Corporate Wellness Program Return on Investment Study

Corporate Health and Wellness
Event

Return On Investment
In-depth analysis of over 50 studies combined
with Health Fairs Direct’s 14 years of industry
expertise providing positive ROI strategies
along with common errors that effect ROI
results

John Buckley
Health Fairs Direct, Inc.
18 Hamilton St, Suite 1
Bound Brook NJ 08805
(732) 563-9756 x:105
jbuckley@healthfairsdirect.com

Corporate Health & Wellness Event
Return on Investment
By
Heath Fairs Direct
EXECUTIVE SUMMARY

The cost of healthcare to corporations in America is going sky high. Over time,
corporations have come to realize that the conventional method of directing
resources exclusively for treating those who are already unwell or disabled is no
longer economically sound. It is clear that the old way of thinking is one of the
reasons for the spiraling treatment expenses most corporations face each year.

An increasing number of employers
across the country are utilizing a
preventative route to healthcare by
providing wellness programs that
involve on site screenings and
consultations to better predict the
potential health challenges of their
employees. This information is now
being used to direct "symptom" based
intervention programs within the
corporation itself.

There is no denying the fact that
healthy employees boost a company’s
bottom line. Research clearly
demonstrates that by encouraging healthier choices among their employees,
corporations are reaping long term savings in terms of less sick days, fewer claims and
declining disability days. Apart from these measurable indicators, companies that
have developed a wholesome wellness cultures also stand to gain from intangible
factors such as job satisfaction, employee retention, recruitment, and employee
engagement.

The Most Important corporate asset is a Healthy Workforce because
a company is only as healthy, energetic and productive as its
employees are. Without a healthy workforce there would
only be a sick company. John Buckley CEO

With the growth of the wellness industry over the past two decades professional
industry players have devised newer methodologies and tweaked older ones to suit
different organizational needs. There are a number of elements and methods

18 Hamilton Street, Suite 1
Bound Brook, NJ 08805
(732) 563-9756
www.healthfairsdirect.com

available for employers to gauge their corporate wellness quotient. Each organization
must enlist options available and choose the program tailored best to achieve their
long term goals and objectives.

Keep in mind that your employees are your greatest asset and they need to be cared
for; "maintained". Keeping your employees healthy is actually more important than
making sure your corporate fleet or office equipment is well maintained. After all,
employees are the essence of any corporation.

This report is based out of numerous research articles written in the area of corporate
wellness practices and wellness studies performed at organizations like Johnson and
Johnson, Citibank, DuPont, Bank of America, Tenneco, Duke University, The California
Public Retirees System, Procter and Gamble, Highmark and Chevron Corporation as
well as reports from Major Medical Insurance providers such as Cigna, United Health
Care and Aetna.

ROI Quick Reference Guide

Here is a quick overview of which programs offer the best ROI. Details of what was
measured and which companies were studied for each ROI category can be found later
in this report.

The values are an average of the various studies taken into consideration for the
purpose of this report. Each value in the table below is the amount earned for every
$1 spent on the program.

1. Comprehensive Online Wellness Portal $17.50
…With Challenges, HRA, Education, Incentives, Activity Tracking, Etc.

2. Health Risk Assessments $6.04
…Delivered in a Full Service Health Fair

3. Fitness Programs $4.90

4. Wellness Coaching $4.50

5. Smoking Cessation $3.50

6. Flu shots $2.51

7. Weight $1.17
Management 18 Hamilton Street, Suite 1
(732) 563-9756

It should be noted that the ROI from HRAs have the highest impact as they are always
done in conjunction with Health Fairs and other interventions such as newsletters,
workshops, telephone coaching, financial incentives, regular feedback, etc. Health
promotion experts believe that HRAs produce the best results when delivered at
comprehensive health fairs and are followed-up with other wellness activities.
More details on ROI for specific programs can be found in later sections of this ROI
report.
SUMMARY OF COST Vs SAVINGS

With healthcare costs on the rise it is becoming increasingly imperative to keep
employees healthy. You can try to hire healthier employees in the future but
wellness programs are the only way to increase the overall health and wellbeing of
your current workforce. According to a policy paper “Workplace Health Promotion”
commissioned by Partnership for Prevention, December 2008, most comprehensive
corporate wellness programs, over a three-year period produce an ROI ranging for
about $1.40 - $4.70 for every $1 invested.

Extensive research suggests that implementing wellness programs and conducting
health fairs at the workplace not only reduces
direct health care expenses, but it also
ensures a more productive workforce,
reduction in employee absenteeism and
turnover, increases employee retention and
fewer workers’ compensation claims, among
other things. While these factors may seem
immeasurable, studies in this area have
proven that will create savings for the
company in the long run.

The chart on the right demonstrates the
return per dollar invested for seven well-
known companies that implemented ©1992, IRSA, the Association of Quality Clubs
comprehensive wellness programs.

Now, ask your CFO what they would be saving if they implemented comprehensive
wellness programs 5 years ago. Then ask what they want to save in the next 5 years.

Reduce Absenteeism
There are numerous factors that control a person’s health and wellbeing, ranging
from a minor infliction like a cold or flu to a major one like a heart disease or
diabetes. Any of these could cause an employee to take time off work. A well-
rounded and comprehensive wellness program can therefore help reduce absenteeism
and save costs to the company.

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A 2005 survey by The Art of Health Promotion reports that companies who
incorporated wellness programs realized a 30 % reduction in medical and absenteeism
costs in less than four years.

A review of scores of published studies on worksite wellness found that the Return on
Investment (ROI) is $5.82 for every $1 invested due to reduced absenteeism alone.
(American Institute for Preventive Medicine Wellness White Paper, 2010)
With regular health checks through wellness programs employees can reduce their
risks. The more risks employees have the higher the number of ‘work loss’ days
claimed. As risks go up, absenteeism goes up and so do healthcare costs.

