Finance and the Chief Executive Officer (CEO) want hard numbers to show Return On Investment (ROI).  And wellness Return On Investment (ROI) is tougher to calculate than, say, a 401(k).

18-month guideline

Current studies have established some benchmark data on wellness Return On Investment (ROI) you are able to use as a guideline. It’s useful whether you already have a wellness program or are thinking about beginning one.

It usually takes at least 18 months from the launch of a health promotion program to see any leads to your healthcare plan bottom line.

For a lot of firms, 18 months is the point at which workers’ bettering health starts to cancel the cost of sponsoring and administering the wellness program.

By and large, the long-term cost savings from a wellness program are going to be driven by how much you’re willing to spend. Usually, companies get what they pay for â.” both in time and money invested.

As a rule of thumb, the typical cost to the employer is about $3 to $5 per participating worker per month. Within three years of launch, you ought to be seeing meaningful savings.

The average Return On Investment (ROI) tends to be about $4 to $5 saved for every dollar spent. So how can you manage the costs in the short-term in order to achieve the long-term savings?  and how can you maximize the long-term payoff?

Consider making health promotion programs budget-neutral

For a lot of employers, the most effective way to manage the cost of a wellness program in the start-up phase is to make it a budget-neutral expense.

In other words, the wellness program neither adds to your healthcare costs at the outset, nor reduces them. Example –  You plan to roll out a wellness program effective Jan. 1.  The wellness program will cost the organization $5 per worker.

You can roll the $5 per month cost directly into the employee’s monthly share of their health care premium. In this age of continuous cost-shifting, most staff are used to seeing small increases in their monthly contributions each plan year.

Just make sure you’re not hitting folks with a large hike on top of that $5. Comparably designed health promotion programs pay off about the same â.” meaning staff members purchase in and participate at the same rate â.” whether they’re budget neutral or the business absorbs the cost.

But when workers get clobbered by large-scale contribution hikes at the outset, they often resist the wellness program.  The long-term ROI for these wellness programs is usually disappointing.

When you’re faced with a situation where achieving a budget-neutral health promotion program would trigger push-back, your firm is better off absorbing most or all the wellness costs.

The biggest hurdle is to get over the hump for those first 18 months or so.

In the past, the fairs often better served the provider(s) who came on-site than the needs of the hosting business or their staff members. More lately, businesses have refined the planning of the events to serve namely to launch or promote a health promotion program.

To be successful, the events need to serve two purposes – boosting staff member education and building their enthusiasm to participate in the health promotion program.

To make sure you and your staff members get the most out of a health fair, it assists to be cognizant of the plusses and minuses – and some little touches that can mean the difference between a so-so event and a hit.

Wellness Fairs –  Double-edged sword

On the plus side, employees received easy-to-grasp information on key wellness topics like disease detection, symptom control and smarter medication practices. They also receive important services like free blood-pressure screenings.

On the down side, some professionals said the more newfangled events were more like “disease fairs” than “health fairs.” In other words, the tone was little too somber and personnel weren’t specifically tuned in because they weren’t enjoying themselves.

Wellness program consultant Dr. Ron Goetzel believes that the savviest firms strike a balance in their wellness fairs. Stick with the screenings, but also feature exhibitors who offer “lighter,” more enjoyable services. Examples -

o  A booth from a local health-food store

o  A chair-massage station

o  elder-care info from the AARP, or

o  A “complimentary medicine” info booth (e.g.,a chiropractor or an acupuncturist).

Offering incentives

In many cases, personnel still need an incentive to attend the fair and get the desired screenings, as well to doing the fun stuff. Some real-life health promotion programs that’ve worked -

o  A contest offering prizes to personnel who visit every station

o  quizzes and prizes based on info from different vendors’ literature

o  flex-scheduling or time-off incentives for getting screened (e.g., a comp day or an additional afternoon off), and

o  cash incentives (as little as $20 and as much as $100) to people  who voluntarily participate in various screenings.

But a Duke Univ. shows that the group you could think would be the least likely to quit – individuals  over the age of 50 – might actually have the best odds for quitting through a tobacco use cessation program.

