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How Two Employers Measured Wellness Success

May 1, 2008
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Related Topics: Benefit Design and Communication, Health and Wellness, Featured Article
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H ighmark Inc., a Pittsburgh-based health insurer, plunged into a comprehensive wellness program for its own employees in 2002 and studied medical claims of two sets of participants for four years.

Using a sophisticated approach that tracked medical claims data and employees’ own health risk assessments, it saw a $1.65 return on investment—a total of $1.3 million over four years—for every $1 it spent on corporate wellness, according to a February article in the Journal of Occupational & Environmental Medicine.

Dr. Brian Day, Highmark’s director of advanced analysis, who helped oversee the study, acknowledged that the research had limits. According to the report, participation bias is among the study’s possible flaws, in that wellness program participants may have been more motivated to manage their health than nonparticipants. The study also found some employees may have participated in wellness activities outside the workplace program.

The limitations of Highmark’s study reveal another flaw in employers’ efforts to calculate return on investment. The "worried well" is a term touted by consultants to describe the employee group most likely to participate in a wellness program: those who are healthy.

People who are healthy also are more likely to participate in employer-sponsored health risk assessments, another major tool used by employers to estimate ROI.

Health assessments come in many forms and often include biometric screenings, such as weight and cholesterol readings, and employee questionnaires that aim to reveal risky behaviors. Even with an incentive such as cash or a reduced health insurance premium, experts again say the least healthy employees also are less likely to participate.

For St. Luke’s Health System, based in Kansas City, Missouri, health risk appraisals track employees’ medical risks and health problems, says Gayle O’Connell, the hospital system’s health enhancement program manager.

The appraisals, which included questionnaires covering exercise habits and stress management, were used to calculate how much the hospital system avoided in medical costs with its wellness program, which cost $250,000 per year.

From 2001 to 2003, the hospital system avoided spending $8.50 in medical costs for every $1 it spent on wellness; from 2003 to 2005, the savings figure was $3.50, O’Connell says.

While acknowledging that the system is not the most accurate way to calculate savings, O’Connell says it did allow the hospital system to track how employees changed behavior and how those changes helped the hospital system avoid higher medical costs.

This popular way of calculating possible ROI fails to track whether the wellness program caused the reduced health risk, says Mike Miele, president of Apex Management Group, a Princeton, New Jersey-based employee benefits consulting and insurance services unit of Gallagher Benefits Services Inc.

"This main method that people do is cohort tracking," he says. "They say, ‘We surveyed 3,000 people and 1,000 people were high-risk and 600 people actually talked to us, and we monitored them, and we tracked their costs over time and it got better, so it’s working,’ " he says. "The problem is there are a lot of statistical errors in that approach. Maybe those people were getting better anyway."

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