Measure ROI for your wellness program

They’re the hot new item employers are adding to benefits plans, but many companies are having a tough time measuring the return on investment from their wellness program.

Wellness programs affect many facets of an organization. They can boost productivity, cut insurance costs and reduce absenteeism, among other things. But how do you set about getting a measure of how much it’s helping to cut costs?

A recent survey by Health2Resources found that only 25% of participants have been able to nail down an ROI. That’s 14% more than were doing it in 2007, but still not many.

Part of the problem is that wellness programs are new, and proving to be rather hard to track. Changes in participation, employee privacy issues and uncertainty as to where to gather data all contribute to the problem.

But there are three areas that can be tracked once a data collection process is put in place:

1. Sick leave. If sick leave’s gone down since the wellness program has started up, you’re on the right track. Take the amount of sick leave used before the program started and compare it to the sick time used after the program got underway.
2. Medical Claims. You can track medical claims two ways. One way is to track the claims of all employees as a whole. Like sick leave, compare the pre- and post-program claims to see if there’s a difference. The other way to track wellness success is to pit the program participants against the non-participants. But make sure the two categories are comparable to minimize the effect of selection bias. For example, if all of the people in your non-participant category are over the age of 40, but the ones in your participant category are in their late 20’s the results will be skewed. Instead, try going employee by employee. If you have a 25 year old male smoker who participated, compare him to a non-participating male smoker of comparable age. One company measured in this fashion for four years and found they’d saved $1.3 million over that time period!
3. Workers Compensation claims. Divide the total claims cost by the number of employees covered by Workers Comp. Track the change of per capita claims from before the wellness program to after.

A research professor and director at the Institute for Health Productivity Studies at Emory University has estimated that for every dollar invested into a wellness program, you can expect to save between $1.50 to $3.

Had wellness program success, or a great way to track ROI? Tell us about it in the comments section below.