How Healthy Is Your Wellness Program?

How Healthy Is Your Wellness Program?

When one wellness study results in four different kinds of headlines, it’s no wonder everyone’s confused.

Let’s start today’s column with a short mental health assessment. Here are four recent headlines atop stories in the media on employer wellness programs. See if you can match them to the corresponding study to which they are referring. Here are the headlines:

  • “Workplace wellness program fails the bottom line—study”
  • “Workplace wellness programs can cut chronic illness costs”
  • “Study raises questions for employer wellness programs”
  • “Workplace wellness programs work”

And here are the studies:

  • Managing Manifest Diseases, But Not Health Risks, Saved PepsiCo Money Over Seven Years
  • Managing Manifest Diseases, But Not Health Risks, Saved PepsiCo Money Over Seven Years
  • Managing Manifest Diseases, But Not Health Risks, Saved PepsiCo Money Over Seven Years
  • Managing Manifest Diseases, But Not Health Risks, Saved PepsiCo Money Over Seven Years

Each of the stories and corresponding headlines were written about the same research. With such mixed messages, it’s no wonder that the business community continues to be baffled by the return on investment in employee wellness programs.

Let’s go over some employee wellness program basics. Employee wellness programs generally fall into two categories: Lifestyle management and disease management. Lifestyle management is targeted at employee behavior (like smoking) that could lead to health problems later (like lung cancer). Disease management is targeted at employees with chronic medical conditions (like diabetes) that, left unaddressed, could lead to more serious health consequences later (like hospitalization). According to a RAND Corp. study released last year, about half of all U.S. employers offer workplace wellness programs to their employees. Of those that do, 77 percent offer lifestyle management programs, and 56 percent offer disease management programs (see

Employers can offer employees workplace wellness programs directly or offer coverage of wellness program services through the health insurance benefits they provide workers. According to the most recent annual report on employer health benefits by the Kaiser Family Foundation and the Health Research & Education Trust of the American Hospital Association, of those employers that provide health insurance to their employees, 77 percent offer at least one covered wellness program or service.

The big question, of course, is do the programs work? Do they improve the health of employees and do employers save money on their health care benefits costs by having a healthier workforce?

In one of the biggest assessments of a workplace wellness program, the answer is yes, but not as much you would think. Researchers from the RAND Corp. studied the impact of the workplace wellness program that PepsiCo launched in 2003. The food and beverage giant, based in Purchase, N.Y., employs nearly 300,000 people and generates more than $65 billion in annual revenue. PepsiCo’s Healthy Living program offers workers both lifestyle management and disease management wellness programs and services. The researchers compared the medical and pharmacy claims submitted by a representative sample of participating and non-participating employees from 2004 to 2011. They calculated ROI in the program as reductions in health care and absenteeism costs over the program costs during the period. Here’s what they found:

  • For every dollar the company spent on Healthy Living, it saved $1.46, a 46 percent ROI.
  • The ROI for disease management was much higher than the ROI for lifestyle management ($3.78 versus $0.48, respectively).
  • Healthy Living savings per member per month were $30, or $360 per year.
  • The biggest source of savings came from keeping employees with chronic illnesses out of the hospital through disease management intervention.

Given the findings, employers would be wise to heed the researchers’ three recommendations rather than relying on headlines to keep them informed. They urged employers: Not to assume all workplace wellness programs save money; to align a program’s specific components with the company’s stated objectives for the program; and to consider the total cost of a program before deciding which program components to offer employees. (You can read the report in Health Affairs at

That’s sage advice given that measuring ROI is one of the least likely ways that businesses gauge the success of their workplace wellness programs, according to the Kaiser/HRET report (see chart). Employers should approach their workplace wellness programs the same way they approach any business decision that requires an outlay of money.


Short take

You know what keeps you up at night. So do hospital CEOs. For the 10th consecutive year, financial challenges ranked first on their list of concerns in 2013, according to a survey of 388 hospital CEOs, conducted by the American College of Healthcare Executives. Of those challenges, government funding cuts ranked first on a list of 12 specific concerns; commercial insurance reimbursement and managed-care payments finished 11th and 12th, respectively. Maybe they do sleep better than you. (Read the survey at


Last month we talked about 10 new medical technologies that the ECRI Foundation said should be on hospitals’ radar this year. Three days after ECRI released its report, one of those technologies—catheter-based renal denervation systems to treat uncontrollable high blood pressure—was pulled from testing by Medtronic because it was ineffective. (For more, see One less thing to worry about.


David Burda (@davidrburda, is editorial director, health care strategies, for MSP-C, where he serves as the chief health care content strategist and health care subject matter expert, and was editor of Modern Healthcare, the industry’s leading health care business publication.

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