Wellness Program Return On Investment.
Wellness programs are a long-term investment. But how long should you wait for results?
Finance and the Chief Executive Officer (CEO) want hard numbers to show Return On Investment. And wellness Return On Investment is tougher to calculate than, say, a 401(k).
18-month guideline
Current studies have established some benchmark data on wellness Return On Investment (ROI) you can use as a guideline. It’s useful whether you already have a health promotion program or are thinking about beginning one.
It generally takes at least 18 months from the launch of a health promotion program to see any causes your healthcare plan bottom line.
For many firms, 18 months is the point at which workers’ improving health starts to cancel out the cost of sponsoring and administering the wellness program.
By and large, the long-term cost savings from a health promotion program are going to be driven by how much you’re willing to spend. Usually, organizations get what they pay for â.” both in time and money invested.
As a rule of thumb, the typical cost to the company is about $3 to $5 per participating employee per month. Within three years of launch, you must be seeing meaningful savings.
The typical Return On Investment (ROI) tends to be about $4 to $5 saved for every dollar spent. So how can you manage the costs in the short-term in order to achieve the long-term savings? and how can you maximize the long-term payoff?
Consider making wellness programs budget-neutral
For a lot of companys, the most effective way to manage the cost of a health promotion program in the start-up phase is to make it a budget-neutral expense.
In other words, the wellness program neither adds to your healthcare costs at the outset, nor decreases them. Example – You plan to roll out a wellness program effective Jan. 1. The wellness program will cost the company $5 per employee.
You can roll the $5 per month cost directly into the employee’s monthly share of their healthcare premium. In this age of continuous cost-shifting, most workforce are used to seeing small increases in their monthly contributions each plan year.
Just be sure you’re not hitting folks with a big hike on top of that $5. Comparably designed health promotion programs pay off about the same â.” meaning workers buy in and participate at the same rate â.” whether they’re budget neutral or the company absorbs the cost.
But when employees get clobbered by large-scale contribution hikes at the outset, they often resist the wellness program. The long-term Return On Investment for these wellness programs is usually disappointing.
When you’re faced with a situation where achieving a budget-neutral health promotion program would cause push-back, your firm is better off absorbing most or all of the wellness costs.
The biggest hurdle is to get over the hump for those first 18 months or so.