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The Dose - JK Wall

Welcome to The Dose, which tackles the finances behind local health care and life sciences and points to the most interesting national analysis. Your host is J.K. Wall.

Health Care & Life Sciences / Life Science & Biotech

Are workplace wellness programs worth it?

November 26, 2014

I broke form when I wrote this past week about an interesting weight loss program at Hillenbrand Inc. in Batesville.

I rarely write about workplace wellness because, with 98 percent of employers offering some form of it, it doesn’t seem to me to have a lot of news value.

But my interest has been rekindled the past few months because wellness, believe it or not, is now a minefield for businesses.

Since August, the Equal Employment Opportunity Commission has taken up three lawsuits against companies because their wellness programs assessed fines, or revoked employer contributions toward insurance coverage or resulted in termination when workers did not participate in required medical exams. The last of those suits, against industrial giant Honeywell International Inc., really caught everyone’s attention.

This has been a surprising turn from the Obama administration, which fully embraced wellness efforts with larger tax incentives in the Affordable Care Act.

But the case for those breaks continues to be under severe attack.

Just this week, the most prominent skeptics of workplace wellness published their latest study—on the blog of the well-regarded Health Affairs academic journal—arguing that wellness programs actually increase employer spending on health care, rather than decreasing it.

“Because today’s conventional programs fail to pay for themselves and confer no proven net health benefit (and may on balance adversely affect health through over-diagnosis and promotion of unhealthy eating patterns), conventional wellness programs may fail the Americans with Disabilities Act’s “business necessity” standard if the financial forfeiture for non-participants is deemed coercive,” wrote Al Lewis, Vik Khanna and Shana Montrose. That is exactly why the EEOC filed its three lawsuits against employer wellness programs, they added.

A key piece of their analysis came from an academic journal review published in July of nearly 30 years of workplace wellness studies. The overall results of those 51 studies suggested wellness programs produce a 138 percent return on investment. But when looking only at the highest-quality studies—those that randomized participants and compared them to a control group—the study found that wellness programs produced a negative ROI of 22 percent.

So is that it? Are wellness programs worthless?

Certainly not everyone is convinced. Julie Joerger, the director of global HR at Hillenbrand, said it makes sense for her company because its employees, who are predominantly male, stay for long periods of time.

If workers start developing more serious health issues in their 40s, odds are, Joerger said, they are still going to be on Hillenbrand’s payroll 20 years later. It also has short-term advantages, she added, although they tend to be harder to measure.

“This kind of program has so much more of an impact than just on their physical health,” Joerger told me, citing mental health, home life and productivity on the job. “It makes us a better company.”

Karl Ahlrichs, a benefits consultant at Indianapolis-based Gregory & Appel who convenes a regular roundtable of local chief financial officers, said wellness is valuable strategically as a way to promote a more productive workforce and workplace culture.

But if CFOs are going to insist that wellness pay for itself in each fiscal year, he added, they’re likely to be disappointed.

After listening to all these folks, it seems as if wellness is just like the rest of health care: It’s an area of spending, not savings. Yet its value, while hard to quantify, is likely significant.

 

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