Scientists tracked 573 older patients over 10 years. They found that just 16 percent of those who joined the smoking cessation program later returned to smoking.  Meanwhile, previous research has found young smokers who try to quit have a 35 percent to 45 percent relapse rate within two years.

Bottom line –   Given the aging staff member population and the cost of retiree health care, you might want to keep trying with use of tobacco cessation education for your older employees.

As a long-term goal, having your general health plan, worker assistance program (EAP) and health promotion program communicating regularly with one another about employees’ treatments is the single best way to reduce redundant or contradictory treatments, eliminate unnecessary claims and increase the quality of the plans for which you pay.

Let’s look at the relationship between your health promotion program and your EAP to illustrate the importance of attacking health costs cross a wide front.

You can begin a wellness program with a health risk appraisal and then, if appropriate, roll out a tobacco use cessation program or a losing weight program.

But ultimately you want to make certain that your wellness provider works combined with your EAP provider.

Here’s why –  It’s very common for an staff member to contact the EAP because the individuals feels depressed about his or her weight. What you want is for the EAP vendor to treat the employee’s depression and behavioral issues, plus you want the EAP to refer the staff member to the wellness program to deal with the root cause of the problem – obesity.

The same thing accompanies the relationship your health promotion program and your workers’ comp provider, STD and LTD providers, rehab individuals , and/or disease managers. You want all them talking to – and sharing data with – each other. If they’re not, it’s costing you money.

In general, the companys who achieve the greatest cost savings through their wellness programs are the ones who overlap wellness with behavioral and occupational health issues.

Common thread –  the way you prepare â.” and control â.” your budget for a health promotion program is vital to its success.

1. Top-down health promotion budget

Depending on the size of your corporation and health promotion program, you could have full budget responsibility or may need to work with a C-level who has budgeting specialistise.

Regardless of the arrangement, you’re likely to face one of two distinct challenges –  a top-down budget or a zero-based budget.

A top-down budget is when you’re given a finite dollar amount and told to run the health promotion program within the limit. If that’s the case, here are three vital questions to ask -

o  Does this limit include money set aside for employee incentives and future programs?

o  Should we keep long-tenured wellness programs that keep going up in price, and

o  Does Benefits/HR have to deliver all education about the wellness program, or is there extra funding to hire staff?

2.  Zero-based wellness budgeting

In zero-based funding, you submit to senior management an itemized list of the health promotion programs/features you want and the cost of each. Best practices -

o  Rank health promotion programs by priority (health-risk assessments should be at or near the top)

o  Indicate which expenses are fixed and which are variable, and

o  List ways to incorporate existing resources (like an employee assistance program program) for a better return on investment.

3. Estimating health promotion Return On Investment (ROI)

On average, health promotion programs typically take at least 18 months to break even. After three years, you should see savings.

When not, it’s time to take a fresh look at the wellness program design.

In Washington, lobbyists have spearheaded a push for Congress, the DOL and IRS to crack down on “punitive” health promotion programs.

Especially, the groups seek to limit wellness programs in which employees’ share of their health care costs are directly tied to their willingness to participate in a wellness program.

HIPAA’s non-discrimination rules prohibit corporations from building negative financial incentives for staff members with health risks.

For  instance, you can’t raise someone’s premium share because he or she smokes. What you are able to do is offer a discount when someone completes a smoking cessation program.

Reason –  the law does allow for financial incentives to workforce who willingly participate in wellness programs.

The watchdog groups seek greater regulation to be sure incentives and discounts are used only as rewards for healthful behavior, not as a thinly veiled form of discrimination against high-risk workforce.

That’s a enormous increase from four years ago, when just 28% of smaller employers offered such wellness programs.

There’s more to come, too. Fifteen percent of respondents that didn’t currently have a disease management component to their medical plan hope to add one by 2011.

The highest-demand disease management programs are for diabetes, asthma and heart disease.

Source –  Small Corporation Benefits Survey, PDR Consulting Group, 9/1/2008.

In order to be effective, the health promotion program must meet participants’ individual medical and psychological needs, not to mention your own organization’s need to control long-term healthcare costs.

