Health Handouts : The Case for Corporate Wellness Programs

Corporate Wellness Programs first became popular during the economic boom of the late 1980s and early 90s. Programs featured on-Site fitness centers and massages, and were used as recruitment tools for young workers searching for nontraditional work environments. Nonetheless, when the tech bubble burst, so too did the willingness to spend money on perceived perks, and companies returned to a more old-school benefit structure focused on managed medical care.

In recent years, as Health Care costs have spiraled out of control, businesses have explored the potential of Corporate Wellness Programs as a cost-saving strategy. Companies 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). Corporate Wellness Programs can help reduce the costs associated with:

Healthcare premiums – The expense a company pays for health care insurance: According to a 2005 study by Hewitt, the Healthcare expense per employee in the U.S. in 2006 will average $8,046, with corporations absorbing nearly two-thirds of that expense.

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

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

Rates of Absenteeism – The price of missed work: Rates of Absenteeism cost companies $660 per employee in 2004, with nearly one-third of companies characterizing the trend as a weighty issue.

Presenteeism – The price associated with workers who work at decreased productiveness levels: Sixty% of the total cost of employee diseases 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 Corporate Wellness Programs can reduce both direct and indirect Healthcare costs. A 2004 review of Corporate Wellness Programs revealed that, in total, an investment of $1 by a business in Wellness Programming returned a median cost savings of $2.05 to $4.64.