Larry Chapman’s Blog

Results-Driven Worksite Wellness

Getting through to execs about wellness: part 1: humanitarian arguments

flickr, ANVRecife

flickr, ANVRecife

 

We just went through a five-part series on measuring the economic impact of wellness for employers. You get the picture – money matters! But people matter too!  We have to speak to both sides of the executive brain to get the right level of support– by communicating both the humanitarian and the economic case for wellness. Let’s start with the humanitarian card.

 

Humanitarian Rationale: It’s the People Stupid!

For decades wellness advocates have told senior managers that wellness programming is a tangible way to signal how valuable employees are to an organization’s success. If senior managers resonate with that message, you should give it to them loud and clear.  However, how you frame it can have a big impact on whether the arguments win the day. As in all communication, the most important element is knowing your audience. What are hot-button issues facing the organization? New competitive dynamics, aging employees, retention, technology, outsourcing—know what your execs care about.  The key to connecting with executives is making sure wellness is seen as highly relevant in the very issues that are keeping them up at night. Here are some arguments that key into the humanitarian benefits of wellness but connect strongly to the issues executives face every day:

 

Argument #1: Wellness differentiates our workplace

  • We wouldn’t have a business or organization without people and we need our people to want to work here.
  • Most organizations including ours (yours) don’t provide real strong reasons for people to want to work here.
  • Wellness can help them want to work here.

When to use this argument: In industries that compete hard for talent, this argument would be most powerful.

 

Argument #2: Wellness drives employee engagement by minimizing distracting health problems

  • We need to have people want to fully engage in this organization.
  • Unhealthy lifestyles often prevent them from fully engaging.
  • Wellness can help them fully engage by freeing them up to focus on things other than their health issues.

When to use this argument: In companies with an aging workforce or facing change in their industry (when they need maximum flexibility from their workforce), this argument could be most effective.

 

Argument #3: Wellness drives employee engagement by proving they work for a caring organization

  • To gain full engagement, we need to employees feel that we care about them as people.
  • Most organizations including ours (yours) don’t provide much evidence for this.
  • Wellness can be the tangible evidence that we care about our employees as people.

When to use this argument: In companies with aging workforces where retaining talent is imperative, this approach would fit best.

 

Argument #4: Wellness can improve community support for our organization by proving we are a good corporate citizen

  • We need to be perceived as a “good” corporate or organizational citizen in our community.
  • Most organizations including ours (yours) don’t do a lot to earn a “good” citizenship status.
  • Wellness can be seen as tangible proof of our “good” corporate citizenship.

When to use this argument: When a company has a contentious or difficult relationship with its community, politicians, or regulators, senior management may be looking for creative ideas to strengthen public perception.

 

Argument #5: Wellness can improve impaired employee morale

  • We need as much “good will” as we can get from our employees and their family members.
  • Most employees and their family members don’t appreciate what we do for them now.
  • Wellness can be used to help educate about what we do for them and can increase our “good will” quotient with employees and their families.

When to use this argument: When relationships with unions or employee groups are difficult, management may be looking for new ways to build morale, making this argument effective.

 

Argument #6: Wellness makes employees better off—it is the right thing to do with the organization’s resources

  • The workplace is potentially a very powerful environment to affect behavior and attitudes.
  • Most employers and organizations don’t utilize that potential to any significant degree.
  • Wellness can capture and more fully make use of that potential.

When to use this argument: In organizations with a strong moral or ethical focus, or organizations with a faith based component (or heritage), this argument can be very effective. It also can be appropriate for non-profit and government entities.

 

Argument #7: Wellness enlarges the role of the organization to benefit employees more

  • There is a basic moral issue about the role of employers in improving our society.
  • Few employees do much about this issue.
  • Wellness should be seen as the morally “right” thing to do for employees, their family members and the community.

When to use this argument: Similar to #6, this argument fits best when managers already have a world-view where they see the role of their organization as a force for good and are looking for ways to make a bigger impact. This approach fits best in environments with a strong service orientation such as healthcare, government, and non-profit sectors.

 

It is critically important that you narrow your communication to focus on one main argument on the humanitarian side. Even though we see all the many benefits of wellness, executives can easily get overwhelmed with a laundry list of rationales. Often they perceive that many ‘good’ arguments aren’t as convincing as one or two powerful ones that fit their strategic imperatives. That said, your best bet is to pair one humanitarian argument with a connected economic argument to speak to both sides of the executive brain and seal the deal! Next week’s post will give you some ideas on how to do that.