Number of Health Risks and Excess "Work Loss" Days Due
to Sickness or Injury
The average employee takes 3.5 sick days per year at an
excess cost (over persons with no risks) of $272 per year
6
Work Loss Days (No. per year)

3.4
2.8
5
2.2 2.5
1..9
4 Excess
1.2 Work Loss
3 0.5 Days/ Year
0.0
2 2 2 2 2 2 2 2

2
Base Work
1 Loss Days/
Year
0
0 1 2 3 4 5 6 7
No. of Health Risks
n=5 ,14 2 e m plo ye e s S o urc e : S um m a ry o f 10 m id s ize d U.S

Increase Productivity
Often employees are at work despite an ailment or illness, which invariably reduces
their productivity. During this time at work, while the illnesses spread to coworkers,
it further reduces productivity of the group. One person arriving at work with early
symptoms of the flu can spread the flu to 25% of the workforce if vaccinations are not
offered at the workplace.

The top three ailments that lead to this decreased performance at work are –
headaches, back pain and arthritis. All three of these can be prevented or helped
with regular exercise. (Journal of the American Medical Association, Nov. 2003).
Lower back pain alone causes American workers to miss 100 million work days each
year, according to Wellness Council of America (WELCOA). In addition, poor physical
condition which increase the probability of accidents and often leads to injuries and
increased worker's compensation claims.

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After starting a fitness program, the Canadian Life Assurance company realized a four
percent growth in overall productivity. Further, 47 percent of program participants
felt more alert, had better rapport with their colleagues and generally enjoyed their
work more.

Swedish investigators observed that mental effectiveness was significantly better in
physically fit workers than in non-fit workers. Fit workers committed 27% fewer
errors on tasks involving concentration and short-term memory, as compared with
other workers. The ability of an employee to effectively focus on the task at hand is
inversely related to the number of health risks the person has.

Number of Health Risks and Productivity Loss
The average employee has 2.2 health risks, resulting in productivity losses of about $2,000 per year

30 16%
14%
25 13%
Productivity Loss (%)

9%
7% Excess
20
Productivity
4%
2% Loss
15
0%12 1 2 12 12 1 2 1 2 12 1 2

10
Base
Cost
5

0
0 1 2 3 4 5 6 7
n=26,375 No. of Health Risks So urce : J Occup Enviro n M ed 2006

Increase Job Satisfaction
Productivity is the key to job satisfaction. Productive and effective workers tend to
be more confident in themselves and their job. Successfully accomplishing projects
helps improve individual attitudes. The absence of illness, injuries or other health
problems allows employees to perform better on a regular basis.

A positive attitude, morale boost and high energy levels, all go a long way in work
effectiveness and hence improve job satisfaction. A 1993 study on a group of law
enforcement personnel who merely participated in health screenings showed
increased levels of job satisfaction.

Employee Retention
Employees tend to stay at jobs that they enjoy and leave those that they do not like.
When an employee is not feeling well at the office, be it from akes, pains or
consistent illness, they relate being at the office to being ill. So, unhealthy
employees tend to transfer their bad feelings onto other employees and the company
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as a whole. They tend to create more problems, make more errors and consistently
underperform, all the while blaming the "company" for how they feel.

All of these side effects of being unhealthy contribute to employee turnover. Just as
disease is contagious, so can a bad attitude and you can see turnover happening in
waves as a result.

In one survey, 78% of employees said they would participate in a company-sponsored
wellness program; over 50% said that a wellness program would encourage them to
remain at their current job. (American Association of Occupational Health Nurses,
April 2003)

Disease Prevention
According to a 2002 report of the Centers for Disease Control and Prevention, 40% of
all deaths are caused by Heart Disease and Stroke. Complications from Diabetes
and illnesses related to Obesity are the second largest expense to our health care
system. These diseases are increasingly afflicting the American population and can be
prevented with timely care and action. Prevention is much less expensive then illness
maintenance or interventional treatments. The Northeast Utilities System in its first
2 years of starting a wellness program (1994 -1996) saw a $1,400,000 reduction in
lifestyle and behavioral related medical claims.

Investments made in preventing acute and chronic illness experienced by the U.S.
workforce will have a significant impact on the overall productivity of American
businesses. The total amount of corporate dollars lost to behaviorally related
employee health issues are hard to directly calculate but their negative impact
dramatically affects the corporate bottom line.

PROGRAMS THAT PRODUCE THE BEST ROI

Not all worksite wellness programs are created equal and there is no one-size-fits-all
option available. It is observed that there can be much variation in program design
and execution without sacrificing ROI. While no particular health promotion initiative
can be identified as the one that produces the best ROI, there are a set of best
practices that have been identified from a series of benchmark studies known to have
been a part of effective programs. These include:

Organizational commitment
Incentives for employees to participate
Effective screening and aggregate reporting
Easy access to wellness resources (Local practitioners, in-house lectures,
consultations, fitness programs.)
Effective implementation of programs based on aggregate reporting of risk
factors.

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Ongoing program evaluation, adjusting based on changes in risk factors
Appropriately funding corporate wellness initiatives

Most researchers believe that for Showing Cost Savings from Your Wellness Program
a corporate wellness program to
be sustainable and yield good

Annual healthcare Costs ($)
Projected cost without

results in terms of beneficial a welness program
Savings

ROI, the program must be
ongoing for a few years. It is not Defected healthcare cost
due to welness program

unusual for positive impact from
corporate wellness initiatives to
be noticed only after three to No Wellness Program Wellness Program implemented

four years of program
implementation. -3 -2 -1 0 1 2 3
Previous Years Start Follow-up Years
Source : D. Edingto n University o f M ichigam Co nference 2006

As per discussions during the conference on worksite wellness conducted by the
University of Michigan Health Management Research Center in 2006, cost-containment
of a wellness program is closely dependant on employee participation. For a program
to be cost-effective and improve health in the workplace, it should be designed so as
to attract at least 80 % of the workforce. It should also include as many spouses and
dependants as possible for maximum impact.

The best way to ensure a high participation rate is through incentives that drive
participation in the corporate wellness program. The Johnson & Johnson Health and
Wellness program initiated in 1979 saw an almost 100 % participation. One of the
reasons for this was a significant incentive of $500 provided for employees who took
part in various aspects of the program. The most common incentives include cash
payments, reduced medical co-pay costs, rebate on program costs, gift cards,
merchandise and prizes.