Exactly how wide-reaching should the program be? After all, it doesn’t make sense to pay for services your personnel don’t want or can’t use.

Mary Beth Chalk of Resources for Living suggests that obesity programs may be broken down into four tiers of staff member need, from which your organization’s ROI can also be measured.

Tier 1 –  Education

Tier I workforce struggle with weight control problems but don’t need a wellness Coach.  Instead, they might benefit from a self-directed program that provides weight-management related materials online, targeted mailing, and/or access to nurse call line.

How to measure Return On Investment (ROI) –  utilization. Do workers click on the Web site? Do they return to the site regularly? Do people  use the nurse line? Your wellness program provider should provide you detailed use stats.

Tier 2 –  Clinical supervision

When the staff member has been diagnosed as obese â.” a BMI  score over 30 is obese, over 35 is clinically obese â.” he or she would do better working with a wellness coach in a clinically supervised health promotion program.

Three keys to getting maximum results -

1. Periodically have participants rate their relationship with their health Coaches. Not everybody clicks, so a change may  be in order.

2. Coordinate your disease management care with your staff member assistance program (EAP)services. Reason –  Inability to control weight is usually closely tied with mental health issues â.” and one can adversely affect the other.

The more closely your employee assistance program and obesity program managers work together, the higher the chance for success.

3. Beware of the fade-out effect. A lot of staff in weight-loss programs get off to a great begin and then fall back into old habits. People  should re-commit to the program after three sessions, four months and nine months.

To measure ROI, look at utlization, goal achievement and reduced presenteeism. of course, presenteeism is notoriously difficult to measure with reliable dollar figures. So how can you overcome that problem?

o  Begin with employees’ salaries. Let’s suppose one participant earns $40,000 annually.

o  Ask staff members to self-report how energetic and productive they feel on the job, on a percentage scale. Then have supervisors estimate the employee’s productivity and split the difference. for this example, let’s assume it averaged to 50 percent.

o  Collect scores again six months and one year into the program and then multiply the difference by salary.  The result is your estimated productivity ROI.

In the example above, when the worker earning $40,000 improves from 50 percent to 75 percent after one year, the productivity related Return On Investment is $10,000.

Tier 3 –  Medical management

At this level, the obese employee needs a higher level of care than a health coach can offer.  The employee has chronic health conditions related to obesity â.” like diabetes, high blood pressure, and/or sleep apnea â.” and needs a doctor case manager.

Especially, the worker needs to set up regular visits with the physician and develop a treatment plan.

To measure Return On Investment, begin with the lower-tier criteria, then track quarterly and year differences in FMLA or compensated absences, and prescription drug costs. Then compare it to the per-participant cost of the obesity program.

Tier 4 –  Morbid obesity

At this level, the staff member has been diagnosed as morbidly obese â.” Body Mass Index over 40 â.” and is considered a potential candidate for gastric bypass surgery.

Return On Investment is measured through ongoing health claims in addition to the previous criteria.

Develop Exemplary Management Support

In the most successful Wellness Programs, upper managers lead their corporations by example.  And they work to ensure that the executive management structure not only allows, but actively encourages their workforce to participate.

Organize a Health Promotion Advisory Team

Health Promotion committees serve as the eyes, ears, arms and legs of the health promotion program, representing colleagues ideas and concerns, and helping reshape the organizational culture toward health.

Conduct an Assessment of Financial and Human Assets and Liabilities

Successful Health Promotion Programs are built upon a foundation of information, including claims review, demographic analysis of the workforce, upper management and worker surveys, health risk data, history of organizational wellness, and health benefit plan design.

Develop Obviously Stated Vision, Mission and Outcomes

Establish a clear vision of wellness program direction, expectations and measures to answer the questions, “Where are we going and how will we know when we get there?”

Create a Comprehensive and Strategic Wellness Program

A multi-component plan should consist of strategically developed and implemented awareness, lifestyle change, and supportive environment programs, as well as policies and activities that target appropriate health risk behaviors and needs of the employees.