Don’t forget: building executive support for wellness is covered in our FREE excerpt of our Level 1 WellCert worksite wellness certification program!

5 ways wellness reduces costs – Part 5: presenteeism costs

 

presenteeism

Flickr & Missparticipacion

Presenteeism is the fifth type of health-related cost that employers commonly experience. In this recent series of posts we have looked at health plan costs, sick leave absenteeism costs, workers’ compensation costs, disability insurance costs and now presenteeism cost. This is a newer concern for employers. Research has demonstrated that when employees decide to come to work when they have an underlying health problem (Like a cold, allergies, migraines, indigestion, muscle pain, etc.) they are not as productive on the whole. The amount of productivity loss can be measured by using specific questions on survey instruments such as HRAs or annual evaluation surveys. This loss of productivity can be reduced by wellness programs. It’s high-time more wellness program managers like you take credit!

 

Presenteeism: the problem

First off, here are the most typical health problems that create presenteeism losses for employers identified in the scientific literature:

Anxiety, Arthritis, Bladder problems, Chills, Chronic back pain, Chronic fatigue, Chronic neck pain, Chronic obstructive pulmonary disease, Congestive heart failure, Constipation, Coronary heart disease, Cough, Depression, Diabetes, Diarrhea, Fever, Fibromyalgia, Hay fever, Heartburn, High blood pressure, High cholesterol, Hopelessness, Hypertension, Indigestion, Irritable bowel syndrome, Low energy, Migraine headaches, Muscle soreness, Nausea, Nervousness, Obesity, Osteoporosis, Other cancer, Other chronic pain, Panic attack, Psoriasis, Refux disease, Restless, Rheumatism, Runny nose, Seasonal allergies, Skin cancer, Sleep disorders, Sore throat, Stomach ulcer, Substance abuse, Tension headaches, Urinary problems, Vertigo, and Watery eyes

According to the National Health Survey the average working adult American experiences an average of two medical symptoms a month or twenty-four a year. The majority of the time we choose to go to work rather than stay at home. Presenteeism losses are therefore very common for all employees and employers. Studies have found that presenteeism effects more than 8% of the total productivity of a work force! That means that in most organizations 8% of the total compensation cost pays workers for non-productive time. Total compensation or salary, wage and benefit costs are usually the largest costs for most organizations across industries. Another way to think about it: presenteeism takes away economic value that amounts to 2 to 4 times what employers spent on employee health benefit plans! If wellness programs can reduce the frequency and severity of many of the common self-limiting health problems employees commonly take to work, it can have a significant impact on the productivity a work force. We saved a heavy-hitter for last!

 

Ways wellness reduces presenteeism losses

Wellness programs can reduce presenteeism loss in several different ways depending on the design of the wellness program:

  • Reducing health risks: The first way is by reducing health risks in individuals and collectively in the population at large which then reduces the occurrence of those common medical symptoms so that less productivity losses take place.
  • Medical self-care training: The second major way is to provide medical self-care training to employees to help them make better decisions about preventing and treating those all-to-common medical problems. This training can be carried out in person or through Learning Management Systems (LMS). It can also mean helping people access medical self-care resources online such as WebMD’s public portal at www.webmd.com.
  • Self-care resources: The third major way is to provide online resources at work and possibly onsite resources to help employees minimize the adverse symptoms associate with the various common health problems. For example, some companies provide a “Not Feeling Good?” tab on their Intranet home page site. This also may include providing access to specific Over-the-Counter (OTC) and prescription pharmaceuticals that are designed to minimize the symptoms associated with those specific health problems through an occupational health unit or onsite primary care center.

But if you want to address presenteeism as a possible area of economic return for your wellness program you have to have a credible method for measuring presenteeism losses and the ability to track it over time. There are a couple of ways to do this.

First you can use one of the more valid standardized instruments for measuring presenteeism such as the Work Limitations Questionnaire (WLQ) or Stanford Presenteeism Scale (SPS). These survey instruments are multi-question and can be used in a random sampling method with program participants and non-participants as well as prior to the introduction of the wellness program and at regular intervals afterward. They provide a quantitative estimate of the productivity loss that can be converted into monetary values. This approach takes some effort but does provide a valid measurement of productivity loss.