Researchers have also observed that best practice employers implement several
interconnected programs and policies that support workers’ health improvement.
These employers provide workers with affordable health insurance and ready access
to recommended clinical preventive services, health promotion programs. The most
effective method of connecting employees with local health and wellness resources is
through professionally run Health Fairs that include local practitioners to educate
employees on their services. This is a must for any successful ROI initiative.

These companies also offer health risk assessments (HRAs) and health screenings to
individual workers and sometimes family members as well. This is followed by helping
them with risk-appropriate behavior change programs that may include motivational
talks and interviews, goal setting, and training. Over the years, as the Johnson &
Johnson wellness program evolved, it was restructured to integrate employee health,
occupational medicine, disability management and health promotion along with
comprehensive Health Fairs and Wellness Events. The program was estimated to
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save the company an average of $224.66 per employee per year, (1984 dollars) above
and beyond the cost of the program, for the four years examined after its
introduction.

In-House Medical Screenings are also an imperative aspect of an effective worksite
wellness program. It is needed to determine high healthcare cost risk factors in which
ongoing programs are designed. Some of the most common health risk factors are
high blood pressure, high cholesterol, high blood sugar, obesity or overweight,
smoking and physical inactivity. These risk factors could lead to heart disease,
stroke, diabetes and other lifestyle diseases plaguing the United States. People with
these risk factors tend to have higher health care claims that those without these risk
factors.

Research shows that costs go up twice as fast with an increase in risks than they go
down with lowered risks; as there is often residual negative health implications
associated with health risks. Thus, low-risk maintenance (through health promotion
and prevention) is the most important strategy and offers the greatest cost savings
and positive (ROI) than risk reduction and disease management.

Number of Health Risks and Excess Healthcare Claims Cost
The average employee has 2.2 health risks, nearly doubling healthcare
5 costs
3.3

4
2.5
Health Claims (RR)

2.0 Excess
3 Cost
1.5
1.0
2 0.7
0.3
0.0
1 1 1 1 1 1 1 1

1
Base
Cost
0
0 1 2 3 4 5 6 7
No. of Health Risks
n=205,216 So urce : University o f M ichigan study, 2006

When planned well, these programs are tailored to accommodate individual needs.
For example, the internet is convenient for some employees but not for others and
internet based information is already readily available and not commonly used by
corporate employees. So adding more internet based information sources offers little
in terms of ROI. Additional modes of communication must be used, such as in-person
or telephone wellness coaching, printed materials and, most importantly, in-house
interactive "health fair" style events.

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Many organizations have also introduced a variety of modalities that support health
improvement efforts. For example, company policies directed at reducing smoking
rates include banning smoking on company grounds and reimbursing employees for
participation in smoking cessation programs. The Coors Brewing Company which
started its employee health program in 1981 offered a better rate for supplemental
life insurance for employees who refrained from tobacco use (meaning that a 50-year-
old employee who smoked paid twice as much as a non-smoker for the same
coverage).

ROI SPECIFICALLY FROM FLU SHOTS

According to Centers for Disease Prevention (CDC) estimates, on an average 5 to 20 %
of the American population gets the flu and more than 200,000 people are
hospitalized from seasonal flu related complications. These figures are testimony to
the fact that flu vaccination can be categorized as a mandatory health precaution and
must be supported by corporations if they expect to maintain a healthy and
productive workforce.

CIGNA has 34,000 US
employees in 250 US
office locations. Through
its Flu Shots Program,
CIGNA saved an overall
$33 per employee who
participated in the
program, with a 3:1 ROI
for it. This resulted in
29% fewer lost days for
flu shot recipients versus
ones who did not take a
flu shot.

In 2001, Motorola’s Flu
immunization program earned them a $1.20 to $1.00 ROI. This was part of a 3-year
study conducted for their wellness initiative which included disease management, flu
vaccinations, cancer screenings, smoking cessation, health screenings and risk
assessments, 24x7 wellness coaching, back care, on-site/ external wellness centers,
children aerobics and nutrition and stress management. About 13,159 individuals
(employees, dependents, retirees and contractors) participated in their corporate flu
vaccination program, which was a 45% increase of participants from 2000. 86% of the
participants responded that they were satisfied with the program overall and
appreciate the convenience of the program.

A study conducted at McKesson Health Solutions experienced a return on investment
of $2.51 for every $1 spent on the influenza program for their employees. The

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research further goes on to point that people who received just a flu vaccination
related mailing experienced a 2.87 % lower rate of flu-related inpatient bed-days and
a 7.25 % lower rate of flu-related emergency department visits. This research study
was published in the American Journal of Managed Care, November 2008.

As part of its wellness program in 2000, Motorola organized a flu vaccination program
which resulted in positive ROI, reduced doctor office visits and hospitalization costs
and labor savings due to vaccinating their employees. The company saw an
immediate ROI of 1.2 per dollar spent on the vaccination program and long term
savings contributable to improved morale and increased productivity.

The CDC reports that in the U.S, influenza typically contributes to approximately $ 1
to $3 billion in direct medical costs each year and higher indirect costs amounting to
about $ 10 to $15 billion. How much is your company paying to cover these costs?

A typical case of the flu restricts the patient to bed for three to four days and
restricts activity for a week or so longer. Productivity in the workplace is also
challenged by delayed reaction time and lowered physical energy and strength. An
attack can reduce reaction times by 20 to 40 % far beyond the initial sickness and
recovery period. Additionally, many patients tend to return to work before the
alleviation of all symptoms, which impairs effectiveness, further effects productivity
and tend to repeat the cycle by infecting others.

ROI SPECIFICALLY FROM SMOKING CESSATION PROGRAMS

Tobacco is the leading cause of preventable death in the United States and a reason
for serious health problems. About 10 per cent of smokers live with smoking related
illnesses and are a heavy cost to the company through health costs and reduced
productivity. There is compelling research on the benefits from implementing smoking
cessation programs. Studies prove that the cost savings from such programs is
immense, through reduced absenteeism and reduced costs arising from disease and
disability.

