Weighing the Value of Workplace Wellness
Companies continue investing in workplace wellness. But can money buy your employees health?
In terms of workplace initiatives, corporate wellness is a relatively new concept that didn’t begin developing until the late 20th century. And for a relatively young industry, it has witnessed impressive growth since its inception in the 1980s.
Employers have plenty of options to choose from, as 951 companies specifically specialize in corporate wellness, according to IBISWorld’s industry report from July 2016. And the vastness of the broader wellness industry allows a corporate customer many options including health clubs, weight loss programs and nutrition programs that don’t primarily cater to employers.
Corporate wellness vendors also have a lot more room to grow. IBISWorld estimates industry revenue is projected to grow to $7.6 billion annually by 2021, up 3.3 percent from 2016. Only 9 percent of global workers have access to a workplace wellness program, according to the Global Wellness Institute.
But defining value in wellness remains elusive. The industry’s growth spurt is a boon for vendors as the expansion of wellness to total well-being presents more opportunities, including former Huffington Post Publisher Arianna Huffington’s high-profile debut of her new wellness company Thrive Global late last year.
Stress management programs and financial wellness programs also are spreading, adding to the array of offerings for employees. That’s leading some to question whether the expansion epidemic is too much of a good thing for employers under pressure to make the right choice for their workers, who now expect a wellness offering as part of their benefits package.Emily Noll, national director of CBIZ Wellness Solutions, said employers are discovering they must offer wellness benefits to attract and retain employees.
“[Wellness] could be different in a few years, but it’ll be there. It’s part of the expectation of what employers offer employees,” she said. “They’ve moved from nice-to-have-status to must-have status.”
Technology from telehealth to fitness apps also continues to promote growth in the industry by allowing vendors to access employees in real time and personalize the employee experience. Employers look toward technology to motivate employees to take an active role in improving their health, Noll added.
Not everyone has a positive perspective on this growth. Wellness has too many vendors, according to Al Lewis, CEO and founder of Quizzify, a company that provides tests designed to make employees smarter about health and health care. “You know there are too many vendors in an industry when seven of them have the same name,” he said.
Such growth doesn’t benefit either the employee or the employer, he argued. Vendors often do wellness to employees rather than for them, without garnering actual results, Lewis said.
At the same time the industry has seen this expansion, it’s paradoxically seeing signs of consolidation, too. Health care transparency company Castlight Health acquired well-being platform Jiff in the first transaction of 2017, and in February 2016 corporate wellness giant Virgin Pulse acquired two wellness companies, Rhode Island-based ShapeUp and Australia-based Global Corporate Challenge.
While some predicted an acquisition craze in 2016, few blockbuster deals materialized. Still, Noll said to expect more consolidation. Some wellness startups now 3 to 5 years old will have to sell in order to pay back investors. A company also may realize they can’t keep up with the technological demands and partner with a more tech-based company in order to meet client needs.
As wellness vendors become more specialized and technology expands, employers face a workplace wellness world that is no longer a one-stop shop, Noll said. Whereas previously they would use one vendor for all of their wellness needs, that’s becoming less common. Employers may need to collaborate with multiple vendors, she said.
Consolidation may cause challenges for employers as well, Noll added. They should vet the program and account management as if they’re looking at a new company to make sure they don’t lose the personal touch they want from a vendor.
The Value of Wellness
When a company invests in a wellness program, they have a lot to choose from and much to consider before partnering with a vendor.
“Before a company implements a wellness program, they have to understand what their goals are for wellness,” said Adam Ochstein, CEO of HR services company StratEx. “Is it just to have a check in the box to say, ‘We have a wellness program,’ or are they really truly committed to what an effective wellness program does?”
Interestingly, although many employers use wellness programs to control health costs, fewer than half measure their program’s return on investment. And several academic studies have failed to show substantial cost savings, according to a 2016 Willis Towers Watson report.
Wellness advocates address this disconnect between expectations and ROI in several different ways. Some companies look at wellness as a short-term fix rather than a realistic timeline for wellness to work, Ochstein said.
“A good wellness vendor will be very transparent,” he explained. “Typically, you will see an increase in health care costs in the first two years. Long term, you’ll see a reduction.”
Costs initially rise because employees get an annual check-up and spend money on health-related expenses before they see the any results.
