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Companies Fail to Measure ROI of Wellness Initiatives

By Scott Flander | Human Resource Executive
October 2, 2007

A survey of major employers found that more than three in five (62 percent) companies did not attempt to determine whether their wellness-incentive plans saved the company money.

And those that did measure their return on investment, three quarters said they broke even or came out ahead, while one quarter lost money.

The survey of 242 companies was conducted by the ERISA Industry Committee, the National Association of Manufacturers, and IncentOne, a Lyndhurst, NJ, company that administers incentives for employer health plans.

Michael Dermer, the president and CEO of IncentOne, says it's often difficult for companies to determine whether the incentives pay off because many company health plans have multiple providers.

He expects the situation to improve as more companies adopt technology that can help determine return on investment.

The survey also found:

• Three-fourths of the employers surveyed offered health-management programs to their employees. Of those that did. Two-thirds offered employees incentives to participate.
• The most common incentive was insurance-premium reductions, offered by 40 percent of the companies. Cash or bonuses were offered by 29 percent.
• Disease management programs were more likely to use health-savings account contributions by employers, rather than premium reductions.

A separate study of 4,000 employees who underwent biometric screening found more than 37 percent were overweight, and many had dangerous undiagnosed conditions such as diabetes, hypertension and high cholesterol.

The study--by Meritain Health, a Buffalo, NY company that administers company health plans and offers biometric screening--was conducted of its client employees.

The screening for the study, which included blood tests and health risk assessments, found previously undiagnosed health problems in 20 percent of the employees. More than 2 percent had serious conditions that required immediate medical attention.

Scott Reed, vice president of marketing for Meritain, notes that most of the employee's health risks, such as smoking, high cholesterol and obesity, are treatable or can be avoided.

"Employers don't realize the hidden costs of behavioral healthcare," says Reed. The employers are paying that cost through lost productivity, he says.