Identify an Incentive and Reward Strategy

Incentives show the organizational commitment to the health promotion program and motivate person to participate. Incentives vary commonly from program to program, but can include such things as time off, reduction in health insurance premiums or co-pays, cash incentives, discounts to health and fitness centers, free pedometers, etc.

Communicate to Employees

Your wellness program must be simple and concise, use an identifiable brand, and rely on a variety of media to communicate with staff members and managers.

Evaluate Outcomes

Evaluate wellness program participation, satisfaction levels and behavioral change. You may want to track the number of workers’ compensation claims, productivity, turnover morale and absenteeism.

—————————–

Health Promotion Program – Management Support.

Develop Exemplary Management Support

Goal –  A Wellness Program established into the organization’s culture.

Focus – Develop support and excitement for the health promotion program from all levels of the corporation –  upper-level management, mid-level management, and grass-roots staff.

Obtaining upper management’s buy-in is essential to launching an effective wellness program.  The personnel must understand that upper management is supportive of the wellness program.

Actions -

Develop an Senior Management Executive Team to determine high-level decisions â.” positions that must be included are the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Communications Officer, and other appropriate division-level managers and health promotion program specialists, as necessary.

The Senior Level Management Executive Team will -

o  Communicate to all levels of senior management about the health promotion program and drive the integration of the Wellness Program as a part of the corporation culture.

o  Ensure that organizational resources are available for health promotion program planning and implementation.

o  Be certain to encourage employees to participate and to assist in “recruiting” other employees, get the momentum going, and keep it growing.

o  Share success stories within the organization, and continue to elevate the perceived value of participation.

Organize a Wellness Advisory Team

Goal – Create a working committee that consists of staff members and essential functional parts of the company.

Focus –  to assist in reshaping the organizational culture to support employee-wellness activities by serving as heralds and supporters for the health promotion program.

Wellness Advisory Committees serve as an essential part of the infrastructure of your Wellness Program.  The team members are the eyes, ears, arms, and legs of the health promotion program.

They represent their colleagues by sharing ideas and concerns about the wellness program.

Actions -

The Wellness Advisory Committee will -

o  Be certain to work with senior management and the Wellness Program coordinator in the design, implementation, and examination of the health promotion program.

o  Develop methods to enhance the acceptance and success of the activities of your Wellness Program by encouraging worker ownership of the health promotion program.

o  Hold periodic meetings to keep the committee informed of upcoming plans and events and to provide feedback to the wellness program coordinator about their thoughts, ideas, and suggestions, and those of their peers.

o  Recommend policy and environmental changes that are aimed at improving the safety and health of workforce.

—————————–

Health Promotion Program – Vision and Mission.

Goal – Create a baseline of information and identify human and organizational needs.

Focus –  Review a variety of information to better understand past and current conditions regarding health care utilization, organizational culture, demographic overview, and health promotion programs.

Data collection plays an important role in planning, monitoring, and evaluating  a wellness program. It’ll also set the baseline for continued and future investigations of wellness program efficiency, effectiveness, and feasibility.

Actions -

o  Claims review (health care, pharmaceutical) -

o  What have been the 10 most expensive major disease categories in each of the past five years? What are the number of claims and dollars paid for each?

o  What have been the 10 most costly therapeutic classes of drugs in each of the past five years? What are the number of claims and dollars compensated for each?

o  What have been the 10 most frequently prescribed and filled therapeutic classes of drugs in each of the past five years? What are the number of claims and dollars compensated for each?

o  Demographic analysis of worker population (may include dependents) -

o  List your number of workers, by gender, for each of the past five years and the percentages of males and females by age groups.

o  Think about any other factors that may have affected the health of your workers and their use of the healthcare system.

This could include mergers, acquisitions, workplace trauma, worker strikes, layoffs, early retirement offers, etc.

Management survey -

o  Conduct surveys of mid-level management to understand their concerns and measure their level of interest and buy-in.

o  Employee-interest survey –  Gather information to find out what the staff want and to measure the level of participation, satisfaction, and “success” of any previous activities.

Risk data (health-risk assessments) -

o  Is there any data from health-risk appraisals over the past five years?

Participation in similar activities -

o  List and describe all wellness programs that have been implemented over the past five years, including participation rates.

