Proven techniques for getting returns from employee wellness programs.

• Author: Kavanagh, Shayne

Wellness programs are employer-sponsored initiatives designed to improve the health of employees, leading to a decrease in health-care costs for the employer. They can include any number of more specific elements, but the core ingredients generally include a health risk assessment for employees (including a blood test and lifestyle questionnaire), resources to help employees improve their health in targeted areas (e.g., a smoking cessation or weight loss program),and an incentive program to encourage participation and to get better results.

Many governments are enthusiastic about wellness programs; in a survey of GFOA members, conducted by the Government Finance Officers Association and Colonial Life and Accident Insurance Company, close to 80 percent of respondents have undertaken at least some form of wellness program. Of those respondents, 90 percent would recommend their program to others, and 65 percent would recommend it enthusiastically. This enthusiasm is not misplaced; a number of rigorous studies have shown that wellness programs have a significant potential return on investment --more than $3 saved for every $1 invested over a three-year period, according to one particularly comprehensive study of larger employers (with more than 1,000 employees). (1)

Impressive ROI figures are not guaranteed, however. The purpose of this article is to present four key strategies for realizing return on investment from employee wellness programs. Governments that already have wellness programs or are considering one are invited to compare their program design (or anticipated design) against the criteria described in this article.

KEY STRATEGY 1

KEEP IT FOCUSED ON OUTCOMES

The fundamental reason for providing a wellness program is to improve the value residents receive for their tax dollars. A wellness program can accomplish that in two basic ways: 1) by shifting a higher percentage of the cost of the employer health program to employees who do not meet the program's objectives (e.g., charge a higher premium to employees who do not participate), and 2) by reducing the number of claims by creating a healthier pool of health plan participants. In both cases, the employer should start by identifying a series of goals that relate directly to improved health outcomes. These goals should be organized along some or all of the following five elements: body mass index, blood pressure, LDL cholesterol, blood glucose, and tobacco or nicotine use. These five factors are thought to be primary causal factors in 75 percent of all chronic diseases,2 and federal law allows specific employee wellness incentives to be designed around each of them. Employers who are just getting started with wellness might wish to begin with just one or two of these factors, based on which are the biggest problem for plan participants, and then expand over time.

Exhibit 1 shows what a set of goals might look like. Notable features include the following:

* National Institutes of Health standards are used, allowing the employer to compare its standards to an accepted national benchmark.

* In most cases, an employer's goals won't be as ambitious as the NIH standards. This is often a good idea for employers that are just starting their wellness programs, as it shows employees that that the employer is not being unreasonable in its expectations. The bar can be raised over time.

* Establish alternative goals for cases when an employee cannot meet the primary goal; participants will not be motivated by goals they have no hope of achieving. Alternative goals provide an incentive for making incremental progress, often by moving from one category to another (e.g., from a higher category of blood pressure to one that is closer to the employer's goal). Exhibit 2 provides an example of how a categorization scheme might look for blood pressure-related goals.

* Specify a reward employees can earn for achieving the goal (shown in the far right column of Exhibit 1). Incentives are a major component of many wellness programs.

KEY STRATEGY 2

COMMUNICATE

The concept is simple: The more employees who participate in a wellness program, the higher the potential return. Ideally, 90...