In the midst of the Great Recession, the most serious economic downturn since the Great Depression, companies are clamoring for ways to cut costs, particularly when it comes to skyrocketing health benefits.
There are a number of measures employers can take to stretch their benefit dollars further and realize cost savings with investment in wellness infrastructure. Although counterintuitive, now is the time to make investments in employee wellness.
While improving employee health is a concern among businesses as a matter of corporate social responsibility, perhaps the greatest motivator for companies to invest in employee wellness programs is to decrease corporate health care expenses. Approximately 50 percent of injury and illness costs are lifestyle-related, according to the Partnership for Prevention’s Healthy Workforce 2010, presenting significant opportunities to improve productivity and reduce costs.
Improving and promoting employee wellness boosts productivity by making people happier and healthier, and it can reduce insurance premiums for companies if healthier employees are filing fewer medical claims. Case studies suggest that for every $1 spent on wellness programs, a company can save approximately $4 on health insurance costs. For example, employees who report having high blood glucose levels have 35-percent higher expenditures than an individual who does not, and employees at extremely high or low body weight have 21 percent higher expenditures than individuals who do not, according to the Health Enhancement Research Organization.
Worksite wellness programs are showing a significant return on investment among companies across the U.S., including:
- Johnson & Johnson’s Healthy People program, which saves an estimated $9 to $10 million per year from reduced medical utilization and lower administrative expenses.
- Citibank’s comprehensive health management program, which demonstrates for every dollar invested in programming activities, $4.56 to $4.73 was saved in reduced health care costs.
- Union Pacific Railroad’s medical self-care program, which shows a cost savings of $2.78 for every dollar invested by reducing inappropriate emergency room and outpatient visits.
Here in Milwaukee, Robert W. Baird & Co. Inc. launched its wellness program in 2006. In the past three years, Baird’s health care cost trend has decreased from 13 percent per year to 7 percent per year, and it is expected to be lower in 2010 as well. In addition, preventable health risks, which are closely associated with health care costs, have decreased for Baird employees.
There are many organizations in Milwaukee taking steps to help encourage workplace wellness and work toward a broader goal of creating a more vibrant and productive workforce. Baird is a member of Well City Milwaukee, a workplace wellness-focused coalition of local employers, led by the City of Milwaukee, the Greater Milwaukee Committee and the Metropolitan Milwaukee Association of Commerce. More than 50 local employers are working together through Well City Milwaukee to achieve a Well City USA designation for our city, creating a call-to-action for all employers, large and small, to work together by investing in workplace wellness.
I urge employers to make a commitment to improving the health and quality of life of the workforce and their families. Not only is the workplace a logical venue to encourage and support healthy lifestyles, but workplace wellness is the right business strategy to achieve bottom-line results that can significantly reduce health care and benefit costs. It is clear that investing in an employee wellness infrastructure is a win-win for all.
Janet McMahon is the executive director of Well City Milwaukee. For more information about Well City Milwaukee, visit www.wellcitymilwaukee.org.
