How much do wellness programs save?

wellness programs
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Have you ever watched a child pick up a full glass of punch and start walking? The outcome is inevitable, there will be punch on the floor. The outcome is predictable because we’ve seen the same thing happen in the past. Our best predictors of the future come from the past. This applies to more than just kids and punch, it also applies to employee healthcare costs. The best predictor of future healthcare costs is past healthcare costs. Insurance companies call this credibility. While there are other predictors, it has been shown that wellness programs can also influence company medical costs.

Wellness Programs cut costs

Healthcare cost increases are worse than the cost increases associated with labor, materials or energy. According to a recent business roundtable survey, CEO’s rank the cost of health care as one of the biggest threats to company profits. But the good news is wellness programs have been shown to save money. There are Wellness ROI calculators that companies can use to see just how much they can save with a wellness program. These wellness ROI calculators forecast how employee wellness programs can impact future healthcare costs, absenteeism, and productivity. The ROI calculator for healthcare costs can help you determine whether an investment in a wellness program makes sense for your company.

You will need just three pieces of information: 1) your company’s total healthcare costs over the past 12 months, 2) the total number of benefited employees, and 3) the percentage change in healthcare costs each year for the past 5 years.

It would be good if you knew the percentage of your employee population who were smokers and who were obese. Once you have entered this information, you will get several graphs.

  • First, you will see the “Cost of doing nothing.” This is what will happen to healthcare costs over the next several years if you do nothing. This forecast is based on the notion that healthcare cost increases will continue as they have. Of course, it is possible that the rate of increase may slow or accelerate. We just don’t know what direction costs will head, so we have assumed that things will continue as they have in the past.
  • Second, because we have a very good idea of the independent costs of smoking and obesity, the ROI calculator can project about how much you would save if you decreased the percentage of employees who smoke and the percentage of employees who are obese.
  • Third, the ROI calculator will project what you would save with a comprehensive wellness program versus the cost of doing nothing.

So what?

Over 5,000 U.S. companies use the Wellness ROI calculators each month. This tool helps move wellness programs from a fun employee perk to a core business strategy, which is something every successful company should consider if they are to stay competitive. You can continue to bear the burden of ever increasing healthcare costs or you can start to get proactive about using a comprehensive wellness program to help your employees have optimal health and stay out of the healthcare system. Not to mention the mental health benefits.

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