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How Wellness Programs Can Nurture Corporate Budgets

By Maria Woehr

The popularity of corporate wellness programs is on the rise as more businesses recognize that incentivized corporate gym memberships and exercise programs keep employees healthier, more productive, and also lower healthcare costs. Wellness programs can come in all forms and sizes including corporate gym memberships, smoking cessation support programs, stress management programs and even massage. Usually employees who use these programs are incentivized and can win awards or discounts when they use these programs wisely to achieve life changing goals.

Close to 50 percent of a business’s health care costs are due to poor diet, lack of exercise and smoking, according to The Pennsylvania Department of Health [PDF]. With healthcare costs raking in around trillions every year, and more employees helping shoulder the costs of healthcare expenses, businesses and individuals are finding wellness incentives a necessary and attractive option. Businesses that spend on adding a corporate gym program to their health care benefits are actually cutting down employees’ health care costs and benefit from the healthier lifestyles of their employees.

A recent study done by Discovery Holdings, a health insurance company, found that corporate wellness programs reduce business health care costs and improve employee health – a business case for corporate wellness programs.

Reducing Costs, Improving Wellness

For the study, Discovery Holdings’ incentive based wellness program was offered to over 300,000 participants over a five-year period. Over 192,000 participated in the wellness program. The research shows that members using the gym increased by 23 percent and members with an inactive membership to the gym decreased by eight percent. Hospital costs for those in the wellness program fell across the board, with more active participants’ costs 16 percent lower. Overall increased gym visits reduced the probability of hospital admissions.

“This research provides compelling evidence that effectively designed incentive programs can motivate people to change their behaviors, leading to better health outcomes and lower healthcare costs over the long term,” said The Vitality Group CEO Arthur Carlos.

Those healthcare cost savings can add up, according to Employee Wellness, a corporate wellness provider. The group estimates that for every dollar a business spends on wellness programs, it saves $2.30 to $10.10. For instance Coca-Cola had 60 percent participation in its wellness program, saving $500 per year for every employee in the program. Meanwhile, Johnson & Johnson estimates that wellness programs saved the company $250 million on health care costs since 2002, and the return was $2.71 per dollar spent, according to a report by the Harvard Business Review.

Way2employeehealth.com and GlaxoSmithKline estimate that the cost saved by employers is even more, and not just related to healthcare. According to their study, companies also save in between $5 and $6 from less absenteeism and workers comp.

Incentivizing Wellness Programs

The savings are prompting even more businesses to implement incentivized wellness programs this year and next, according to the Integrated Benefits Institute. The research center said that in 2012 nearly 70 percent of companies are increasing their spending on health or productivity management initiatives. Healthcare insurers are also expecting an uptick in wellness programs. WellPoint CEO Angela Braly said during the insurer’s first quarter earnings conference call that she expects wellness programs to gain more popularity.

“Total cost remains the number 1 driver with considerable discussions around employee productivity and wellness programs,” Braly stated.

Most companies offer some incentivized wellness programs already. In 2010 around 86 percent of American companies offered an employee wellness option as part of their healthcare benefits package, according to The State Journal. Surprisingly, 73 percent of American companies had wellness incentives in place five years ago and 42 percent had wellness programs in place for over a decade. Business Roundtable reports that by 2012 almost 100 percent of US companies should offer wellness programs.

This year until 2015 employers that do not offer wellness programs yet have another incentive, they can receive government grants to kick off the process. The Department of Health and Human Services is allocated $200 million to help companies develop these wellness programs, according to Mississippi Medical News [PDF].

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