Employee Benefit Views

Stop obsessing over wellness ROI

Posted May 6, 2013 by Heath Shackleford at 11:03AM. Comments (12)

Today’s guest blogger suggests employers’ focus on measuring the return on investment for wellness programs is distracting from the real effects these programs can have. Read on and let me know if you agree. –Andrea Davis, Managing Editor

Within the span of a few short weeks, I read one study touting a 7-to-1 return on investment for wellness programs, followed by a second report stating wellness has little financial ROI, if any. I also came across multiple articles citing the popular Harvard study, which concluded that wellness produces a 3.27 to 1 ROI, and blog posts refuting the validity of the same Harvard study, questioning its ability to offer decisive evidence that wellness programs generate financial returns. 

My reaction to these dueling headlines is simple. As an industry, we should step away from the calculators, stop torturing the numbers and gain a bit of perspective. There is no return on obsessing over the ROI of wellness programs.

The only thing these headlines confirm is that ROI is hard to measure. There are lots of variables and variability among programs. Intangibles that are difficult to quantify. Value that is hard to fully claim without regard to the rest of the health care equation. Not to mention accounting for things that would have happened but didn’t because of wellness interventions.

Our obsession with ROI started logically enough. In a quest to establish credibility, legitimacy and meaningful impact, proponents of wellness turned to financial ROI as the central value proposition. Maybe that was necessary to recover from a history where wellness was too often seen as a feel-good, nice to have perk instead of a mission critical driver of positive business outcomes.

But because of the hard sell on financial performance, we have perpetuated a myopic view of wellness and all that it has to offer. What’s more, we’ve placed unnecessary pressure on wellness to generate results that are largely unrealistic, i.e. deliver immediate financial value.

Wellness is about more than reducing health care costs. It’s about creating massive value for organizations. Some might suggest this is stretching reality a bit. Those people have never seen a wellness program properly implemented and continually supported over time.

One recent report cited, almost apologetically, that although there was no short-term financial return, the wellness program in question did reduce hospitalizations by 40% for targeted conditions. It’s a sad day when there’s not enough value in preventing numerous employees from having heart attacks to unequivocally declare such a program as being a wild success, simply because these outcomes didn’t immediately deliver a hard financial return.

What we need to do now is remember why we started offering wellness in the first place, which was not solely to generate a financial return. And we need to shift our attention to helping employers address some of the more pressing issues that are actually holding wellness back, such as engagement.

If we want to continue getting better at calculating the financial returns associated with wellness, then so be it. But we need to be honest and ask ourselves what are the chances that we’ll find a bulletproof, undisputed methodology for measuring ROI that can be consistently applied across populations and programs? And are there better ways to invest our time and energy?

Companies like Apple have proven again and again that if you focus on doing things the right way, you’ll succeed. I think the same is true with wellness. In the case of  iPhones and iPads, it’s all about creating a high quality product that brings with it a powerful user experience. For wellness, it’s taking care of your people the best way you can. Do that, and the financial rewards will find you. No calculators required.

Heath Shackleford is the founder of Good.Must.Grow, a marketing agency focused on social enterprises, health and wellness and nonprofits.

Do you agree? Is it time for employers to stop obsessing about wellness ROI? Is it the right direction for the industry? Share your thoughts in the comments.



Posted by: Al L | July 29, 2013 1:32 PM

No need to "refute" the 3.27 ROI -- the author recanted last week on Marketplace

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Posted by: Marc T | May 10, 2013 2:19 PM

Everything else being equal, would you rather have healthy employees or unhealthy employees? Just because you can't measure it doesn't mean that it isn't there. Einstein said, "Everything that can be counted doesn't necessarily count; everything that counts can't necessarily be counted." I grew tired of this ROI debate very quickly. A lot of companies spend more on their landscaping, janitorial services, office equipment maintenance (without hesitation and without knowing the ROI) than they do on their own people.

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Posted by: Ron B | May 8, 2013 10:13 AM

For those of you who think it must be measured or doesn't work should look at other investments that companies make that many times can't be measured and demonstrated to provide an ROI. Just because you can't show an ROI doesn't mean it isn't valuable and a important part of a businesses overall strategy.

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Posted by: WILLIAM S | May 8, 2013 8:36 AM

Heath, George Bernard Shaw said "The power of accurate observation is frequently called cynicism by those who don't have it." So consider me a wellness cynic. Wellness programs have been around for more than 20 years. If we can't prove ROI in 20 years we're not going to prove it. Because it's NOT THERE! The problem with wellness programs is that the vast majority are not focused. They consider all health conditions and wellness efforts to be equal. Facts are, there are only about 5-6 conditions that significantly impact health care costs. They account for 70% or more or most organizations health care spending. These are the ones where wellness programs should be focused. Health programs with disease management are an example of such focused wellness efforts. The bean-counters at the top of any organization will evaluate whether wellness is an investment or an expense. If it's an investment, they'll want a return and want it measured. The parts that measure up will be kept, the others discarded. If it's an expense, they'll only keep paying it until the cost exceeds what they consider a reasonable threshold. If it does, it will get evaluated as an investment and most likely will get jettisoned because it provides no measurable ROI. Remember, the people running successful businesses got to run them because they know business, and that includes measuring ROI.