Others argue that workplace wellness has a value, but it’s not economic. It’s proven that such programs are bound to lose money for a company, said Quizzify’s Lewis, and they must rethink the actual value.
“If I’m going to be spending real dollars as well as directing my employees’ valuable attention to this program, how can I be sure these programs will deliver the value I really want?” said Lewis. “For some employers, that might mean a smaller investment and commitment to wellness programs. For others, that might mean a rethinking on whether a wellness program is supposed to lower medical costs or be something that will help make employees easier to recruit and retain and help improve morale in the company.”
Value is exhibited through a company showing it cares about employee well-being, he said. Employers should realize any wellness program will lose them money, though a well-designed program will lose considerably less than a poorly designed one, he said.
Wellness programs won’t change the behaviors of many unhealthy employees, Lewis added, but they will engage the already healthy employees and change the behavior of some of the undecided. “It’s important to give employees the opportunity to take care of their health,” he said.
It’s All in the Design
A major design aspect to improving a wellness program is a performance guarantee that contractually binds a vendor to a set goal, according to Jeff Levin-Scherz, national co-leader at Willis Towers Watson’s Health Management Practice.
“The performance guarantees need to be carefully written, and the goal of them should be to encourage vendors to put the right resources into the employer’s program,” he said. “It’s important not to over-engineer them and not to make them so difficult to agree on that [as a result] you end up spending too much on the performance guarantee and not enough on the actual program.”
“If you look at what curbed smoking in this country, it wasn’t the warning label on the side of a pack of cigarettes, which have been there since the ’70s,” he said. “It’s when cities like New York began taxing cigarettes to the point where it impacted the wallet.”
Behavior changes often occur when there is a life-altering diagnosis, such as diabetes or cancer, he added. “And hopefully it impacts our pocketbook before it impacts our life.”
Corporate wellness has not lived up to the guidelines it should aspire to, argued Lewis, who once worked in the industry. Vendors design programs that encourage employees to take on unhealthy behaviors like over-screening in order to make more money, and rarely do companies or HR departments push back. The U.S. Preventive Services Task Force provides guidelines for how often people should get screened for certain problems.
Similarly, programs such as corporate crash diet competitions may motivate employees to take on unhealthy behaviors to lose weight and not support sustained weight loss, Lewis added.
Other than adhering to healthy guidelines, the other key component of workplace wellness is education.
“The missing element of essentially every wellness program is employee education,” said Lewis. Many people know to avoid sugar if they’re trying to lose weight but aren’t aware of how much sugar “healthy” food like granola bars have, he noted as an example. They’ll see the product in the health food aisle and assume it’s good for them without knowing what they’re putting in their bodies.
A Push for Certification
Regulations also may play a larger role in the future, said CBIZ’s Noll. There is little oversight in the wellness industry. Just two organizations, the National Committee of Quality Assurance and the Corporate Health and Wellness Association, certify wellness providers, and fewer than 30 vendors are certified, she noted.
At this point there isn’t a connection between certification and vendor quality, Noll said. But employers may see third-party certification as something that adds a comfort level to their relationship with the vendor. Likewise, vendors may see it as a way to differentiate themselves from the competition.
Incentives also will play a less important role, said Patty Curran, principal for the national practices at Conduent HR Services.
“The heyday of incentives is probably passed and people are finding that incentives get people’s attention in some things and work in some parts of the wellness program to get people engaged, but for long-term sustainability, they’re not delivering,” she said.
A large trucking company she worked with offered the incentive of joining a raffle for NASCAR tickets, which doubled the number of participants in the wellness program. It worked in the short term, but she said in the long term interest in wellness faded. Employers have to be more focused on communicating the value of the program and educating employees so they can change behavior for themselves.
Lewis said there is a need for change in how some vendors operate. Although there are wellness programs he supports that don’t harm employees, there are others that promote unhealthy behavior.
He referenced the Employee Health Program Code of Conduct created on LinkedIn in August 2016. Vendors can publish on their websites that they officially endorse the code, which acts as kind of a Hippocratic oath. They can promise and make a point to not fabricate outcomes or endorse practices that harm employees.
“This code of conduct has got to be the thing for 2017,” said Lewis. “How can you have an industry if vendors aren’t willing to say, ‘First do no harm?’ ”
Andie Burjek is a Workforce associate editor. Comment below or email firstname.lastname@example.org.