Second, a global presenteeism question can be added to your HRA or annual wellness program evaluation survey. This question would read something like this:

“In the last month that you have been at work about how much of your work productivity has been adversely affected by any of the following health problems? Please estimate the approximate percentage of your work productivity reduced by any of the identified health problems. _____.__ % (You can use the above box with the various health conditions)

Third, if you have a website that provides advice for dealing with the various common health problems you can have a follow-up survey mechanism that asks users to estimate the effect of the help they received on the users work productivity which can them be used to monetize the value of the wellness program’s intervention.

As with the other measurement methods we have discussed there are lots of ways to strengthen or weaken the validity and utility of the findings from your evaluation. Also this approach doesn’t necessarily address the pain, discomfort, disability, work and family disruption, quality of life effects of fewer injured or ill employees due to healthier lifestyles brought about by the wellness program, but you can certainly mention it.

Presenteeism isn’t something most executives spend a lot of time thinking about. If you are going to communicate the presenteeism benefits of your program to executives, you probably will have to spend significant airtime explaining the concept to them.

Remember: always make your methods for estimating savings transparent so if critics have concerns they can be challenged to come up with a better approach.

Check out our wellness economics series courses on measuring the impact of wellness on presenteeism costs to go deeper on this topic.

5 ways wellness reduces costs – Part 4: disability insurance costs

wheelchair

Flickr, Noblitt

 

 

This part four of my five-part series on getting the complete picture on the economic impact of your wellness program. Last week I covered workers’ compensation, the week before was on sick leave, and the first week was on health plan costs.  Today we are on to disability costs…

Not all employers offer disability insurance coverage to their employees but they should! Disability coverage protects employees financially against injury or illness that happens outside of work and keeps them from working. There are two kinds of disability insurance (DI) coverage. One is called Short Term Disability (STD) which usually provides about 60% of your salary or wage tax-free beginning 30 – 90 days into your absence and lasts up to six months. The other is called Long Term Disability (LTD) which usually starts at the six month mark and usually covers up until two years. Coverage does vary in different markets but these parameters are pretty common.

 

This private insurance coverage is usually insured rather than self-insured so any economic savings from generally healthier employees usually results from lower increases in future premiums. However, an employee that is absent from work costs the employer more than just his or her salary or wage. For one thing, if there are fewer DI claims then future premiums are likely to be lower. Wellness program managers should dig deeper to measure the other costs of disability. DI claims go hand in hand with needing additional workers to make up for missing employee(s), loss of work continuity, loss of additional sales, reduced quality of customer service, more cross-training needed, and less efficient utilization of space and resources. These costs are real but very hard to nail down and measure over time. You can make an estimate of these costs but you will need to make your assumptions explicit. BTW: the incidence of disability insurance claims are usually in the area of 1% to 4% of a work force each year. Remember, if your organization does not provide disability insurance coverage to employees then there won’t be any savings from your wellness program.

 

Here again as with any relatively rare events you need a large number of employees (events) to measure and track these costs with acceptable levels of accuracy and validity. Our measurement strategy with DI claims costs are also similar to how we deal with Workers’ Compensation costs and savings. Here also we only want to work with “closed” or completed cases where no additional claims costs are likely to occur.

 

Measurement Options

The first option is to track the overall pattern of the frequency and severity of disability insurance claims costs in your entire work force. If you have from 50 to 1,000 FTEs covered by disability insurance this method probably makes sense. You then are tracking the overall annual frequency (Number of closed STD (or LTD) cases per year per100 FTE’s) and the severity (The average cost per closed case) and creating a time-series trend analysis for each metric by year. If you see a pattern of declining frequency and/or severity and nothing else changed in how you manage these costs then you can attribute the reductions to the effects of your wellness program. To derive the economic value you would multiply the reduced frequency times the reduced severity.

 

The second option If you are dealing with employee groups with more than 1,000 FTEs is to track the frequency and severity of disability claims for wellness program participants as a group versus non-participants as a group over time. If the participants and non-participants are close in disability insurance claim experience for both frequency and severity during the baseline or pre-program period, then any positive trends are again likely to be related to the wellness program. You then take the frequency difference between the participants and non-participants and multiply it by the difference in average cost for the two groups.

 

Don’t Forget to Keep track of Your Assumptions

Again, make all your econometric assumptions explicit so that everything in your methodology is transparent to your audience.   It will also help you duplicate the analysis for the following years.

 

As with workers compensation costs, if your organization is not doing much to manage or minimize these costs (and the illness and injuries that employees experience!) then there may be some real opportunity for savings. If your disability insurance claims experience is already tightly controlled and managed then don’t expect a lot of savings associated with your wellness program.