A 2010 study by the American Lung Association and Penn State University, found that
helping smokers quit has favorable benefits to states that implement it. The study
finds that if states were to invest in comprehensive smoking cessation benefits, they
would receive on average a 26% return on investment. This would mean that for every
$ spent by the state on the smoking cessation program, it would reap a benefit of
$1.26. Some states would see a higher return that others. They include the District of
Columbia ($1.94), Louisiana ($1.47), Massachusetts ($1.43), Maine ($1.41), Ohio
($1.41) and North Dakota ($1.41). The study deduces monetary gains by considering
lower medical costs due to fewer smokers, increased productivity and reduced
absenteeism and premature death due to smoking.

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UNUM Life insurance company recorded an estimated annual savings of $132,000 to
$237,000 from its smoking cessation program with a return of $1.81 for every dollar
spent on it.

A combined research conducted by the Center for
Health Research and America’s Health Insurance
Plans (AHIP) found that smoking cessation
programs earned investments of $.18 - $.79 per
member per month and would generate an ROI of
$1.34 - $2.05 after five years. This study was
presented in the 13th World Conference on
Tobacco or Health in 2006.

CIGNA offers its smoking cessation program to all
its employees and its benefits eligible family members who wish to quit smoking.
CIGNA estimated a savings of $949 in health care costs for each successful participant,
with a return on investment of 9.5 to 1.

Implementing an Effective Smoking Cessation Program
According to the CDC, employers should offer a minimum of 2 smoking cessation
attempts per year for implementing a successful tobacco cessation program. Ideally,
these smoking cessation attempts are offered at the office during work hours.
Multiple methods should be offered with an emphasis on "natural"
treatments/methods.

Hypnotism should be avoided as it lowers the overall awareness level of the
individual by implanting its "hidden suggestions" below the level of consciousness.
These "suggestions" override the individual's analytical ability as they force the
individual to operate on the implanted suggestion automatically. Because their
behaviors are being dictated from beneath their level of consciousness, even if
successful in quitting, they will not be learning how to achieve personal control of
their health or how to make positive behavioral changes.

Other Measures Employers Can Take to Assist in Smoking Cessation

 Communicating to employees the types of cessation benefits that are available
to them via their health plan
 Adopting a long-term approach to smoking cessation that supports multiple quit
attempts and multiple quit methods IN THE WORKPLACE
 Promoting a workplace that discourages smoking and encourages a healthy
lifestyle (e.g., incentives to achieve and maintain optimal health)

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ROI SPECIFICALLY FROM WELLNESS PORTALS
Research has shown that the return on investment (ROI) form a comprehensive online
wellness portal averages around $17.50 per dollar spent on it. So far, it has shown to
yield the highest ROI among the wellness program initiatives listed in this report.
What makes an online wellness portal a success is the various components it includes,
such as health challenges, health risk assessments (HRA), education, wellness
coaching, incentives, activity tracking, etc.

It is noted to cost about $20 to $30 per employee per year and has year round
wellness activities reinforcing a culture of health and wellbeing within the company,
while addressing a wide range of wellness issues. A portal also tends to attract a wide
range of participants with its social media aspects and its combination of virtual
wellness aspects with live activities where employees can receive instant recognition
and appreciation for positive behavior changes.

It can include ALL of the employees regardless of location or country and can be the
organizational hub for all of a corporation's wellness activities. With built in
communication tools, it tracks and keeps a record of aggregate health data that can
be used to direct wellness dollars to create the greatest impact as well as create a
record that the company can use to prove ROI year after year.

ROI SPECIFICALLY FROM OBESITY MANAGEMENT PROGRAMS

An obesity management program instituted to reduce weight and improve health risk
factors among employees produces an ROI of $1.17 per dollar spent, says a report
based on a study in the Journal of Occupational and Environmental Medicine published
in its September 2008 issue.

Researchers from the University of Georgia analyzed 890 obese employees who
participated in a weight loss program. They received coaching and other services to
support their efforts to lose weight, improve eating habits, and increase physical
activity.

The program provided telephone coaching to participants and access to educational
materials through a health improvement web site. While the coaching services were
customized for each participant, all participants received a standard set of services,
including access to a personal health coach for up to 48 sessions, written materials to
support the coaching sessions, a personal health improvement plan, exercise planning
support, nutrition education, and web-based health trackers.

The researchers used an ROI model to estimate savings that can be achieved through
such a program. The review of financial gain was made with this model estimating
changes in medical costs and worker productivity resulting from reduced health risks.

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Tracked over a period of a year, participants had reductions in seven out of 10 health
risk factors like bad eating habits and lack of exercise.

This research project did not measure other ROI factors such as reduced absenteeism,
increased productivity, improved energy and morale to name a few.

ROI SPECIFICALLY FROM FITNESS PROGRAMS

There is more than enough said about the importance of exercise and physical activity
for the sake of good health. With the tomes of studies on this topic, one can safely
say that a lack of exercise is a critical health risk factor that can have a dramatic
effect on your health and life.

As corporate America realizes the importance of physical fitness, more and more
companies are incorporating fitness programs into their wellness initiatives. The
results of a well-structured fitness program are seen in the form of reduced
absenteeism, lower healthcare costs, reduced turnover, lesser sick leave and positive
Return-on-investment. According to Health Promotion Advocates, a consortium of
groups and individuals committed to health and fitness, for every dollar spent on
work-site wellness and fitness programs, a company saves $5.82 in absenteeism costs
and $3.48 in medical costs.

Blue Cross Blue Shield
Blue Cross Blue Shield,
Indiana found its corporate
fitness program to produce
a 250% ROI. For every dollar
invested in the program
(over a five-year period),
the corporation gained
$2.51.

Coors Brewing Co
The Coors Brewing Company
started its corporate fitness
program in 1984. Six years
later, this initiative returned $6.15 for every dollar invested in it. The company
reported annual returns ranging from $1.24 to $8.33 for each dollar spent on the
fitness program over a six year period.

