But are employee wellness programs delivering a return on investment? Are they helping to improve productivity and contain the growing cost of medical benefits?

A Set of Number Crunches

In trying to measure a wellness program’s effectiveness, business leaders might break a sweat while trying to calculate the ROI. First, there isn’t a single, universally accepted method for calculating it. “There’s always been a big debate about what costs go in there,” says Stephanie J. Pronk, senior vice president, Clinical and Health Improvement Solutions, Aon Hewitt. “Do you include the costs of incentives? Do you factor in the cost of time an employee has taken away from work to participate in the wellness program?”

Harvard researchers have come up with one possible baseline. A recent Harvard-led meta-analysis, which reviewed 36 studies for analytical rigor, identified an average ROI of USD3.27 for every dollar spent on wellness programs. If employers simply addressed three hazardous health habits—inactivity, chronic stress and alcohol use—over a five-year span, they’d save an average of USD700 per employee per year in healthcare costs and productivity gained, according to the report. “The literature has gotten much stronger over the past 10 years around whether wellness programs work,” Pronk says. “As a result, there’s now a big resounding ‘yes’ that there is a return on investment for those who participate.”

“We’re dong some of the leading research on sudden death in the United States related to genetic and imaging predictors,” says Robert Weiss, M.D., director of the Donald W. Reynolds Cardiovascular Clinical Research Center at Johns Hopkins. “One of the new things we’re looking at is the use of MRI [magnetic resonance imaging] to identify scar tissue that’s interspersed with normal heart tissue. That may be a very strong predictor for sudden death.”

Carrots and Sticks

But as the dismal success rate of New Year’s resolutions proves, bad health habits are hard to break. So in taking the global lead on offering workplace wellness programs, U.S. employers are dangling “carrots” and swinging “sticks” to prod workers to change behavior and better their health—and sometimes inadvertently clashing with new federal laws. Many companies offer cash incentives or insurance-premium reductions to fill out health surveys, and some use that information to offer health advice or direct at-risk employees to disease-management programs.

But you have to be careful, Pronk says. The Genetic Information Nondiscrimination Act, which took effect in 2009, restricts employers’ and health insurers’ ability to collect and disclose genetic information. That includes not only genetic test results, but family medical history, too. What’s more, the Health Insurance Portability and Accountability Act (HIPAA) currently limits the value of incentives that group health plans can offer to 20 percent of the total cost of health insurance (meaning premiums paid by both employer and employee).

So, before implementing a wellness program, Pronk advises employers to fully understand the nuances of the laws in the countries in which they operate.

Strong-Arm Tactics

Legal complexities aside, today’s workplace wellness programs don’t have to include expensive on-site gyms or in-house personal trainers. Instead, employers are spending more on gift cards, contributions to health savings accounts and other incentives to persuade workers to take part in health-improvement programs, according a recent survey by Fidelity Investments and the National Business Group on Health.

The average employee incentive rose 65 percent in one year alone—to USD430 in 2010 from USD260 in 2009. The percentage of companies offering incentives also rose during the same timeframe, from 57 percent to 62 percent.

Some companies shoulder the entire cost of these programs. Others choose to pass the costs on to workers in the form of higher premiums. In fact, an increasing number of employers are demanding that workers who smoke, are overweight or have high cholesterol shoulder a greater share of their health care costs.

Policies that impose financial penalties on employees have doubled in the last two years to 19 percent of 248 major American employers. “Employers have begun putting teeth in wellness programs, saying “It’s not OK to opt out. If you’re going to have a bad lifestyle, you’re going to pay,” says Paul R. Berger, M.D., senior vice president and chief medical officer, Aon Hewitt Consulting. “It can’t go on just being incentives.”

Wellness at Work

How do you build a corporate culture based on health and wellness? Berger offers these nine tips:

1. Get buy-in from the C-suite. “One CEO of a company in south Florida went to a company’s five locations over a three-week period of time and ran a 10K at each location with employees to kick off a wellness program. Now that’s meaningful.”
2. Don’t get caught in the middle. “Because a lot of employees might not know who the CEO is, ideally you want to get it down to the managerial or supervisor level. …
3. Getting the local boss involved and setting an example is important.”
4. Communicate, communicate, communicate. “You can’t communicate about a wellness program only during open enrollment. The information is going to get lost amidst 401(k)s and the disability plan. You have to have a strategic communications plan that is using all the elements of communications that are applicable for the different populations of people in the workplace.
5. Start with carrots and then go to sticks. “It has to be evolutionary. You start with incentives, but eventually it has to be my way or the highway. If you don’t want to practice healthy behaviors, then you’re going to be in the more expensive health plan.”
6. Spread the word. “If an employee had a great experience with a nutrition plan and lost 15 pounds and lowered their cholesterol, I want that employee to be able to tell their story to other employees on the company Intranet.”
7. Make over the lunch room. “If you’ve got a workplace wellness program that your CEO says is important, then having a vending machine full of cupcakes and candies is sending a mixed message. Likewise if you get a hamburger for USD1.59 and a salad costs USD6 in the cafeteria.”
   Make it a sport. “Competitions are great, whether walking, weight lost, blood pressure or cholesterol. You can have competitions for all sorts of things, and they can be done geographically. It’s up to the given culture.”
8. Walk the talk. “Ongoing communications about wellness programs can’t be 24/7, so it’s great if you can have a champion, someone whom everyone knows, who exercises and eats right and likes to talk about being healthy.”
9. Brand your plan. “You need a logo and a wellness program name so that it’s recognizable. It gives the program more meaning, and people can relate to it. It’s important that the logo and the name match the company culture.”

Power Tools

To help employers understand and measure the impact of their employee wellness program, Berger recommends setting up a dashboard with key data, including employee engagement rates and baseline metrics such as weight, BMI scores, waistline measurements, good and bad cholesterol levels, blood pressure readings and blood sugar levels. Then track these numbers on a quarterly basis. “If your wellness program is working, these metrics will improve. Ultimately as those metric improve it will lead to lower hospital admission rates and fewer emergency room visits over the next three to five years, which are how wellness programs save money. When wellness programs are well-executed and companies use all the tools in their toolkit, I think that in year three, four or five they should be looking at wellness programs that are 3 to 1, 4 to 1 or 5 to 1 on ROI.”