Corporate Wellness Return On Investment (ROI)

By November 22, 2012 Wellness programs

What is the cost-to-benefit analysis of a Workplace Wellness Program?

For many companies, medical costs can consume half of corporate profits or more. It is common now for employers to utilize cost sharing, cost shifting, managed care plans, risk rating, and cash-based rebates or incentives. However, these methods only shift costs. Workplace wellness promotion stands out as the long-term answer for keeping employees healthy and at less risk of disease.

Recently, public and private efforts and programs are increasingly designed to promote healthy behaviors. Employers are becoming more aware that overweight and obesity, lack of physical activity, and tobacco use are adversely affecting the health and productivity of their employees and ultimately, the business’s bottom line. As a result, innovative employers are providing their employees with a variety of work-site-based health promotion and disease prevention programs. These programs have been show to improve employee health, increase productivity, and yield a significant return on investment for the employer. For example, a recent review of health promotion and disease management programs found a significant return on investment for those programs, with benefit-to-cost ratios ranging from $1.49 to $4.91(median of $3.14) in benefits for every dollar spent on the program. Several major companies with award-winning cost-saving health promotion disease prevention programs include:

Not only do individual Americans have the power to effect dramatic change in their personal health status, but also the health statistics of the nation.

Cost and Benefit Ratio of the Energyfirst Wellness Program

The benefits of the EnergyFirst program corporate clients have recognized include reduced sick days, fewer health care claims, as well as improved productivity, and improved morale and loyalty.

Cost of Absenteeism

To consider the benefits of such a program, consider the affect on the cost of absenteeism for a company of 150 employees.

A recent survey showed that the average rate of absenteeism on any given day is approximately 2.5% i.e. approximately 4 employees absent out of 150 total employees

The cost of a sick day is calculated as (salary + 30% employer costs) divided by 240 working days

Let’s assume the average wage in our example is $40,000 per year.

The employer’s average cost of a sick day is calculated as: ($40,000 + $12,000) = $217 per day divided by 240.

Let’s also assume there are 4 absences a day (per the aforementioned survey):

$217 X 4 = $868 per day X 240 (working days) = approximately $208,000 per year or $1,387 per employee per year, based on 150 employees.

The average cost of absenteeism is $1,387 per employee per year.

Based on other company’s previous experience with the program the anticipated reduction in absenteeism would be approximately 17.5%, amounting to savings of $243 per employee, per year.