Harvard Study: Wellness Programs in the Workplace Reduce Medical Costs

iStock_000016974432XSmallThis average return on investment suggests that the wider adoption of such programs could prove beneficial for budgets and productivity as well as health outcomes,” a 2010 Harvard study revealed.

With healthcare costs increasing at an alarming rate due to employee illness, injury, and absenteeism, and with 60% of U.S. employees having company-paid healthcare coverage, employers are searching for answers to control spiraling medical expenses. Many companies are finding that an investment in workplace health and wellness programs create a win-win-win situation – lower costs, increased productivity, and improved employee health.

Harvard Study

The Harvard study further revealed that, “Several well-publicized case studies have suggested a positive return to employer investment in prevention. For every dollar invested in the program, the employer saves more than the dollar spent. The Citibank Health Management Program reported an estimated savings of $4.50 in medical expenditures per dollar spent on the program. Studies from the California Public Employees’ Retirement System, Bank of America, and Johnson & Johnson have similarly estimated significant health care savings from wellness programs.”

An analysis of the workplace health and wellness programs in the study concluded that each dollar invested returned an average of $3.27 to the company coffers. In addition, savings realized by preventing absenteeism and other lost time illnesses or injury are about $2.73 for every dollar invested.

Journal of Occupational and Environmental Medicine Study

More recently, the January 2013 edition of the Journal of Occupational and Environmental Medicine reported on a study by Jonathan P. Dugas, PhD titled, “Medical Care Savings From Workplace Wellness Programs: What Is a Realistic Savings Potential?” and found that workplace disease prevention and health promotion programs reduced medical costs by more than 18.4 percent per worker. It further found that cost savings increased to 28 percent for aging and retired employees who participate in the corporate health and wellness program.

ThiStock_000004139269XSmalle Dugas study concentrated on seven common risk factors normally targeted by company health and wellness programs: 1) physical inactivity, 2) low fruit and vegetable intake, 3) smoking, 4) overweight/obesity, 5) high blood pressure, 6) high cholesterol, and 7) alcohol abuse.

However, there are other benefits that can accrue such as improved employee health, reduced turn-over, higher morale, improved employment/recruitment brand, reduced replacement worker costs, and lower costs for disability insurance and Medicare. Companies that include an ergonomic program in addition to the seven common risk factors will recognize an even greater return-on-investment.

Dr. Dugas did caution that maximum estimated savings are not likely to be achieved immediately but will increase as the effects of risk reversal take hold. Dr. Dugas adds, “Medical care savings from workplace wellness programs will increase with time given that more eligible wellness program members participate, effective control of heightened risk factors improves, and greater risk reversal can be achieved.

Studies continually find that companies that strategically invest in health, wellness, and ergonomic solutions have consistently recognized a significant ROI over time. As with any investment, it takes some time for the benefits to accrue. Are you implementing your health and wellness programs strategically?