Don’t reinvent the Wheel

Some 15 years later, a review of the literature would suggest that the approaches to calculating ROI are as numerous as the number of companies actually offering wellness programming to their employees. Employers use qualitative as well as quantitative measures to place real dollar values on their program results. In our review of the literature, we looked at 25 articles dealing with 25 different populations using 25 different methods of calculating ROI.

To measure the health outcomes of wellness programs, employers generally use the results of health risk assessments (HRAs) and biometric screenings of a number of health risks such as cholesterol, blood pressure, obesity, blood sugar, tobacco use and sedentary lifestyle. They also endeavour to capture before-and-after data relating to short-term and long-term disability, presenteeism and productivity. Then, on a go-forward basis, employers will track annual changes in the metrics they have identified to determine the success of their wellness programs.

During the mid-1990s, the Holy Grail of ROI data was absolute numbers. In Canada, there is now a deviation from trying to mimic the American approach to ROI calculation. This divergence, due to the dissimilarities in our healthcare systems, underscores that any attempt to standardize data collection and ROI calculation approaches between the two countries would be folly. Try as we might, we are beginning to understand that there is little value in ROI calculations when they are forced to fit a model that is dissimilar from the Canadian experience.

Interestingly enough, Canadian wellness practitioners have been unable to quantify the costs associated with those healthcare expenditures that are the purview of the various provincial healthcare programs available to Canadians. On the one hand, American data from various case studies have been dismissed because it included the costs associated with physician and hospital services, which are not typically available to employees’ private healthcare plans in Canada. Because the concept of universality does not exist in the United States, many American citizens find themselves without any coverage whatsoever.

Alternatively, Canadian case studies, which have been modelled after a number of American initiatives, have been dismissed because they are not reflective of the Canadian reality. The irony is that while Canadian wellness professionals were endeavouring to force Canadian data to conform to the U.S. experience, they were doing so in all likelihood unaware that healthcare costs in the U.S. represented only 20% of total wellness-related expenditures, whereas short-term disability, long-term disability and presenteeism represented 80%. Not unlike the iceberg, there is a tremendous amount of danger represented by indirect costs that lie beneath the surface.

There are six key elements for which baseline data should be collected and for which, on a go-forward basis, data for each category should be updated and compared to the original baseline data annually thereafter. Those key elements are:
• HRAs,
• Short-term disability data,
• Long-term disability data,
• Biometric screening initiatives,
• Productivity,
• Presenteeism, and
• Employee engagement.

By capturing baseline data relating to each of these areas, employers are putting themselves in an excellent position to evaluate their program performance annually.

In October of 2009, Buffett & Company released the results of its fifth tri-annual National Wellness Survey; 634 Canadian employers, representing a broad cross-section of public and private sector and not-for-profit organizations, completed the survey.

Each employer was asked to choose a response that best described its organization’s motivation for offering wellness initiatives. The responses in order of their significance to the employers were as follows:
Organizational culture – 53.1%
Benefit cost containment – 17%
Employee retention – 11.8%
Employee request – 8.2%
Management request or initiative – 5.1%

Employers were also asked three critical questions that speak volumes about the supposed importance of ROI to the organization.
1) Is the organization continuously evaluating and recording the outcomes of its wellness efforts? Only 38% said yes.
2) Does the organization attempt to calculate the ROI on its wellness efforts? In this case, 75.2% of the respondents indicated they did not calculate ROI.
3) What barriers does the organization face in implementing wellness programs? Some 43.3% of respondents identified the lack of ability to quantify results as a major barrier.

These three questions in relationship to what the survey respondents identified as their motivation for offering wellness initiatives prove interesting. By far, the single largest response describing an organization’s motivation for offering wellness programs was organizational culture (53%). This was followed by benefits cost containment at 17%. On the one hand, organizations are saying that they are implementing wellness initiatives because the initiatives speak to who they are as an employer and are a critical component of their organizational culture. However, employers were asked to identify the primary motivators for offering wellness as opposed to the one motivator that superseded all others. In this case, more than 70% of the respondents identified “enhance organizational culture and improve employee morale” as the top two reasons for offering wellness.

The majority of employers that participated in this survey are paying lip service to both the program evaluation and ROI calculation. Although the media, and to some extent the insurance industry, have identified the importance of being able to calculate ROI as a critical requirement for the establishment and ongoing viability of wellness programming, the survey responses did not bear this out.

In addition to the six areas where baseline data should be collected, the wellness community needs to come together to adopt standard approaches to the collection and analysis of that data.

People with single or multiple risks represent a significant challenge and a potential cost that will ultimately impact their employer profoundly. An organization’s ability to assist its employees in modifying and/or eliminating that risk represents a major win for the two most critical stakeholders: the employer and the employee. The extent to which employers can assist employees in impacting the six areas will enable employers to manage their employee health risk far more effectively, while offering their employees a greater opportunity to improve their health and the health of their family members.

Without question, meaningful ROI is readily available. In many instances, we have been looking for the wrong data in the wrong places. The tools enabling us to effectively evaluate our wellness programs are at our disposal. The challenge is to avoid the temptation to overcomplicate this issue, and instead to confidently move forward knowing we have what is required to make and sustain the business case for wellness—without the need to reinvent the wheel.

Ed Buffett is President and Chief Executive Officer of Buffett and Company Worksite Wellness. ebuffett@buffettandcompany.com

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© Copyright 2010 Rogers Publishing Ltd. This article first appeared in the March 2010 edition of WORKING WELL magazine.