Kennecott Cooper Co
Over a four-year period for every dollar invested in its fitness program, Kennecott
Cooper earned an ROI of $5.78.

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Equitable Life Assurance
In the first year of its corporate fitness program, Equitable Life Assurance realized an
ROI of $5.52 for every $1 invested in the program.

Canada Life Insurance
For each corporate dollar invested in physical activity, Canada Life earned a return of
$6.85 in reduced turnover, productivity gains and decreased medical claims. The long-
term employee health and worksite fitness program also saw a 4% increase in
productivity.

ROI SPECIFICALLY FROM HEALTH RISK ASSESSMENTS (HRA)

Health risk assessment (HRA) is something that employers use to design programming
that effectively targets current health risk factors. It is also used to measure the long
term impact of wellness initiatives. Ideally an HRA should be conducted twice a year
over a period of 3 to 5 years. Wellness experts believe that best results are achieved
when HRAs are followed-up by health promotion and wellness programs.

Below is a compilation of Wellness programs in various firms where HRAs have been
used with other medical interventions and have seen positive ROI.

SOURCE INTERVENTIONS USED HRA and Medical ROI (FOR $1)
ALONG WITH HRAs Testing Offered At
Health Care Setting Newsletter, self-care Health Fair $6.52
(10-year study) book, self-directed
change materials,
workshops, financial
incentive
Blue Shield, CA (1- Newsletter, self-care Health Fair $6
year study) book, self-directed
change materials,
coaching line, regular
feedback
Bank of America, CA self-directed change Health Fair $5.96
(2-year study) materials, regular
feedback
Procter and Newsletter, self-care Health Fair $6.75
Gamble, OH (3-year book, telephone
study) coaching, workshops
Chevron, CA (2.5- Newsletter, telephone Health Fair $6.42
year study) coaching, workshops
Citi Bank, NA (3- Newsletter, self-care Health Fair $4.64
year study) book, telephone

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coaching, workshops,
regular feedback

Combining HRA with health data from wellness initiatives will help improve care
management, determine the population health profile more accurately, and establish
health priority needs and design custom made health promotion plans.

ROI SPECIFICALLY FROM WELLNESS COACHING

The CEO of Wellness Coaches (WCUSA), Jay Vandegrift defines wellness coaching as a
series of conversations or discussions, interactions between coach and client intended
to elicit the client’s best thinking and decision making to create and accomplish real
and sustained improvement in risky lifestyle behaviors like weight loss, smoking,
sedentary lifestyle, etc. Wellness coaching can be face-face, telephonic, electronic or
a hybrid of all three. The process includes an initial conversation and an ongoing
series of follow-up conversations. The initial conversation includes introductions,
overview of the process, expectation and ground rules, clarifying priorities and goal
setting. The market for telephone coaching services ranges from $4-$8 per
employee/month. Onsite face-to-face services can range from $8-$10 per
employee/month. More comprehensive and specialized coaching services can run up
to $20-$25 per employee/month.

According to WELCOA, an employee health and wellness program directed at bringing
about behavior change among employees has an ROI that ranges anything between $3
and $6, averaging to about $4.5.

An independent study of return on investment (ROI) conducted by Hummingbird
reported an impressive ROI. The study found a $5.5 for every $1 invested in wellness
coaching programs. The program indicates approximately a 23% cost savings after 6
months based on typical costs of health risk factors.

In 2004, Sargento Foods saw a dramatic ROI of more than $13:$1 for the health and
wellness coaching program that was implemented. The company avoided more than
$573,200 in health claims cost during that year.

HOW TO CALCULATE ROI

There are many factors that affect this magical number, which is the reason why
corporations would conduct worksite wellness programs in the first place. According
to wellness expert Randy McCaig, measuring the impact of these programs provides a
significant amount of value, from aiding to gain management’s buy-in to reducing
corporate costs and increasing employee productivity. McCaig who is also Director,
Product Management and Employee Wellness Programs at Canadian based Medisys
Health Group, believes that a company should collect the following information prior
to launching its wellness program.

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 Aggregate results of health testing (cholesterol, glucose, HDL, LDL, blood
pressure, weight, waist measurements, BMI, etc.)
 Number of smokers
 Drug costs
 Sexually Transmitted Diseases (STD) causes, costs and rates
 Absenteeism rates
 Turnover rates
 Employee satisfaction, morale & engagement

The return on investment of any initiative can simply be calculated by dividing the
profit or savings of the initiative by the total investment in the initiative. While there
are many other variables that come into consideration, but the basis of the
calculation is the formula mentioned above.

Smoking Cessation ROI Calculation
In 2006, The Conference Board of Canada estimated an employer’s cost of an individual smoker
to be $3,376 in decreased productivity and increased absenteeism alone when compared to a
non-smoker (two smoking breaks per day outside of regular break times and two more sick days
per year).

(Number of people that quit * $3,376)
______________________________
(Investment in the cessation program)

Note: This calculation does not take into account the positive effects on presenteeism, drug costs
in the future, and STD/LTD costs related to illnesses from smoking.

ROI calculation for initiatives targeting absenteeism (accidents, injuries, illness, etc.)

(Reduction in the number of employee absence days * employee’s daily salary)
________________________________________
(Investment in the targeted initiatives)

Note: This calculation does not take into account elements such as opportunity costs, employee
replacement costs, overtime, reduced productivity, training time, etc.

OBSTACLES IN FUNDING WELLNESS PROGRAMS

Funding wellness programs is by far the biggest challenge in organizing them. “How
much is this going to cost us?” is typically the foremost question that members of
upper management will ask when approached for support of a wellness fair.

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Most corporations do not have a
budget set aside for wellness
programs as it doesn’t feature on
their priority list. Scarcely do they
realize the importance of having a
healthy workforce, which in turn
leads to greater productivity and
output for the company. It is often
viewed as not practical to "spend
money on creating healthy
employees" when the cost savings
are not always glairing, such as
when sales go up or down, or when
budgets are tight in general.