 

This approach doesn’t necessarily address the pain, discomfort, disability, work and family disruption, quality of life effects of fewer injured or ill employees due to healthier lifestyles brought about by the wellness program. You should definitely include these non-economic impacts when you communicate your program’s effects! In my experience, the most powerful way to promote your program’s value is to provide BOTH hard economic sizing as well as the human impact of improved health.

 

Again, always make your methods for estimating savings transparent so if critics have concerns they can be challenged to come up with a better approach.

 

Check out our wellness economics series courses on measuring the impact of wellness on disability insurance claims costs to go deeper on this topic.

5 ways wellness reduces costs – Part 3: workers’ comp costs

back_pain_wc

From Flickr & dthomasd

 

I am doing a five-part series on how to measure the impact of your wellness program on five key employer costs. I started with health plan costs, and last week covered sick leave costs. Today’s post is on measuring the impact of your wellness program on workers’ comp costs.

 

All employees are covered by some form of workers’ compensation. This state-specific, legally required coverage has been around for more than 100 years and protects all of us when we experience an illness or injury related to our work. It is “no-fault” in nature so that employees and employers don’t have to prove who was at fault in order to get medical expenses covered and a paycheck while away from work. Workers’ comp coverage is usually provided by state government through very large pools made up of many employers. Some types of businesses have very high costs associated with workers’ comp while others have minimal cost.

 

Researchers at the Health Management Research Center at University of Michigan found that employees with lots of health risks use a great deal more workers’ compensation dollars than those with minimal health risks. One landmark study showed that high risk individuals with multiple health risks used almost 20-times the average amount of workers’ comp dollars per year than someone without those risk factors!

 

Executives can be skeptical about the tie between workers’ comp and wellness, thinking that workers’ comp claims is basically what happened ‘that time Joe fell into the milling machine’. What most executives (and many wellness professionals!) don’t realize is that about 50% of workers’ comp claims are strains, sprains and back injuries. When your wellness program gets more employees exercising (and taking care of their back), they get injured less, and bounce back faster from injuries. This is just one intuitive story behind the empirical findings.

 

Generally, wellness programs that are effective in helping employees reduce their health risks will lower workers’ compensation costs. If your company pays into these state pools in a way that is influenced by your actual claims expense then there is measurable employer cost savings attributable to your wellness program.

 

In simple terms, and in the same way we did with sick leave, we need to compare the trends in per-employee workers’ compensation costs incurred by employees who participate in wellness programs to those of employees on the sidelines. We also want to look at the business-wide use of workers’ comp over time. By making these comparisons, we can infer the effect our wellness programs is having on workers’ compensation. Here again, gathering the data to make this comparison can be tricky depending on how your organization is handling workers’ compensation costs—a factor that is strongly related to how aggressive these costs are currently being managed.

 

If your organization is not doing much to manage or minimize these costs (and the illness and injuries that employees experience!) then there may be some real opportunity for savings. If your workers’ comp experience is already tightly controlled and managed then don’t expect a lot of savings associated with your wellness program.

 

 

Are you big enough?

You probably want to begin by determining if you have enough employees and enough time to conduct any kind of meaningful analysis. You probably need at least 500+ employees in each group (wellness participants and non-wellness participants) and a year of data to start with. That is necessary for you to derive a rough baseline regarding your workers’ comp experience.

 

You usually want to look at two issues. The first is the frequency of workers’ compensation (WC) claims. This is simply a count of the WC claims filed during a set period of time, such as a year. Typically this might be 2-8 claims filed per 100 FTE employees per year. I want to go back in time 2-5 years before introducing the wellness program and then plot these numbers out as a trend over the years. I also want to monitor in the coming years the rate of WC claims filed by the work force using these same frequency measures. Ideally I would like to see the frequency trend diminish over time as the wellness program helps employees be healthier (and perhaps more safety conscious!).

 

The second thing I want to do is examine the pattern of average cost of each closed claim (remove claims that may have additional costs). You can appreciate if I only experience 2 or 3 WC claims per year then the average cost of the claims is going to vary tremendously and I won’t be able to use the data to demonstrate the economic value of the wellness program. However, if I am big enough to have 20 -100 WC cases each year then I can get some meaningful data out of changes in the average case cost. If the data shows that the frequency of WC cases is down by 15% and the average case cost is down by 23% after the wellness program has been introduced and there was no change in our safety activities or WC management process then I would feel reasonably comfortable suggesting that the wellness program had produced some WC savings that should be included in the economic return analysis. I can monetize that return by multiplying the cases avoided times the reduced average case cost.

