If corporate CFOs are looking for a way to fight ballooning health care
costs, they might actually want to consider one relatively quick fix: spend more
money on health care.
While it sounds counterintuitive at first, experts in the health care
industry are suggesting that companies that implement wellness programs are now
starting to show returns on those investments, specifically in the form of lower
health care costs.
“CFOs have always viewed health care as an expense, but rarely as an
investment” said Jerry Ripperger, director of consumer health at the Principal
Financial Group. “But improving the health of your employee base, rather than
simply providing reimbursements, is an exercise in risk management with a true
ROI.”
The types of wellness programs may vary—generally they aim to get employees
going to the doctor less by improving their overall health—but Ripperger
said that the returns on such programs tend to be consistent across the
board.
He pointed out that a recent study by Principal—one the company had validated
by benefits consulting and actuarial firm Milliman—found that for every dollar
spent on putting a wellness program in place, employers have seen an average
reduction of $2.45 in medical claims. Generally, Ripperger added, it takes
about 18 months for an employer to start seeing such returns, noting that the
longer a wellness program is in place, the more health care costs can be
reduced.
While Ripperger said it’s difficult to pinpoint the exact cost of a
wellness program, they are often less than 5 percent of a company’s total
health care costs.
On average, health care for a family runs about $12,100 a year—with employers
picking up 72 percent of the bill, according to the Kaiser Family Foundation’s
2007 annual report on employer health benefits.
Kaiser research also shows that companies tend to implement a wide range of
wellness programs, although they are still utilized by only a small minority of
corporations. Specifically, 19 percent of companies offer injury prevention
programs, while 10 percent offer fitness programs, 9 percent have smoking
cessation programs and only 6 percent offer weight-loss programs, according to
the Kaiser Foundation.
Filed by Mark Bruno of Financial Week, a sister publication of Workforce
Management. To comment, e-mail editors@workforce.com.
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