Investing in a healthy workforce to control health care costs

July 5, 2001
Contact: umichnews@umich.edu

ANN ARBOR—In a comprehensive review of more than 500 worksite wellness and health care cost articles and studies conducted from 1979 to 2000, researchers with the Health Management Research Center (HMRC) at the University of Michigan show that money spent on keeping the workforce healthy is money well spent.

While some scholars and employers are not entirely convinced that investing in worksite wellness programs impacts the bottom line enough to make it worthwhile, research conducted over the past 21 years show that some wellness programs do produce significant cost savings. Yet, there is concern that savings earned through worksite wellness programs will be outpaced by rising health care costs.

“Worksite Wellness programs have been proven to impact the bottom line in a very significant way. We at the HMRC are confident that employers will continue to invest in these programs we consider to be the new way to do health care,” said D.W. Edington, HMRC director.

Cost savings from employer-sponsored wellness programs rarely are realized immediately. Wellness programs generally must be in place for at least one year for risk reduction to occur and one- to three-years to show cost-effectiveness, he said.

Consider the results of worksite health promotion studies cited in the HMRC Cost Benefit Analysis and Report (1979-2001):

COMPREHENSIVE PROGRAMS: year-round health promotion programs are designed to achieve greater cost savings and most do. The numbers are nothing to sneeze at: most of the many studies cited show savings to costs ratios of more than $3 saved for each dollar invested. Documented savings are observed in medical cost, absenteeism, worker’s comp, short-term disability and presenteeism (how productive is the employee during the time on the job). (more)

INFLUENZA: Three studies showed that workers who received the influenza vaccine had lower absenteeism rates and lower medical costs associated with influenza-like illnesses. Another study showed that medical claims for those who didn’t receive the vaccine rose by $496. Yet another study showed that offering influenza vaccines in the worksite can be costly when the vaccine doesn’t match the circulation virus.

BACK PAIN: Businesses lose $20-56 billion to back pain and injuries each year (medical costs, lost production and employee training). Some companies have had success with back care programs. Boeing Corp. reduced back injuries by 34 percent saving more than $6 million; Coca-Cola Bottling Co. reduced employee back injuries by 32 percent and Dupont Co. reported saving $10 million in 1989 with its program.

CARDIOVASCULAR HEALTH: A 1993 study showed that heart disease cost employers an average of $5,988 per patient. Other studies show that heart disease wellness programs, such as risk factor screenings and intervention programs, are cost-effective. One company saved $1.48 for every dollar invested in a heart wellness program.

EXERCISE: While many studies show significant cost savings attributed to fitness programs (Canada Life Assurance, $550,000; General Foods Corp., $750 per employee; Steelcase Corp., 55 percent reduction in the increase of medical claims for program participants over a six-year period), cost savings and long-term exercise wellness programs are difficult to measure. Despite the cost uncertainly, exercise programs proved to hold other benefits: lower absenteeism, increased productivity, less stress, higher retention rate and increased employee morale.

SMOKING: Smoking cessation often receives the highest priority of worksite and community health programs. Several studies featured in the HMRC report show that smokers are hospitalized or seek medical attention more frequently than non-smokers. Other studies show that employers can save approximately $200-$300 per employee who attempts to quit smoking.

For more information about the Cost Benefit Analysis and Report (1979-2001), Please contact HMRC Director D.W. Edington at (734) 763-2462 or by e-mail at dwe@umich.edu. Or, you can visit the HMRC on the Web at: http://www.umich.edu/~hmrc.

The Health Management Research Center is a research group within the U-M’s Division of Kinesiology. The HMRC conducts original research on worksite wellness issues. HMRC experts also act as on-site consultants with employers.

Health Management Research CenterD.W. Edingtondwe@umich.eduDivision of Kinesiology