 

As with the sick leave costs example, if you can measure any other costs such as hiring a temporary worker to replace the injured employee then you have some additional economic savings to include if that is reduced as the wellness program is introduced.

 

This approach doesn’t necessarily address the pain, discomfort, disability, work and family disruption, quality of life effects of fewer injured or ill employees due to healthier lifestyles brought about by the wellness program, but you can certainly mention it!

 

Remember: always make your methods for estimating savings transparent so that critics can follow your methodology. If they poke holes, they can always be asked “Well how would you suggest we do it?”

 

Check out our wellness economics series courses on measuring the impact of wellness on workers’ compensation to go deeper on this topic.

5 ways wellness reduces costs – Part 2: sick-leave costs

From Flickr & Anthony Cain

From Flickr & Anthony Cain

 

American workers are absent from work due to sickness an average of 8 days a year. Wellness programs have been documented to reduce that amount by 25% or an average of 2 days a year. That reduction in absenteeism represents economic return that is potentially attributable to your wellness program, but it takes some effort to capture the data needed to make that case.

In simple terms, we just need to compare the trends in per-employee sick leave use of employees who participate in wellness programs to the employees on the sidelines. By making this comparison, we can infer the effect our wellness programs have on sick days. Of course, gathering the data to make this comparison can be tricky depending on the structure of your sick leave benefits—a factor that drives what data your organization already collects.

 

‘Dedicated’ Sick Leave

Dedicated sick leave refers to arrangements where there is a formal policy about the number of sick leave days earned by each employee per year. It’s easier to get data on dedicated sick leave because employers have to keep track of it. Some employers provide 6, 8 or 10 days of dedicated sick leave per year. This makes it easy to get the data on sick leave for participants and non-participants in your program.

 

Combined Leave

Another common type of sick leave is called “combined” leave. If your organization uses “combined leave” (also called “Paid Time Off”), all the distinctions between types of leave including administrative, sick, vacation, jury duty, family emergency, etc. are eliminated and each employee gets a lump sum of annual leave. Sick leave is converted into annual leave and is expected to be taken with adequate advance notice. When employees are sick the leave is arranged usually within 24 or 48 hours of its use, giving us a proxy for the amount of sick leave used by the population. If you can get data on each employee’s unscheduled leave within a year, you can do the comparison between wellness program participants and non-participants and measure the reduction in sick leave.

 

Using an HRA to measure sick leave trends

In many organizations, there are holes in the data a wellness program manager can get their hands on to gauge their impact on sick leave. As a result many wellness program managers use a question in their annual HRA that asks about sick leave usage. A question like: ”How many days in the past 12 months were you absent from work due to a personal illness or health problem?” can be used to track sick leave over time. If you ask a question like this at the beginning of your program, the result can be used as a baseline, as it gathers information about the 12 months prior to the launch of the program.

If lots of people complete the HRA then it can become your baseline sick leave measure for the entire population. The same question can also be used as a reference point for the individual participant in your wellness program in what is called a “cohort” analysis. This is when you compare the participants’ own sick leave usage in year one of the program to their usage in year two, etc. (Also called “participant to participant” comparison). In both these methods you are expecting to find a reduction in sick leave usage as participation in the program increases.

 

Monetizing the benefits of reducing sick leave

Using one of these data collection approaches, you can compare the trends in sick leave use in populations who have participated in your wellness program to those who haven’t. Once you have the raw number of days of sick leave reduction attributed to your program, you have to come up with the right cost-basis to use for each day to translate days into dollars of savings.

In many cases, all you need to do is take the average salary costs and apply them to the number of days saved to quantify the benefit to the organization. You can assume that each lost day of employee work is worth at least as much money as the organization was willing to pay them for it!

There are two ways to calculate the wage/salary savings. The first uses an estimate of the average labor cost per day of work. To use this method you need: the total wage/salary cost for all employees for the year, the average number of Full Time Equivalents (FTEs) employed during the same year and the average number of work days expected to be worked per year. It is typical in this method to arrive at an average wage/salary amount of $400 to $1,200 per day per FTE. This number then gets multiplied by the number of sick leave days reduced by the wellness program to derive a total amount of economic return.