In many cases when the economy
went down at the end of 2008 many
corporations immediately slashed their corporate wellness budget in an effort to "save
money". This proved to be counterproductive as any perceived savings from stopping
spending on healthy employees was lost several times over in illness related
absenteeism, loss of productivity and spiraling morale.

While wellness programs need not be exorbitant in order for them to produce positive
returns, there does however have to be some funds allotted to programming. As a
rule of thumb, a company should ideally set aside about 2 to 4 % of its overall medical
insurance budget for employee health and wellness programs. From an investment
perspective, it is realistic to think that if you invest this amount you should return
approximately $3:1 to $16:1 according to the health management literature.

According to Buck Consultants, on an average, companies paid $220 per employee for
wellness in 2010 which is a big leap from $163 spent the previous year. (This per
employee calculation was for the total number of employees, not just those who
participated in the wellness programs.)

According to the consultancy, the three most popular ways that brought companies
the most gain were:
 Gifts or merchandise to reward employees for healthy behaviors
 Discounts and subsidies for preventive health services like annual
physicals and
 Raffles or door-prizes in health-driven contests or competitions

How much should a company allocate towards an effective, comprehensive employee
wellness program? This question deems consideration from various sources. The
University of Michigan’s wellness program ROI expert, Dee Edington says, “about $300

(732) 563-9756

- $400, (per employee based on the total population), if you expect good savings and
a positive ROI.” He further added that companies that invest adequate amounts in
their wellness programs save at least three times their investment in health-care
related costs.

The Wellness Council of America (WELCOA) recommends that at least $100 - $150 per
employee per year should be spent on wellness promotion activities and more if
incentives are expected.

Health promotion guru Dr Ron Goetzel, who is also the Director of Cornell University
Institute for Health and Productivity Studies, suggests investing about $150 per
employee per year for an expected $ 450 annual ROI per employee.

Based on what experts have to say, a company can run an effective wellness program
for anything within the range of $100 - $400 per employee per year, (based on the
total population of the company).

With a great deal of planning and services from outside vendors, a worksite wellness
program can be very effective, affordable and also fun for employees. It is best to
turn to the industry experts to insure the best products, services while limiting your
potential liability.

According to the Wellness Council of America (WELCOA), one of the primary best
practices for corporations to build an effective wellness program is gaining senior-
level support and participation. If you need the financial resources to organize a
comprehensive and successful wellness program and require proper communication to
be passed on to the rest of the organization, you will need the senior officers to lead
the way.

Furthermore, senior level executives can help link your health promotion objectives
to the business outcome, thereby placing the wellness program as an integral part of
the organization’s culture.

A company truly supportive of wellness programs will have members of the upper
echelons of their management help get rid of hindrances by providing funding,
support and will also be actively involved in the wellness program. Wellness programs
that are directed towards early detection and prevention can save big bucks for a
company. For instance, there is about a $100,000 cost difference between detecting
prostate cancer early versus late treatment.

In 1987, when the Coors Brewing Company established an on-site cardiac
rehabilitation facility it reduced rehabilitation time for post myocardial infarction
patients. These employees bounced back to full productivity faster. This program
alone saved Coors approximately $ 1,390,661 over a six year period.

(732) 563-9756

When Coors initiated an on-site breast screening program in 1985, it led to substantial
savings for the firm. They had screened over 2300 women (including employees and
spouses). As a result four early malignancies were detected. While the program cost
them $63,628, had these cases developed into advanced stages, the cost-to-company
would have been about $289,000 based on direct medical expenses, short-term
disability and human resource costs.

Health Care Trend Comparision

15.00%
o ts

10.00%
f e lthC reC s
a

5.00%
%
%o H a

0.00%
1992 - 2002 2003 2004 2005 2006 2007 2008

-5.00%

Total National Average Ye ar

Nothing is Free if there are Backend Costs
Often, doctor owned clinics and certain dubious health fair companies offer free
health fairs or free medical screenings, such as cholesterol of Glucose, which most
companies will jump at. This can be quite a trap, since on the face of it, a free health
fair sounds like a wonderful idea, but it
in turn could place upon the company
huge back-end costs if done with the
wrong group. This is something
corporate firms should steer clear
from.

The cost savings in the above
mentioned examples alone allows for
implementation of a pretty
comprehensive wellness program.
Having pre allotted budgets for
corporate wellness initiatives will save
companies from falling into the loop of
free health fairs and later suffering the
brunt of heavy back end costs. Moreover, caring for their employees’ health will only
increase their prospects of profit making and productive output.

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BACK-END COSTS

Your health fair salesman has floored you with his sales pitch. The health fair
company has assured you an out-and-out free and fun event. They promise to do free
biometric screenings, offer free massage therapists and also free lunch for every
employee. What more could you ask for? How about some Due Diligence to protect
the employees as well as the corporation as such a free health fair will cost your
corporation and each employees anything from $250 - $650 per employee annually in
back end costs.

Conducting a health fair can be quite a daunting task. Further, many companies do
not have a budget for organizing one. Moreover, they are looking for a hassle free
event as the health fair is often the most visible corporate event they will put on for
the year. When a health fair company approaches them and offers to do it for free,
many companies pounce at the opportunity. But, little do they realize that they’ve
fallen for a raw deal and in the bargain end up paying heavier prices.

What you need to know
A large proportion of health fair companies across the country work this way and most
companies are drawn by these tempting freebies without questioning what the catch
is? The reason is personal profit for the doctor or doctors who own the health fair
company. It is a little known fact that a majority of health fair providers are out-of-
network doctors who use corporate health fairs to attract patients for their medical
practice. In fact the genesis of the health fair industry can be attributed to out-of-
network medical practitioners who wanted to market their services to corporate
employees because they could score big with high paying medical insurance.

Since insurance companies only
pass on business to in-network
medical partners who consented
to work according to insurance
regulations with reduced fees,
these more expensive out-of-
network doctors are required to
market themselves more
aggressively.

