Employee Health, Wellness, and Welfare

Question 1

What are two broad strategies to help control medical costs?

Answer 1

• Improve workers’ health habits.
• Reduce employer payments for employee health insurance or health care.

Question 2

What is the logic of the costs and benefits of employee health and wellness?

Answer 2

• Organizations invest in programs that attract, select, develop, or encourage employees to improve their health at the worksite and in their lifestyles.
• Organizations invest in employee assistance programs to address specific employee
  health issues.
• Employees respond by adopting healthier lifestyle behaviors both at work and away from work.
• Healthier employees require less treatment for health problems, reducing employer-paid health-care services or group health insurance premiums.
• Healthier employees are available at work more often because they are absent less (due to both personal health and family health issues), and they separate less frequently.
• Healthier employees perform better at work due to greater physical and mental capacity.
• Better job performance, reduced absenteeism, and reduced turnover result in lower costs and increased revenues which results in better finanical outcome (e.g., ROI, ROA, higher stock values, etc.).

Question 3

According to a survey of Fortune 500 companies, what are the top five objectives of corporate wellnes programs?

Answer 3

1. To promote better health
2. To improve cardiovascular fitness
3. To reduce coronary risk factors
4. To decrease health-care costs
5. To improve employee relations

Question 4

How are corporate wellness programs typically evaluated?

Answer 4

• Typically, the evaluation of a WHP program relies on some form of cost-effectiveness, cost-benefit, or return-on-investment (ROI) analysis.

Question 5

What is cost-effectiveness analysis and how does this apply to corporate wellness programs?

Answer 5

• Cost-effectiveness (C/E) analysis identifies the cost of producing a unit of effect within a given program.
• To illustrate, suppose a worksite hypertension-control program incurs an annual cost of $50,000 for a 100-employee population. The average reduction in diastolic blood pressure per treated individual is 8 millimeters of mercury (mm/Hg).
  
  • C/E ratio is as follows:
    $50,000 / 100 ÷ 8 mm/Hg = $62.50 per mm/Hg reduction
• C/E analysis permits comparisons of alternative interventions designed to achieve the same goal.
  
  • For example, the cost of $62.50 to reduce each mm/Hg achieved by the program
    could be compared to alternative programs to reduce diastolic blood pressure that are not offered at the worksite.

Question 6

Suppose that a wellness program costs a firm $250,000 during its first year of operation. The measured savings are $65,000 from reduced absenteeism, $110,000 from reduced employer health-care payments (assuming a self-funded plan), and $90,000 from reduced employee turnover. What is the return on investment (ROI) for this program?

Answer 6

• Reduced absenteeism $65,000
• Reduced health-care payments $110,000
• Reduced employee turnover $90,000
• Total expected benefits $265,000
• ROI = Total expected benefit ÷ Program investment
• ROI = $265,000 ÷ $250,000 = 106%

Question 7

What is an ideal evaluation process for determining the effectiveness of a corporate wellness program?

Answer 7

1. The strategy begins with (a) determination of the demographics of an organization (age, gender, race, and ethnicity), (b) identification of high-risk employees, (c) expected participation rates, and (d) start-up and maintenance costs required to reach an organization’s goals (such as reducing the incidence and costs of undetected cancerous conditions).
2. The next step is to develop a testing and tracking system to quantify the outcomes of the WHP program for both participants and nonparticipants. Individuals in these two groups should be matched as closely as possible in terms of characteristics such as gender, age, weight category, and lifestyle variables. Pre- and post-comparisons can be made for both groups in terms of behavioral changes, health-care costs, fitness level, absenteeism, turnover, injury rate and severity, productivity, and job satisfaction.
3. Finally, cost-benefit analyses must include present and future benefits, expressed in current dollar values.

Question 8

What is the most effective way to communicate the effects of wellness programs to decision makers?

Answer 8

1. In communicating the results of wellness programs, it may be helpful to begin by presenting some national-level statistics to serve as benchmarks against which to measure a firm’s employees. Consider four broad categories of such data: chronic conditions, smoking,
   regular exercise, and lifestyle choices.
2. When you have presented this broad information as background, consider presenting a second, more focused set of information that relates more directly to ROI analyses of wellness programs in your own organization.

Question 9

What is an EAP?

Answer 9

• An EAP (employee assistance program) is a system that provides confidential, professional care to employees whose job performance is or may become adversely affected by a variety of personal problems.

Question 10

What costs can be affected by EAPs?

Answer 10

• productivity
• employee turnover
• unemployment costs
• supervisors’ time