Is Wellness ROI Becoming Passé?
It should be. How’s that for cutting to the punchline? Companies looking for – and worse yet, companies claiming – an ROI on a corporate wellness program are typically engaging in what we call “magic math.” While we’d love to put out promotional materials claiming an impressive ROI, we won’t play that game. What’s the metric? Healthcare costs? Claims? While biometric improvement is nifty and intuition would tell you that you’re going to save money if people’s biometrics improve, can a wellness vendor really claim that $X in savings will be the result? The biggest flaw in magic math seems to be not the math itself – but the fact that people are confusing correlation and cause. Here are a few more of our thoughts on the subject:
- You can’t measure what you prevent. If our program drives someone to improve his health habits and ultimately prevents the imminent heart attack, how do we measure that? Presumably, an effective wellness program will inspire someone to increase activity levels, improve nutrition, and take steps to lower their stress levels. In doing so, it’s likely that the person will have fewer accidents, injuries, and chronic disease. How do we measure what we prevented?
- ROI models don’t account for regression-to-the-mean/fluctuations in claims. IF we were to try to show an ROI with, for example, healthcare spend, then catastrophic events, short-term disabilities, pregnancies, and acute injuries must be accounted for. But we’re still faced with the question of cause vs. correlation and the inability to measure what you’ve prevented.
- We don’t know the whole story. Josh was seeking expensive medical care for his back issues, but found that chiropractic and acupuncture were more effective – but he has to pay out-of-pocket for them. Healthcare costs are lower, but can we thank the wellness program for that? Unless we have every detail of all medical expenses, loss-of-productivity costs, increased home or childcare costs, and costs due to permanent lifestyle changes, we can’t possibly know exactly how much has been saved.
- Selection bias may exist. If only healthy folks chose to participate while unhealthy ones sit the sidelines, claims that are typically viewed across the entire population are not representative of that specific population. If heavy incentives are used to lure people into the program, you may find that the higher wage earners don’t engage, skewing your data significantly.
- The definition of “engagement” or “participation” varies. ROI models can’t agree on what truly counts as “engagement” in a program. Does engagement include members who simply signed up (even if they never actually participated in the program)? Does it include someone who did a biometric screening but didn’t change behavior?
That said, no wellness program should shirk its duty to demonstrate value. But instead of focusing on what’s commonly understood as ROI, people should focus on VOI – the Value of (or on) Investment.
This approach can be measured in a variety of ways, and should be tailored based on each client’s specific goals for the program. While year-over-year risk reduction and improvement is an ideal long-term goal for any wellness program (which is most easily facilitated through biometric screenings that are completed by program participants over the course of a few years), the actual value of wellness programs can be determined through a number of other methods:
- Success stories. Whether the program has helped members lose weight, go off meds, stop smoking, improve relationships at home as well as work, lower stress levels … any and all of these things, especially when showcased, help spread a culture of wellness throughout the organization. They happen also to save the employer money, but who’s to say how much?
- Comprehensive engagement statistics. Monitor and report on various engagement statistics (far beyond logging in to get an incentive).
- Improved morale, teamwork, and camaraderie. Granted, this would need to be based on self-reported information, which is always less-than-ideal. But it’s a good indicator of some important factors in employee satisfaction and engagement.
- Absenteeism, retention, engagement, and productivity. Many companies track these metrics – if a wellness program can have a positive effect on these metrics, the organization will benefit.
Every employee strives for the same things: to be healthy, financially secure, and socially connected. Employers want the same, because a healthy, secure, socially connected employee is the best employee on the planet. Once employers commit to investing in the success of employees beyond the workplace and into their homes and communities, the idea of using wellness programs solely to reduce claims or decrease healthcare costs collapses. Wellness allows employees to flourish in every way.
Sonic Boom Team