Businesses devise programs for myriad reasons
Unlike U.S. companies, which implement wellness programs in hopes of lowering healthcare costs and improving employee health, foreign companies are creating workplace wellness companies as a way to stay com- petitive in the marketplace, increase productivity, and improve morale.
Wellness programs have stretched beyond the employer-based U.S. healthcare system as foreign businesses look for ways to separate themselves from competitors.
Wellness programs’ business objectives vary by loca- tion. Europeans seek better work force morale, whereas Asian and African companies seek reduced absences. (See Figure 1 on p. 4.)
A closer example is Canada, which isn’t as interested with the financial benefit of wellness. “A lot of Canadian organizations see wellness as an opportunity to demonstrate that they are an employer of choice—a good place to work,” says Barry Hall, principal at Boston-based HR and benefits consulting firm Buck Consultants, an ACS company.
Hall recently released results from an October 2008 survey of workplaces called Working Well: A Global Survey of Health Promotion and Workplace Wellness Strategies. The second annual survey analyzed responses from more than 600 organizations in 25 countries representing more than 10 million employees. Sixty percent of organizations surveyed said they have a wellness strategy, which is a jump from 49% in 2007.
Although more companies outside the United States have implemented wellness programs, North America is still home to most of them. Eighty-two percent of North American companies that responded to the survey said they have wellness programs. Hall says the U.S. employer-based insurance system means that companies see the direct bottom-line effect of wellness programs.
“I think that’s the one thing that boosted the U.S. above the rest of the world,” Hall says.
After the United States, the next highest percentages of companies with wellness programs are Africa with 45% and Europe with 44%. Hall says the vast majority of African companies that responded are based in South Africa, which has seen a boom in workplace wellness programs.
Whether programs continue to gain popularity in other countries may largely depend on the United States.
“I think if we can really demonstrate to a deeper level that the programs or certain aspects of them are effective in the U.S., that will really boost the adoption in other parts of the world,” Hall says.
The top wellness programs in Asia and Africa are biometric health screenings, which have not caught on in the United States. In Europe, employers have im-plemented gym and fitness club member discounts. (See Figure 2 on p. 5.)
The fastest-growing wellness initiatives are technology-driven tools such as Web portals, online programs, and personal health records. Other programs gaining global popularity are healthy vending machine food choices, employee health screenings, and workplace health competitions.
Workplace wellness competitions in such areas as physician activity, weight loss, and smoking cessation could grow in popularity with the emergence of TV shows such as The Biggest Loser. These programs will grow by more than 100% outside of North American during the next three years, Buck Consultants predicts.
Most don’t gauge ROI
Although U.S. companies implement wellness programs in hopes of reducing costs, Buck found only 16% of U.S. respondents claimed the programs reduced healthcare costs, with an average reduction of two to five percentage points per year. This lack of savings is largely because U.S. companies are not measuring the programs’ return on investment (ROI). For international companies, 40%–60% of organizations are not measuring the financial effect of the programs.
Buck Consultants points to a few reasons for this lack of information: Metrics to figure out productivity and healthcare costs are expensive and time-intensive, employers don’t collect data such as absentee rates that could help them calculate ROI, and businesses don’t usually gauge employee morale and satisfaction with wellness programs.
Although most companies don’t analyze workplace wellness programs’ costs and financial benefits, Hall says justifying the investment of wellness programs is at the top of the list for most companies.
“The fact that organizations continue to offer wellness programs, despite these gaps, suggests that even if program effectiveness proves difficult to quantify at this point, the intuitive value of offering these programs remains a major motivator for employers. To some extent, employers also may recognize that health and behavior changes effected by wellness programs are likely to take multiple years to fully manifest themselves as measureable savings,” Buck Consultants wrote.
“Mercer is seeing greater interest in measurement and evaluation of health management and wellness programs,” says Sander Domaszewicz, a principal at Mercer’s Newport Beach, CA, office and the consulting firm’s national health consumerism leader. “While the financial or ROI picture is a key component of program measurement, tracking other indicators like participation, satisfaction, and clinical or functional improvements can also help to show a program’s broader value.”
Incentives less popular elsewhere
Incentives for employees who participate in wellness programs have increased by 45% since Buck’s 2007 survey. This is consistent with 2007 findings showing that a large number of U.S. employers planned to implement incentives. More than two-thirds of U.S. respondents with wellness programs offer incentives, which easily outdistances other parts of the world. (See Figure 3 on p. 5.)
