Issue: More employers are warming up to wellness programs to help reduce health care costs.
Benefit/risk: Wellness works, but choosing the wrong pieces of the wellness puzzle can lower your ROI dramatically.
Action: Focus your program on efforts that create the greatest cost savings for the least investment, starting with the following five.
Lincoln Industries' $245,000 investment in a comprehensiveresulted in savings of $2.7 million, mostly in health care costs. And the Nebraska-based metal finishing company paid health insurance premiums for its 450 employees at nearly half the national average.
Lincoln Industries may be a model for wellness success, but it isn't the only company reaping the rewards. An Aon Consulting study says 43% of employers have established a disease-and health promotion/wellness strategy, while another 19% say they're looking into starting a wellness program.
Wellness programs not only cut costs, but they show top execs that HR specialists can create and lead big-picture strategies that directly affect the bottom line.
Your goal: Focus your program on wellness efforts that generate the biggest cost savings at the lowest cost investment.
Dan Krick, Lincoln Industries' VP of HR and a national expert on wellness programs, suggests following five wellness steps that produce the best ROI:
1. Reward employees with premium reductions. Lincoln Industries' "Well Bucks" program lets employees earn up to $40 in health insurance premium reductions each quarter, based on their participation in various wellness initiatives.
"The money you spend is worth it," says Krick.
2. Hold smoke-free workshops and ban smoking on the premises. Lincoln Industries banned smoking years ago, and smokers can't earn health insurance discounts. Employees who claim to quit are on the honor system.
3. Start employees moving. The company buys pedometers and encourages employees to walk at lunch. Departmental teams compete to see who can rack up the most mileage. Winners earn Well Bucks. The company offers yoga classes and a fitness reimbursement program. It doesn't have an on-site fitness center because its discussions with other employers revealed that few employees used them.
4. Perform quarterly health screenings. Lincoln Industries checks employees' blood pressure, body fat, flexibility and weight each quarter. They review results with the wellness manager or occupational nurse, then set individual goals. Costs for screening services vary greatly; shop around.
5. Stock vending machines with healthy food. "Our vendor hesitated to do it, saying that it won't sell," says Krick. "But we made it a condition of doing business."
So, how much should you spend on a wellness program? Krick says an employer with a small budget could start with $20 to $50 per employee per year. That's $2,000 to $5,000 for 100 employees.
"The number-one mistake I see HR people make is starting wellness efforts without thinking about how they fit into company culture and beliefs," says Krick. For example, honesty is a Lincoln Industries company value and, without it, the honor system-bound smoking cessation program might not have succeeded.
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