2) and Insurance Law § 403(c).

The Solution:Do your Due Diligence. Know who you are working with and make sure they areproperly licensed. Know for sure who owns the company and make sure they are notdirectly associated with any medical practice. Make sure to get a 100% in-networkguarantee.

To help with this process OpenHouse Direct Inc (OHD) has a sample Due DiligenceChecklist to help guide you through the decision making process when evaluating yourcurrent or choosing your next corporate health and wellness event.

Exhibitors should be more involved in educating employees and not sell their productsor services. Ensure that your health fair provider has each exhibitor sign a strictExhibitor Code of Conduct to make sure that they will be a good fit for your event.

CONCLUSION

Achieving a positive ROI on your health and wellness programs is simple if you knowwhat to do and what to avoid. The corporate health and wellness industry is new andunder-regulated. Hopefully this will change in the near future but until then it is upto each corporation to make sure they are creating a wellness program that will givethem a positive Return on Investment.



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