U.S. respondents spent an average of $145 per employee per year on wellness incentive rewards, which increased from an average of $100 in 2007. Twelve percent of U.S. respondents spent more than $500 per employee per year on incentives in 2008. (See Figure 4 on p. 5.)
The most popular activities for which employees receive incentives in the United States are health risk appraisals and workplace health challenges such as weight loss. (See Figure 5 on p. 6.) Businesses are not giving incentives for activities such as biometric health screenings, regular preventive care examinations, and adhering to disease management programs, but many said they plan to reward employees for those activities in the next three years.
One incentive that remains low on employers’ lists is rewards for employees who achieve or maintain measurable health status results. The 2008 survey found 16% of employers offer incentives for that activity, which was an increase of only one percentage point from 2007.
A major barrier for many employers is that laws such as the Americans with Disabilities Act make measuring health status indicators (e.g., body mass index and weight) a touchy—and potentially costly—topic. “This is not surprising, because this type of incentive reward introduces additional challenges, from regulatory restrictions to potential employee relations issues regarding intrusion into confidential matters involving their health,” wrote Buck Consultants.
The largest number of U.S. employers with wellness programs that responded to the survey offer gifts or merchandise, raffles or drawings, and free or low-cost preventive health services. The incentives that have seen the most growth are reducing healthcare premiums and making cash contributions to healthcare-related spending accounts, which shows a growing trend toward aligning rewards with healthcare benefits. (See Figure 6 on p. 6.)
“In this way, employers seek to emphasize a strong connection between healthy living and their ultimate objective of reducing the cost of healthcare,” wrote Buck Consultants.
Most U.S. employers believe their incentives are moderately effective, but nearly one-quarter said they were not sure of their effectiveness. (See Figure 7 on p. 7.) Buck Consultants suggests this could be because incentive systems are still new and lack defined best practices.
Incentives are not nearly as popular in other countries, but they have shown growth. Seventeen percent of respondents outside the United States say they offer at least one wellness-related reward.
Hall says other cultures find financial incentives crass. “The U.S. is just more financially focused, but I think also, from a cultural perspective, it’s more culturally acceptable and probably more common in the U.S. to motivate people with direct incentives,” he says.
Overall, 19% of respondents rated their incentive rewards as “extremely effective” or “significantly effective” at changing employee behavior, which was higher than 2007’s 16%. Buck Consultants suggests this increase shows employers believe that wellness programs can change behaviors.
Employers and their healthcare partners use a wide variety of tactics to promote wellness efforts, with Web portal or intranet presence, posters and flyers, and newsletters and articles topping the list. (See Figure 8 on p. 7.)
The largest jump in 2008 was in Web portal/intranet and workplace challenges, whereas the biggest drops were in health fairs and home mailings. Less than half of respondents said they mail wellness materials to their employees’ homes, which could be problematic if a spouse or family member is the family’s healthcare decision-maker. Without reaching out to that family member, the health information is not reaching the right person.
Buck expects employers and health plans will implement more personalized messaging. About half of those with wellness programs reported they did not have personalized messages; this shows an opportunity to move from one-size-fits-all messaging to tailored and more effective communication, wrote Buck Consultants. (See Figure 9 on p. 7.)
Nearly half of companies that responded to the survey employ workers in multiple countries. Given the wide variety of cultural norms in the global community, Hall says companies must understand the differences when developing wellness programs. For example, U.S. employees may respond to incentives, but employees in other countries may take offense.
Among multinational employers, one-third said they have a global wellness strategy, whereas more than half claimed they did not have global oversight for their wellness strategies. The remainder of respondents said they had no global coordination but left it to regional control.
“Given this degree of local latitude, it may be more difficult for a multinational employer to garner and/or drive consistent results,” Buck Consultants stated.
“While it’s sometimes not a small undertaking, there can be a strong value proposition for crafting global health initiatives,” Domaszewicz says. “Some key drivers that lead companies to address health globally include ‘one company’ philosophies, extending competitive advantage, accelerating work force mobility, a desire for shared best practices, and the promise of tapping into global leverage.”
Regardless of the direct reason for wellness programs, employers are viewing them as a way to show employees that they care about their health. For employers in other parts of the world, the programs are a way to make employees feel a greater connection to their employers.
“Frankly, that’s the competitive boost for any employer to have: to have a really engaged, motivated work force. If wellness is even a piece of that formula, I think a lot of employers would really like to figure out how to leverage that,” Hall says.