Finding the Payoff from Happier, Healthier Employees
Self-funded employers take employee well-being seriously.
That’s because they know that every dollar saved by improving employee well-being — whether it’s from spending less on health care for chronic conditions or gaining more from higher productivity — has a direct impact on the bottom line.
Shifting the Focus
A decade ago, wellness programs focused on nutrition and exercise. Companies hoped helping employees improve fitness or lose weight would pay off with lower health care costs. Employers and employees alike provided positive feedback, although it was hard for researchers to measure the impact.
Over time, employers expanded their efforts to include the full range of employee well-being by adding emotional, social and even financial well-being.
New research examined the impact on employee satisfaction, productivity and turnover. And the wellness payoff from happier, healthier employees began to emerge.
The Wellness Payoff – Productivity Rises, Turnover Falls
For example, an August 2017 study by the University of California – Riverside looked at the impact that participating in an employer-based wellness program had on Midwestern commercial laundry plants.
The wellness program aimed to improve nutrition, increase exercise and reduce stress. In the year after employees took part, employee productivity increased by an average of 4 percent. Among sick workers, that increase topped 10 percent.
Improved productivity was a $57,558 gain for the laundry company, while the wellness program cost $32,640. That translates to a 76.3 percent return on investment.
Wellness has also been shown to have a positive impact on employee turnover, according to the Mercer National Survey of Employer-Sponsored Health Plans. The 2016 survey found turnover rates of 18 percent for large employers who adopted five or more well-being best practices. For companies that adopted three to four best practices, the turnover rate increased to 22 percent. If zero to two best practices were in place, the turnover rate went up to 29 percent.
A Holistic View
Companies that self-fund their health plans know that taking control of employee health has the potential to create a positive ripple effect through the entire organization.
Here are three areas where companies can leverage their investment in self-funding to improve employee well-being:
- Using data to design your wellness program. Because you’re self-funded, you have access to data that’s unavailable to fully-insured companies. This data can help you understand how many employees have specific health conditions and how that impacts your bottom line. Knowing how many employees are being treated for diabetes, for example, can help you decide whether to pursue services that help diabetic employees manage their care. Offering free health screening to employees can give you additional data about issues such as pre-diabetes or obesity rates.
- Taking advantage of flexibility in plan design. You can design your benefit plan to match the needs of employees, as long as you follow regulatory guidelines. For example, an employer with a high obesity rate might choose to add coverage for nutrition counseling.
- Creating a culture that reinforces well-being. With self-funding, you see the impact that employees’ health decisions have on the bottom line. That helps you persuade other leaders of the value of a healthy work environment, which can include everything from encouraging healthy break room snacks to offering mindfulness classes at the worksite. As you refine your workplace culture to nurture employee well-being, you can impact productivity, recruitment and turnover.
Make the Shift to Well-Being
If you’re an employer looking to improve employee health by shifting your focus from wellness to well-being, you can tap into this step-by-step advice to get started. As other self-funded employers have shown, boosting employee well-being can have positive results for you and your employees.
This article originally appeared in the Wisconsin SHRM e-Blast in March 2018. Revised and reprinted with permission.
Learn more about the Wellness Payoff and Successful Programs
- High-Cost Claims and Stop-Loss Insurance: How Self-Funded Employers Can Mitigate Significant Losses - March 30, 2021
- How to Save Your Employees 50% on Primary Care Costs - November 3, 2020
- What RAND Corporation’s Hospital Price Transparency Project (RAND 3.0) Means For Employers - September 22, 2020