Employer Wellness

Workplace Health Promotion Programs first became popular during the economic boom of the late 1980s and early 90s. Programs featured on-Site gyms and massages, and were used as recruitment tools for young employees searching for nontraditional work environments. Still, when the tech bubble burst, so too did the willingness to spend money on perceived perks, and employers returned to a more antiquated benefit structure focused on managed healthcare.

In recent years, as Medical Care costs have spiraled out of control, corporations have explored the potential of Company Wellness Programs as a cost-saving strategy. Corporations such as Johnson and Johnson, General Motors, Motorola and Union Pacifi c Railroad have all seen a signifi cant return on investments in employee health (See Case Studies, p.20). Company Wellness Programs can help lower the costs associated with:

Health Care premiums – The expense a organization pays for medical insurance: According to a 2005 study by Hewitt, the Health Care expense per employee in the United States in 2006 will average $8,046, with organizations absorbing nearly two-thirds of that expense.

Pharmaceutical costs – The price of a drug plan: According to a 2005 study by Mercer, the average annual drug costs for big corporations grew 11.5%, making it nearly a decade straight of double-digit increases in cost.

Short-term disability (STD) – The price of offering STD insurance to workers: According to a 2004 study by insurance provider Cigna, the average STD claim results in $13,094 in direct disability payments and medical costs. The report also found that 26 percent of claims related to health care events were a result of chronic conditions that could likely be mediated through Corporate Wellness Programs, and that these cases amount for 56 percent of the STD-related medical costs.

Absenteeism – The cost of missed work: Absenteeism cost organizations $660 per employee in 2004, with nearly one-third of organizations characterizing the trend as a genuine concern.

Presenteeism – The cost associated with employees who work at decreased productivity levels: Sixty percent of the total cost of employee illnesses come from presenteeism, according to a 2004 study by the Institute for Health and Productivity Studies at Cornell University.

The evidence is clear that strategically designed Employee Health Promotion Programs can reduce both direct and indirect Healthcare costs. A 2004 review of Employee Health Promotion Programs revealed that, in total, an investment of $1 by a corporation in Wellness Programming returned a median cost savings of $2.05 to $4.64.