Design of the health plan, and anticipated changes -

o  Have there been any significant changes in the health plan’s design in each of the past five years, such as a change from an Health Maintenance Organization to a PPO, increased co-payments or deductibles, or increased employee contributions?

Develop Clearly Announced Vision, Mission and Outcomes

Goal –  Establish a clear vision of health promotion program direction, expectations, and measures.

Focus – Establishing a vision, mission, objectives and objectives to keep your Health Promotion Program focused toward its desired outcomes. It will answer the questions, “Where are we going?” and “How’ll we know when we get there?”

Actions -

o  Identify two to five obviously reported goals. Make certain that your wellness program is capable of having an impact in the area desired, and make certain that you’re capable of measuring that impact.

Example Goal – Workers having access to healthier food options

o  Establish two to five measurable objectives that particularly state what your health promotion program is going to accomplish, by when, how, and how it’ll be measured.

Example Objective –  Modify all vending machines to include 50% healthy food choices.

o  Identify several activities that will help you reachyour objective. Activities are very specific.

Example Activity – Make sure to work with vending machine owners to identify healthful food options and restock with 50 percent of items that are healthier food options.

o  Identify who is going to do what, by when, and what resources are needed.

Example Detail –  the Program coordinator will contact XXX Vending Business by September 30.

—————————–

Health Promotion Program Incentives.

Develop a Comprehensive and Strategic Health Promotion Program

Goal –  A robust Health Promotion Program plan.

Focus –  Development of a plan that consists of a variety of awareness, lifestyle change, and supportive environment program, policies, and activities that’ll target risk behaviors, needs, and interests of staff.

Your Health Promotion Program ought to provide an integrated, strategic approach specific to the needs, goals, and culture of your organization, designed throughout an annual cycle.

It’ll be important to review and revise existing policies governing such areas as use of tobacco, vending machines, and the staff cafeteria. Furthermore, it’s useful to examine what corporate wellness or health-promotion activities are offered under your existing health-benefit plan.

Actions -

o  Create activities based on your wellness program goals and the specific needs of your personnel. Focus on those topics that are of greatest interest to your personnel and the greatest needs of your business, in that order. Prevent topics with narrow appeal.

o  Keep it simple. Design the health promotion program so it’s easy for the participants to understand and track. Let employees focus their learning efforts on their own behavior, not on the rules and regulations of the health promotion program.

In addition, simplify the health promotion program administration. Let individuals  record their own activities when possible; develop a mixture of self-reported activities along with verified activities.

o  Integrate a combination of activities to include awareness, educational, and behavior elements. Link the activities throughout the year to allow for desired behavior repetition.

o  Select activities that every employee can participate in.

Examples -

o  Challenges –  Activities that focus on practicing a desired behavior and continue for 4-8 weeks and focus on specific topics (like physical activity, nutrition, or stress management).

o  Learning experiences (seminars, videos, classes) –  One-time activities that last for a relatively short time and focus on a specific topic; these can precede “challenge activities” to prepare participants for behavior change.

o  Behavior changes (like use of tobacco cessation) –  Interventions may or might not be offered at the worksite; person should be encouraged to make lifestyle changes that they wanted to make even without the incentive.

o  Illness management (support and education groups for diabetes and hypertension) –  These could  be provided or supported by the company through disease-management providers, or by community, health, or religious organizations.

o  New skills (first aid, cardiopulmonary resuscitation) –  These could  be provided or supported by the business, or by community, health, or religious organizations.

o  Screenings, wellness assessments, physical exams –  A wellness assessment provides the company with aggregate data that could be used in health promotion program planning and analysis; preventive screenings and physical exams could be encouraged by awarding credits to employees.

o  Program support (membership or leadership in wellness committee or challenge team) –  Reward those who work with you to help make your Wellness Program a success.

o  Community events –  Reward participation in events like the Heart Walk or March of Dimes Walk; limit the number of these events that could be counted toward the annual total, and be selective about which events you allow to be counted.

Create an Incentive Strategy

Goal –  to motivate and reward worker participation and completion.

Focus – Develop a sense of interest in participation and completion of wellness activities.