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Posted by: Heath S | May 7, 2013 7:17 PM

Appreciate the discussion so far. William, also appreciate your POV and don't think that we disagree...all that much anyway. I don't argue against ROI because I am against measurement. But I've watched the endless debate on ROI for far too long and just simply don't think there's merit in it. If anything it's taken away from our ability to appreciate the impact of wellness. You can't report outcomes of a program without three people telling you why they are not valid. That's what I think we should put the brakes on. There are no perfect ways to measure wellness. And once again, I don't think we need one to validate these programs make a difference. Do you?

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Posted by: Sean Y | May 7, 2013 2:58 PM

William S may sound harsh, but he's right. Wellness sounds nice, but in most cases it amounts to not too much more than altruism. Each company needs to follow their own moral compass with regard to deploying a wellness program. I am an 'old HR guy' and can sputter nonsense about attracting and retaining quality staff members with the latest fad, but like every other HR initiative, they're almost impossible to measure the intended results. However, if your selling (or buying) wellness as a material ROI, I suggest examining the math under the 'scientific method'; you'll find you either can't measure effectively or, if you can, the outcomes are not at all what you had hoped.

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Posted by: Linda R | May 7, 2013 2:24 PM

I wholeheartedly agree with William S. This is business, and businesses don't do things that don't make financial sense. I also agree, however, that wellness programs have a non-financial "return" on investment. There is room for both kinds of value. The real problem with wellness ROI is not that it doesn't exist or is difficult to measure. The real problem is that the typical wellness programs don't deliver any ROI. As long as buyers are willing to settle for this, sellers will keep selling it. And who wouldn't want to sell something that is profitable and has no performance guarantees?

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Posted by: WILLIAM S | May 7, 2013 1:52 PM

Nice try, Heath, but if you can't measure it and can't prove it's saving money, then how is that any better than doing nothing at all? Forget the "it's the right thing to do" argument. It's an expense. As such, it needs to be proved to be worth the cost. Otherwise, it could have the effect of reducing some other business expense that may provide a greater return for the organization and its employees. Apple not only focuses on doing the right thing the right way, they focus on whether it provides a return on the time and money invested. If it doesn't, they stop doing it.I recall a project in Asheville, NC where employers and the area health care providers worked out a program focused on reducing the costs associated with diabetes. They got very measurable results, in terms of instances and costs.If you want to argue that our obsession should be on better, more accurate, ways of calculating wellness ROI, fine. As it stands, this article makes you sound like an HR guy from decades gone by, who never knew how to calculate ROI or really operate from a business perspective, but focused more on feelings an anecdotal comments. Pick up your game.

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Posted by: Mike M | May 7, 2013 1:51 PM

An employers wellness initiative should focus on improving human capital productivity. That is the only ROI that matters with regard to operating a profitable business. Most for-profit businesses will keep an unhealthy productive employee over a healthy unproductive employee. Why is it the employers responsibility to create "healthy" human capital for the sake of being healthy?

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Posted by: Maryann S | May 7, 2013 12:09 PM

Thanks, Heath for a refreshing exchange on this overly "touted" tag line. I appreciate your use of the description "obsessing" which is exactly what we are seeing in today's market place. Further, your statement: "Those people have never seen a wellness program properly implemented and continually supported over time" is powerful. Sounds like we both agree that not all wellness programming is created equally but when done well, a comprehensive program can rocket an organization into a new dimension.

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Posted by: Jacob K | May 7, 2013 11:32 AM

Mr. Shackleford is absolutely correct- ROI can never be the reason for wellness programs. It is really designed to "mitigate risk" - which is also a valid justification for a business investment. View it as "insurance" agains rise in future costs of healthcare. Actuaries can then calculate and tell you how much investment is warranted to mitigate that risk. Exactly the way insurance premium against fire is calculated, for example. In short, there is a mathematical basis for investments in wellness - but it must be calculated carefully. Mr. Shackelford has a visceral feeling for it, as explained in the column eloquently.

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Posted by: Ron B | May 7, 2013 11:13 AM

Thank you! This is a very healthy perspective on ROI and one that vendors, brokers and employers should take note of when consider a wellness program and what the ultimate goal is.

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