This gave birth to the health fair
industry. In order to grow their
business, out-of-network doctors
would offer to organize health
fairs at no cost to the employer,
thus offering various services for
free to tempt more employees

(732) 563-9756

into their events. These doctor-owned companies can afford to offer thousands of
dollars in freebies as they stand to make tens of thousands of dollars through backend
medical billing to your employees. Had this been the case in any other industry, such
“freebies” would be detected as kick-backs and would be banned by corporations.
Since the health fair industry is fairly new, the back end profiteering has not yet been
fully exposed and thousands of corporations are routinely taken advantage of.

Soaring Costs
According to the Actuaries at Lockton Companies LLC, Employee Benefits Specialists,
if 10 % of a company’s employees seek out-of-network medical doctors, the company
will see an additional 9 % increase in its next medical insurance renewal. Since most
corporations share the insurance charges with their employees, everyone in the
company will be paying more for their insurance benefits the following year.
Therefore properly funding a corporation's health and wellness initiatives and banning
"freebies" will increase corporate wellness ROI.

In-Network Providers
In order to provide its employees affordable medical care, a company’s insurance
provider prescreens and makes agreements with doctors to offer high quality services
at reduced costs. So in addition to in-network medical practitioners receiving stricter
screening and approval from your medical insurance provider, these in-network
doctors agree to accept reduced fees for their services saving the employee and the
corporation money with each service they perform. These prescreened doctors are
the most reliable and cost effective way for companies and their employees to obtain
medical care.

Out-Of-Network Providers
There is nothing shady about seeing doctors who are not a part of your medical
insurance network. It is important to note, that out-of-network providers tend to be
more expensive for your company and employees than in-network providers.

Below is an example of how much more expensive out-of-network providers can be.

Category Service Procedure In-Network Out-of- Difference Visits Differenc
Code Costs Network per visit used for e per avg
Costs (Procedure example annual
) treatmen
t plan
Podiatry Bunionectomy 28292 $581.61 $6500.00 $5918.39 1 $5918.39
Outpatient 99213 $52.00 $175.00 $123.00 3 $ 369.00
visit
Chiropractic Adjustment 98941 $33.00 $100.00 $67.00 20 $1340.00
Exam 99213 $52.00 $175.00 $123.00 2 $ 246.00
Massage 97140 $26.54 $85.00 $58.46 20 $1169.20

Additional expenses based on one employee choosing 2 out-of-network services: $ 9042.59

(732) 563-9756

*Based on 2007 Insurance Rates

The medical billing for an out-of-network provider can cost about 2 to 10 times more
than an in-network provider. For example, if an employee has a $500 deductible and
is responsible for 30% of any out-of-network services, they will be expected to pay
$3062.78 out-of-pocket for the above services. If your employee went to an in-
network practitioner and has a $15.00 co-payment for each office visit they would
only have to pay $360.00 for the same series of treatments. Additionally your
insurance company would have to pay $5979.81 extra. These extra costs will be
passed on to your company in your next insurance premium rate increase.

Since most corporations share their total medical insurance costs with their
employees, when your company receives a price increase it will pass a part of this
increase along to each employee. A 10% increase could easily cost each employee
$400 to $600 extra by over a 12 month period. Any way you look at it you, your
company and your employees will all pay more money whenever out-of-network
providers attend your health fair.

DUE DILIGENCE

With the right guidance corporations can shop for the right health fair company and
organize effective health fairs for their employees without overshooting their budget.
When choosing a health fair, wellness event or screening provider verify everything
the corporate health fair company claims to be. Make sure you work only with an
independently owned full service health fair company capable of verifying their
ownership, licensing and insurance coverage. Only Work With a Full Service
Professional Corporate Event Planner Who Specializes in Corporate Wellness!

Be sure to negotiate a deal that doesn’t involve kickbacks. Run from companies
offering free cholesterol or glucose screenings, a gaggle of free massage therapists
and especially free lunch.
These kickbacks are a sure
sign that you are about to
be taken advantage of and
that you will pay dearly on
the back end.

Insurance Fraud
Do not agree to accept
medical providers that will
‘waive the deductible’ or
those who claim to "treat
your employees as if they were in-network providers". They will still bill your

(732) 563-9756

insurance company out-of-network rates and may put your employees and your
company at risk.

A common practice is for out-of-network medical doctors to offer to NOT BILL
CORPORATE EMPLOYEES FOR THEIR MEDICAL INSURANCE DEDUCTIBLE, CO-INSURANCE
OR CO-PAYMENT. This is against the medical insurance industry regulations.

The Law:
Long Island Pulmonary Assoc. v. Metropolitan Life Ins. Co.,
2/14/2003 N.Y.L.J. 24 (col. 6) (Sup. Court, Nassau Co.2003).
The Nassau Co. Supreme Court granted summary judgment to United Healthcare on a
cause of action for tortious interference on the theory that a physician that waives co-
pays is tortiously interfering with the contract between the insurer and the beneficiary.
The New York Comptroller has taken the position that a non-par provider that waives co-
pays is illegally inducing the patient to otherwise seek out-of-network care at a higher
cost to the insurer. The fact that the waiver circumvents the normal financial impediment
to seeking out-of-network care is the "fraudulent insurance act" that is in violation of
Penal Law § 176.05(2) and Insurance Law § 403(c).
The Solution:
Do your Due Diligence. Know who you are working with and make sure they are
properly licensed. Know for sure who owns the company and make sure they are not
directly associated with any medical practice. Make sure to get a 100% in-network
guarantee.

To help with this process OpenHouse Direct Inc (OHD) has a sample Due Diligence
Checklist to help guide you through the decision making process when evaluating your
current or choosing your next corporate health and wellness event.

Exhibitors should be more involved in educating employees and not sell their products
or services. Ensure that your health fair provider has each exhibitor sign a strict
Exhibitor Code of Conduct to make sure that they will be a good fit for your event.

CONCLUSION

Achieving a positive ROI on your health and wellness programs is simple if you know
what to do and what to avoid. The corporate health and wellness industry is new and
under-regulated. Hopefully this will change in the near future but until then it is up
to each corporation to make sure they are creating a wellness program that will give
them a positive Return on Investment.

