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The Flip Side of Wellness Wealth

by Scott MacStravic

While many hospitals and some large physician groups are already investing in the “wellness market”, serving consumers, employers, insurers or any mix thereof, there is another potential for wealth in wellness.  Since large providers are also large employers, they can become their own best customer for the significant economic benefits that are only available to employers from wellness investments.

Many hospitals have already made such investments, along with major integrated systems such as Kaiser Permanente.  The larger providers are as an employer, the more economical it can be to operate their own wellness programs, given both qualities and economies of scale.  And since employees in health care are often high users of sickness services, yet more than usually concerned with health, they should be both more rewarding and more open to having their wellness improved.

The major challenge for providers will likely be to decide which dimensions of economic benefit to look for when planning, managing and evaluating wellness investments.  If the focus is strictly on reducing sickness care costs, for example, the best opportunities for improving productivity and performance are likely to be missed, since these typically are not affected nearly as much by “diseases” as by common health “problems”, such as overweight/obesity, lack of sleep, exercise, healthy diet and effective management of stress.

The further in space providers look for returns on wellness investments, the greater the likelihood they will identify the most rewarding opportunities.  The further in time they look for such returns to be realized, the greater the likelihood they will avoid missing out on investments that take a few years to realize their full potential.

In terms of “space”, for example, employers in the US and Europe have already found significant, often dramatic cost savings achieved through wellness programs’ impact on employee turnover, absenteeism and presenteeism, errors, on the job injuries, workers compensation and disability payments.  Some who looked at such dimensions have also found improvements in customer service and satisfaction and even new business and revenue that result from having a healthier and happier workforce.

As for “time”, while patterns differ for different kinds of wellness initiatives, there seems a clear tendency for net economic benefits to increase over time.  Gordian Health Solutions has reported average ROI ratios for its clients of 1.69:1 in the first year of its engagements, then 2.00:1 in the second, and 2.46 in the third year.  With third-year returns almost half again as great as first-year, providers that judge only on early returns may terminate their investments before they have the chance to pay off. [“When It Makes Cents to Back Into the 80/20 Rule” Gordian Health Solutions Mar 2004]

While the Gordian results reflect results from a changing set of wellness participants, GlaxoSmithKline followed a cohort of the same 6000+ participants over four years.  It found that savings amounted to $233 per participant in the first year, then $375 in the second, $944 in the third, and $950 in the fourth.  While some of this increase was no doubt due to increasing numbers of wellness programs, it also reflects the usual pattern of taking some time for full effects to be realized. [G. Stave “Quantifiable Impact of the Contract for Health and Wellness” JOEM 45:2 Feb 2003 109-117]

Fairview Health Services’ (Mnpls. MN), with 13,000 employees eligible for health benefits launched a system-wide wellness program in 2001, called “Fairview Alive” with health coaching for high risks, disease management for diabetes, asthma, back injury, heart disease, lupus, multiple sclerosis and rheumatoid arthritis.  After 18 months, three-quarters of employees were participating.   Absence costs went down by $157 per participant, WC costs down $1391, turnover fell to 16% vs. 35% for non-participants, where each 1% difference est. to save $5.1 million system-wide. [B. Eischen Impact of Health Management Programs” Integrated Benefits Institute Conference Nov 19-23, 2003]

Providence Everett (WA) Medical Center saved an estimated $3 million, with a 3.8 ROI ratio, using its “Wellness Challenge® program.  It found 28% lower healthcare utilization and costs compared to nine other Providence system hospitals used as a control group. [R. Foust “Evidence Health Management Works” Zoe Consulting, Inc. June 30, 2003]  Had it measured the full range of effects as some employers have done, it would surely have found even greater returns.

Of course, there are challenges whenever an employer operates its own program, but also advantages when healt