The second method for uses the actual labor cost per work day of the program participant. This method is similar to the average method, but uses the actual labor cost of each day of work of the specific program participants that have experienced lower sick leave usage. Of course, this requires that you identify the labor costs of the specific individuals who saw a reduction in their sick leave use.

However, this simple approach breaks down in situations where employees can simply use the days they aren’t sick to extend their planned vacations! This is a great benefit for the employees who are now healthier, but it doesn’t result in bottom-line savings to the employer who still has to pay for those days off…or does it? In organizations with combined leave arrangements, there is often the false assumption that wellness programs don’t drive economic returns from a reduction in sick leave. The reality is there are additional savings we can calculate—costs from unscheduled absences.

Unscheduled leave is a nuisance to managers particularly in manufacturing, school and retail settings. It may lead to line delays, service level reduction and the use of lower-skilled substitute labor. If it is possible to estimate the economic value of the elimination of an “unscheduled leave” event then that value can be used to monetize the reduction in sick leave absenteeism. This can be achieved by estimating the average labor cost per work day and then taking a fraction of that cost, for example 10%, 25%,or 33% of that cost. The unscheduled leave event may lead to bringing in a substitute teacher for a school district, hiring a temporary for a call center, reducing a manufacturing goal or losing a fraction of sales for a retail outlet. Just make sure you make the assumptions explicit so everyone knows how you are coming up with your numbers.

Remember: always make your methods for estimating savings transparent so if critics have concerns they can be challenged to come up with a better approach.

Check out our wellness economics series course on measuring the impact of wellness on sick leave absenteeism to go deeper on this topic.

5 ways wellness reduces costs – Part 1: health plan costs

Wellness ROI piggybank

Flickr image from taxcredits.net

Last week’s post made the case for broadening the economic argument for your wellness program. As I noted before, the five economic factors that respond to wellness programming are health plan cost, sick leave absenteeism cost, workers’ compensation costs, disability management costs and presenteeism costs. I will take the next five posts to dig into each of these areas to give you a path to fleshing out the economic case for wellness.

Measuring wellness’ effect on health plan costs

Now let’s dig into health plan cost savings. The average U.S. employee costs their employer about $12,000 per year in health plan cost—lots of room for meaningful savings! There are many ways to do this analysis, but the one I advocate for most organizations is a basic claims analysis.

In simple terms, this kind of analysis just compares people who participated in wellness programming to people who didn’t. By comparing how fast health plan costs are growing in one group with growth rates in the other group, we can infer that any difference between the two is attributable to participation in wellness programs.

To do this analysis, you need:

  • At least a 1,000 lives to make sure your population is “actuarially credible” or large enough to reach statistical confidence.
  • Claims data so you can look at the yearly cost experience of both program participants and non-participants over time.
  • Analytic resources to compute the average claims cost per employee per year–a consistent measure of health plan use for both participants and non-participants.
  • Outlier removal so that extremely large claims don’t mess up the analysis unfairly.
  • Consistency in the health plan design and claims payment process, so the data is comparable.
  • Consistency part two–Use of consistent time periods and definitions (So that your analysis is valid and defensible.)

The major challenge for wellness program managers is usually getting access to health plan claims data in order to sift the data to isolate how much each group’s average claims costs were in each year. You also have to be careful about any significant change in the cohort groups from year to year (participants and non-participants), such as big changes or shifts in age, gender distribution or geographic pricing patterns often caused by people dropping out of your sample cohort groups mid-year.

When computing the economic return from health plan claims cost effects I usually recommend that you determine the growth rate of per employee health plan costs from year to year for non-participants and participants and then compare the non-participants’ growth rate to participants’ growth rate. This gives you a low cost yet valid way of identifying the savings associated with your wellness program. The non-participant’s growth rate functions as a kind of ‘control’ group to compare with the same metric for your participant group. Any difference can be reasonably explained by your intentional programs whose very purpose is to shift the very behaviors that would cause individuals to consume less health care.

If you don’t have access to health plan claims data you can use changes in the prevalence of specific health risks in the participant population over time to estimate the economic return from your wellness program. For example, if 100 individuals completing an HRA last year indicate that they are smokers and then this year only 50 of that same group indicate they are still smoking, 50 individuals have stopped smoking presumably due to the effects of the wellness program. If we then take those 50 people that stopped smoking and multiply them by the average annual excess cost associated with smokers (depends on the study you look at, but it’s roughly $1,500 per year) then the economic return associated with the reduction in smokers from the effects of the wellness program amounts to (50 x $1,500 = $75,000) $75,000.