(732) 563-9756

SOURCES:

1. Workplace Health Promotion: Policy recommendations that encourage employers to
support health improvement programs for their workers, December 2008.

2. Cost Benefit Analysis and Report 1979-2001, University of Michigan Health
Management Research Center.

3. The Burden of Chronic Diseases and Their Risk Factors. National and State
Perspective 2002. Centers for Disease Control and Prevention (CDC).

4. Edington D. Wellness in the Workplace Conference - Beyond Individual Risks and
Behaviors, March 2006. University of Michigan Health Management Research Center.

5. Heaney CA, Goetzel RZ. A review of health-related outcomes of multi-component
worksite health promotion programs. American Journal of Health Promotion, 1997.

6. Goetzel RZ, Guindon AM, Turshen IJ, Ozminkowski RJ. Health and Productivity
Management: Establishing key performance measures, benchmarks, and best
practices. Journal of Occupational and Environmental Medicine, 2001.

7. Goetzel RZ, Shechter D, Ozminkowski RJ, Marmet PF, Tabrizi MJ, Roemer EC. CME
Promising Practices in Employer Health and Productivity Management Efforts: Findings
From a Benchmarking Study. Journal of Occupational and Environmental Medicine,
2007.

8. O’Donnell M, Bishop C, Kaplan K. Benchmarking best practices in workplace health
promotion. Art of Health Promotion, 1997.

9. Wellness Councils of America. Seven benchmarks of success, August4.
http://www.welcoa.org/wellworkplace/index.php?category=2

10. Goetzel RZ. Essential building blocks for successful worksite health promotion
programs. Manag Employ Health Bene, 1997.

11. Agency for Healthcare Research and Quality. U.S. Preventive Services Task Force
(USPSTF), September 8, 2008 http://www.ahrq.gov/clinic/USpstfix.htm

12. Colonel Elvin Ray Hamlin, Colonel Albert J Sierra. Impact of Corporate Health
Promotions on Productivity and Health Care Expenditures. Executive Research
Project, 1993.

13. Ronald J Ozminkowski, et.al. Lomg-Term Impact of Johnson & Johnson’s Health
and Wellness Program on Health Care Utilization and Expenditures. Journal of
Occupational and Environmental Medicine, 2002.

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14. Study shows McKesson’s Flu Vaccine, Nurse Advice Line Mailings Decrease Bed
Days/ ED Visits, Improve Health Plan ROI. The American Journal of Managed Care,
November 2008.

15. Motorola Global Wellness Initiatives 2002.

16. WELCOA: WELCOA’s Well Workplace Model.

17. Ozminkowski, Goetzel et al., A return on investment evaluation of the Citibank,
N.A., health management program, 1999. American Journal of Health Promotion.

18. WELCOA’s 7 Benchmarks of success. Absolute Advantage: The Workplace
Wellness Magazine, 2006.

19. Annual smoking - attributable mortality, years of potential life lost, and economic
costs – United States, 1995-1999. Morbidity and Mortality Weekly Report 2002. Centers
for Disease Control and Prevention (CDC).

20. ‘Prevention Makes Common “Cents.”’ U.S Department of Health and Human
Services, September 2003.

21. Worksite Wellness: ‘Overview of Worksite Wellness & Its Value.’ Pennsylvania
Department of Health, July 2008.

22. New Study Finds Positive Return on Investment for States that Invest in Quit
Smoking Treatments. American Lung Association.

23. ‘From 0 to 500 in 30 years flat.’ Absolute Advantage The Workplace Wellness
Magazine, 2002.

24. Jeffrey Fellows, Jack Hollis, Bob Rehm and John Dickerson. ‘Estimating the Return
on Investment to Smoking Cessation.’ The 13th World Conference on Tobacco or
Health, Washington D.C, 2006. Center for Health Research and America’s Health
Insurance Plans.

25. Best Practices for Comprehensive Tobacco Control Programs. Centers for Disease
Control and Prevention.

26. Kristin M Baker, Ron Z Goetzel, et al. Using a Return-On-Investment Estimation
Model to Evaluate Outcomes from an Obesity Management Worksite Health Promotion
Program. Journal of Occupational and Environmental Medicine, 2008.

27. Jim Narum. Working out at Work. Employee Benefits Planner, Minnesota’s Journal
of Human Resource Management, 2003.

28. Kenneth R. Pelletier. American Journal of Health Promotion, March/April 1991.
(732) 563-9756

29. This is Corporate Wellness and its Bottom Line Impact. Wellness Councils of
America, 1991.

30. The Cost Effectiveness of Corporate Wellness Programs. American Institute of
Preventive Medicine, 1991.

31. Lifelong Fitness. Benefits of corporate Fitness.

32. Benefits of Physical Activity @ Work – Bottom-Line Benefits of Physical Activity @
Work. Alberta Centre for Active Living

33. Robert Kaman. Fitness in Business, 1987.

34. Maintaining a Healthy Workforce. Insights, 2006.

35. Yann A. Meunier, Health Promotion Manager, Stanford Health Improvement
Program, Stanford School of Medicine. “HRAs and ROI.” Stanford Prevention Research
Centre.

36. Randy McCaig, Director, Product Development Employee Wellness Programs,
Medisys Wellness. “Employee Wellness ROI: Measuring the Success of Wellness
Programs,

37. WELCOA. “The Cost of Wellness,” interview with Ron Goetzel, Director, Cornell
University Institute for Health & Productivity Studies. WELCOA September 26, 2007.

38. Dee Edington, director of University of Michigan Health Management Research
Center, 25th Annual Wellness in the Workplace Conference, University of Michigan.

39. News from Prairie States Enterprises…Health Coaches Slash Medical Spending,
Improve Lifestyle Habits at Sargento Foods.

40. Coaching Catches On. A WELCOA Expert Interview. http://www.welcoa.org

41. David Hunnicutt. An Introduction to Wellness Coaching - A Pre-Conference
Workshop. The WELCOA Webinar series.

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