Healthy finances

Companies could be wasting money on wellness programs for employees who don’t need them

January 7, 2014
January 7, 2014

Hold on tight to that office-subsidized gym membership: According to a recent study, workplace wellness programs might not actually be saving your company much money. But does that mean companies shouldn’t have them?

Such programs are now quite common. In 2012, the RAND Corporation reported that 90% of US companies with more than 50,000 employees offered one. And that number can be expected to grow since the recently passed Affordable Care Act has incentives for companies to improve their employees’ health (such as gym memberships, exercise spaces, or healthy food in the office).

Now a new study by RAND (paywall) examines PepsiCo’s Healthy Living wellness program. The study followed more than 67,000 eligible PepsiCo employees for seven years. While the program saved money for those who already had chronic illnesses like heart disease or diabetes—nearly $4 of savings for every dollar spent, mostly thanks to a 29% drop in hospital visits—healthy employees who used services like nutrition counseling and fitness centers didn’t see their health-care costs drop much.

Of course, that’s just what happened at one company, albeit a big one. In 2010, researchers examined 10 such programs (paywall), and found that the best of them saved as much $6 for every dollar spent, overall. The pillar of a successful wellness program, the authors concluded, was that it actually be tailored to suit the needs of the company and its employees. In other words, corporations couldn’t just hand out free gym passes and hope for the best: To get a high return, they needed to provide amenities and support that employees actually wanted to use.

In any case, wellness programs can save money on things other than trips to the doctor. RAND’s study also showed that employees involved in PepsiCo’s program missed less work. Nor is the bottom line the only reason for companies to have a wellness program. According to RAND, employers also cite employee retention and morale high on the list of reasons having such programs. Still, the study authors caution, companies shouldn’t assume the programs will save them money on health care, or even lead to net savings overall.

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