These two methods for determining the economic return of your wellness program are covered in-depth in the WellCert Wellness Certification Program. Measuring the impact is great, but future posts will cover how to maximize the employee health plan cost savings from your wellness program actually drives!

Next week we will dig into how to measure sick leave absenteeism savings.

Don’t make this common mistake in your wellness program…

Not the best defense...

Not the best defense…

A major mistake many worksite wellness practitioners make is using a narrow economic rationale for wellness programming. As I emphasized in my post last week, communicating the impact of your wellness program in ROI terms is critical. However, I have seen many managers who set out to communicate the ROI of their efforts focus narrowly on health claims. Rapid increases in health benefit cost have historically spurred investment in worksite wellness programs. Employers wanted to do anything they could that might slow the rates of growth in per employee health plan costs. This fueled some major expansion of our field. But this narrow economic perspective focused only on health benefit cost has its own problems. I think it makes us way too dependent on societal trends affecting health costs. If the ACA actually results in low growth rates for health plan costs (which I don’t think it will – keep your eye out for a future post on that) then “do we really need to invest time and money in wellness?”

My read is that humanitarian reasons for doing wellness (“It’s the right thing to do!”) are not adequate to secure a long-term employer commitment to well-funded wellness programming. My experience is that business cycles can be devastating to wellness efforts. It seems that many people in our field want to believe that enlightened humanitarianism should be what we rely on to secure long-term investment. To that my response is “fat chance”! Without a tangible, sustainable and broad economic rationale for worksite wellness I believe we will ultimately be relegated to the dustbin of management history, as an innovation that lost its way in the early 21st century because though it felt good, it didn’t prove itself to impact the bottom line.

How can we protect wellness from capricious management fads and economic cycles? We have to move to take a results-oriented approach to worksite wellness that focuses on health improvement and impact to five economic costs that all employers should care about. The big five economic costs are:

  1. Health plan cost: We are all familiar with this one (though many are not familiar with all the tools wellness programs can use to affect these costs).
  2. Sick leave absenteeism costs: It’s not a good thing for people to be sick and it adversely affects all work organizations in a wide variety of ways. Workers don’t get much done for the business when they are home in bed!
  3. Workers’ compensation costs: Work related illness and injury are often a significant issue for employers, particularly by type of industry and occupation.
  4. Disability insurance costs: Prolonged absence from work is growing as our work force ages.
  5. Presenteeism costs: When we chose to be at work with an underlying health condition, like allergies, headaches, or colds, productivity suffers.

 

Best-practice wellness programs have a measureable impact on all these cost areas (if you want to learn how take our Wellness Certification)!  Wellness practitioners who don’t measure and articulate their impact on these cost-drivers are like soldiers going into battle with only a few bullets in their guns!

I believe that we should be building a strong economic rationale for worksite wellness around these five economic variables and thereby help wellness to become as non-negotiable as any other mission-critical part of the organization—just like accounting, HR, or the legal department! Getting to that point isn’t easy, but I believe that the benefits of making effective wellness truly ubiquitous are surely worth the hard work required to win over the hearts and minds of financially-driven decision-makers.

How wellness can impact these economic costs is covered in our Wellness Economics Series of trainings.

Let me know what you think in the comments below!

How do you build executive support for Worksite Wellness?

Building sustained executive support for Worksite Wellness is often one of the most important roles of a wellness professional. In my decades working with over a thousand organizations, here are the top three best practices with the biggest impact:

Starting with number three…

#3: Dig into the details and show them the plan.

None of us really enjoy putting proposals and plans together, but I have found it to be absolutely critical to getting senior management buy-in for an employee wellness program. All managers want to be seen as good decision-makers. This means they need to be taken through the details so that they can satisfy themselves that the program will deliver results and mitigate any risks.  A well-written proposal for an employee wellness program should answer all the major questions that a good manager should be asking.

Questions I hear senior managers ask are: What will the program cost? How much new overhead will it add to our costs? How will we measure its impact? What economic impact will the program have on our organization? Will employees adopt it? Will they like it? How will the program be rolled out? What policy and physical changes will be necessary? How soon can we see the results? What future actions are we going to be committed to taking? What are our main competitors doing about wellness? A well-written proposal becomes your best defense against potential critics while it also creates a blueprint for implementation. A carefully prepared proposal for a wellness program is an incredibly important strategy for building strong senior management support for wellness.

 

#2 Cultivate a “C-level” champion.