Providing incentives and rewards will send an important message to the workers that the business is committed to improving their health and will share the rewards that these changes will bring. It also plays a meaningful role in arousing person to participate.

Actions -

o  Identify through workforce what incentives they value most.

o  Identify what incentives the business can provide.

o  Integrate your incentives into your benefits strategy.

o  Ensure that every participant who achieves a goal receives some recognition.

o  Offer participation incentives.

o  Avoid offering incentives for the “best” or the “most.”

o  Avoid rewards for biometric changes.

o  Use incentives to promote your Wellness Program, through logos and branding.

Examples -

Compensated time off, reduction in medical insurance premiums or co-pays, cash incentives, discounts to fitness centers, free pedometers, etc.

—————————–

Health Promotion Program Communication.

Goal –  Increase awareness of and participation in the Health Promotion Program.

Focus –  Promote the Wellness Program to workforce to encourage participation in activities and benefits.

A well-designed communications strategy is paramount to successful wellness program awareness and participation. Even a “world class” wellness program design will not succeed if nobody knows that it is available or how to get involved.

Staff Members who do not get involved in the health promotion program must be doing so because they select not to participate, not because they did not know about how, when, or where to participate.

Actions -

o  Conduct a Resources and Communications Audit to identify internal and external resources available to support your Health Promotion Program, as well as knowing how information are going to be disseminated.

o  Keep the wellness program simple and concise –  easy to peruse about, understand, and act upon.

o  Build the brand; be sure it’s something that personnel can identify with. Add the brand to T-shirts, water bottles, mouse pads, stress balls, etc.

Use a variety of media -

o  Print â.” brochures, fliers, posters, banners, paycheck inserts, newsletter articles, bulletin boards, literature racks, post cards.

o  Electronic â.” Web, intranet, e-mail, closed-circuit televisions, sign lines, audiovideo productions.

o  Staff meetings and organization events; word of mouth.

o  Use existing channels of communication â.” what works best in your company â.” and be sure to know about all points of contact and systems of distribution.

Timing for communications -

o  Prior to activity to develop awareness and to educate.

o  During activity to stimulate participation.

o  After an activity to report results.

o  Between activities to maintain momentum and interest.

Consistency of communications -

o  Use branding; maintain a consistent look, feel, and tone of messages.

o  Maintain this consistency throughout the health promotion program.

Surveys and forms -

o  Collect information.

o  Disseminate information.

Chronic illnesss, which rob individuals and families of their health and happiness, represent major costs to corporations in the form of health care and disability costs, lost productivity, and absenteeism.

Health Promotion Programs should address risky behaviors that can help your workers eat healthier, increase their level of physical activity, help reduce stress, lower blood pressure (BP) and cholesterol, and quit smoking. Wellness programs should focus on helping workers achieve and maintain their optimal health status.

Extensive health promotion programs focused on changing lifestyle behavior have been shown to yield a $3 to $6 return on investment for each dollar invested. It takes about three to five years after the initial health promotion program investment to realize these savings.

Ninety-three% of U.S. companies offer some kind of health promotion program for their staff, but is it the right type?

Main Types of Health Promotion Programs

Programs focusing on illness management. These wellness programs monitor and treat specific illnesses. Illness management follows the 80/20 rule –  80% of healthcare costs are spent on 20% of workers.

Disease management is announced to have a $7 to $10 return on investment within a year.  The 20% of employees requiring the greatest medical expenditures today are usually different 20% who will cause the greatest healthcare expenses a year or two down the road.

Programs focusing on health enhancement and risk management. These wellness programs focus on lifestyle behavior change, and offer a $3 to $6 return on investment within two to five years, according to a 2004 report issued by the National Corporation Group on Health.

It is important to note that a $3 to $6 return on an entire staff member population produces a higher total savings than does illness management.

Good Data Drives Good Business Decisions

o  Based on more than 120 research studies, the National Corporation Group on Health announced that, within five years of wellness program implementation, overall benefit-to-cost ratios (return on investment) of -

o  $3.48 in lowered health care costs per dollar invested.

o  $5.82 in lower rates of absenteeism per dollar invested.