Your program won’t thrive without a senior executive talking it up to the organization’s top decision-making group. Most of the time this leadership comes from the VP of Human Resources, but sometimes it can be the Chief Financial Officer (CFO). Someone needs to speak on behalf of the wellness program and be a credible advocate. Once I was sitting with a group of senior managers for a signature national company and I watched the CFO make a fool of himself by citing a number of deeply held, but erroneous views on wellness. Thank God the Chief Human Resources Officer (CHRO) was well-read on wellness and easily shot down the CFO’s spurious arguments and irreverent bluster.

One way to cultivate a champion is to deliver a cadence of communications to them via email, and in-person meetings, arming them with powerful pro-wellness sound bites. By communicating high-quality independent research and the results from your own program, you can turn a casual supporter into an ardent champion. There will always be competing priorities and resource needs that will have the potential to derail support for wellness efforts. Cultivating a credible and effective wellness C-level champion is absolutely critical to the long term success of your wellness initiative, ensuring that support for your program stays strong regardless of occasional headwinds.

 

And now for #1…drum roll please…

#1: Three little letters: R…O…I!

The most effective wellness program leaders use a strong economic rationale and positioning for their program. The thousands of senior managers I have worked with over the years all resonated with the economic argument for justifying investment in an employee wellness program. The prospect of avoiding future health plan costs, sick leave absenteeism costs, workers’ compensation costs, disability insurance costs and presenteeism costs helped senior managers support the funding and initiation of a worksite wellness program. Most of the time a PowerPoint deck with economic highlights of peer review studies did the trick. With that said…. we all still need to be very careful not to over-promise and risk under-delivering, so make sure you make conservative estimates of economic return for your program that you can easily surpass.

Of course if you pursue this strategy you have to measure economic return and make sure your wellness program uses a broad array of programming strategies to affect economic variables. This is about more than just reducing selected health risks!  In my experience, making the case that spend on wellness programs creates significant ROI has been critical to unlocking the investment and support for the kind of program structure that actually impacts employee health.

There are more than a dozen other strategies for building strong senior management support for wellness. The first session of our Wellness Certification  WellCert Level 1 covers this topic in more depth. To dig into wellness ROI, check out our series of online courses on Wellness Economics.

 

For more Results-Driven Wellness, follow @WellnessCzar on Twitter. This blog covers topics from our five-level WellCert certification program for worksite wellness practitioners. We love your feedback. Use the comment tool below to let us know how you liked the post and any ways we could improve.

ObamaCare Revealed: The “Good”, the “Bad” and the “Ugly”

ACA Title II, Sec. 2202. Permitting hospitals to make presumptive eligibility determinations for all Medicaid eligible populations. “Ugly” – “Of course you are covered by Medicaid!” This provision gives authority for hospitals to determine the preliminary eligibility of each patient for Medicaid. This opens up the opportunity for hospital admissions staff to presumptively determine that the patient is Medicaid eligible. The more the merrier, after all our children and grandchildren will pick up the tab. This legislative initiative provides an enormous incentive for hospital admissions staff to creatively game the Medicaid eligibility rules of a state agency that historically suffers from chronic under-staffing. Who is going to care if you fudge the rules? Anybody ever heard of the concept of “checks and balances”? Apparently not. No discernible improvement in population health status and no discernible improvement in long term health cost control.

 

Please let others know about this blog and have them “follow” @Wellness Czar on Twitter for the section topics. This information is also available in summary PDF form by making a request to LChapman@ChapmanInstitute.net.

ObamaCare Revealed: The “Good”, the “Bad” and the “Ugly”

ACA Title II, Sec. 2201. Enrollment simplification and coordination with state health insurance exchanges: “Bad” – Streamlining is not always good. This provision requires a streamlining and simplification of eligibility for Medicaid, both the categorically eligible and the CHIP eligible. This makes it easier to qualify for Medicaid while Medicaid itself has almost bankrupted the states. It is a program that has a historical compound growth rate of almost 10% per year since 1965. It’s out-of-control and we are adding millions more people to its roles. Is that very wise? I don’t think so. Get Medicaid under fiscal and programmatic control then add more people to it. Not the other way around. “Streamlining” means reducing the potential obstacles to coverage, for example whether the individual is really eligible for the program. No discernible improvement in population health status and no discernible improvement in long term health cost control.

Please let others know about this blog and have them “follow” @Wellness Czar on Twitter for the section topics. This information is also available in summary PDF form by making a request to LChapman@ChapmanInstitute.net.