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WHY CORPORATE WELLNESS SCHEMES MAKE BUSINESS SENSE

 

How do you really measure the effectiveness of corporate wellness initiatives?

The answer: By the numbers.

That’s what we’re going to talk about today. Because health care costs – while never far from the mind of any employer – are more of a concern now than ever. Globally, medical costs have been rising much faster than inflation for some time. This culminated in an increase of 8.7% in 2015, compared with a global general inflation rate of just 3.2%, according to data from US management consultants Aon Hewitt.

Throughout Asia, the gulf between the two figures is wider still.

Medical inflation soared to 10.4% in 2015, compared with a general inflation of just over 4%. And this trend has been continuing for several years: An analysis by insurance adviser Pacific Prime reveals that healthcare cost inflation in Southeast Asia has averaged at around 8.5% over the past five years, and other research points to double-digit increases in several countries across the region in 2015.

And while healthcare technology and demand increase make up a large part of our region’s rising healthcare costs, the root cause of the issue is, of course, lifestyle.

For example, Southeast Asia’s obesity rates, while still nowhere near as high as the West’s, are rising at a worrying rate. Data gathered by the Economist Intelligence Unit shows that between 2010 and 2014 the number of people medically classed as obese rose by 38% in Vietnam, 33% in Malaysia and Indonesia, and 27% in Thailand.

 

And with obesity comes the inevitable rise in lifestyle diseases such as type 2 diabetes, which is rapidly increasing in the region. The International Diabetes Foundation predicts that by 2040 the numbers of people with type 2 diabetes in Southeast Asia will almost double from 78 million in 2015 to 140 million, and in China alone over 110 million people now live with the disease.

In the face of such increases, it’s easy for employers and insurers to feel powerless to stop rising healthcare costs. However, as the average person spends at least one-third of their life at work, there’s plenty businesses can do to buck this trend. The most obvious way to effect such a change is through the provision of corporate wellness initiatives – something that around two-thirds of businesses now offer to their staff.

And insurers of course are getting in on the game, increasingly offering policies to individuals that include individualised lifestyle benefits in an attempt to mitigate costs.

That said, for corporations it’s not as simple as offering a discounted gym membership and setting up a running club. Of the companies that do offer such perks, engagement can be low – a recent survey by US PR agency Brodeur Partners found only a third of employees are even aware that their employer has a wellness scheme in place. That’s not to say wellness initiatives aren’t worth it, however. In fact, there’s plenty of evidence to show that, when implemented in the right manner, corporate wellness works – both to improve employees’ health and bring down those rising costs.

A recent survey by US PR agency Brodeur Partners
found only a third of employees are even aware that
their employer has a wellness scheme in place.

Corporate wellness that brings results

So, today we’re going to put rhetoric and anecdotal evidence aside and focus on what matters – measuring the effectiveness of corporate wellness based purely on those all-important numbers.  

Nutritional improvements: The Western diet, now so popular throughout the Asian world, has to bear the brunt for a large proportion of the health problems that are also common in the region. The biggest dietary culprit is without doubt added sugar. Sugar – or rather the litany of diseases it contributes to (obesity, diabetes, heart disease and various cancers) – leaves its mark on both our health and our spiralling healthcare costs.

Then there are the additional costs that bad diets inflict on employers. Let’s take the most common side effect of poor nutrition: Weight gain and obesity. According to several studies – including one published in the American Journal of Health Promotion – overweight and obese employees take more sick leave than those of a healthy weight. The study also found the cost of employing an obese person is more than double that of employing someone of a healthy weight – USD 8,067 compared with USD 3,830.

A study in the American Journal of Health Promotion
found the cost of employing an obese person
is more than double that of employing someone
of a healthy weight – USD 8,067 compared with USD 3,830.

For a great real-world example of the impact that improved nutrition can have – and with it better health and weight loss – we need look no further than the case of Johnson & Johnson. Since implementing its wellness programme, which includes nutritional education, healthy food choices on site and access to health and fitness professionals, the US pharmaceutical giant has seen its employees reduce their weight by a collective 55%. This improvement has contributed to a reduction of healthcare expenses in the region of USD 400 per person within just four years.  

Smoking cessation: It would be impossible to write a wellness article without covering the costs of smoking – both to employee health and the bottom line. Particularly in this part of the world: According to the World Health Organization (WHO), one-third of the world’s smokers live in the Asia-Pacific region. Once again, research has been carried out into the costs of employing smokers and found them to be vastly more expensive than their non-smoking colleagues. The study, conducted by Ohio State University, found that smokers cost their employers an additional USD 5,816 per year in lost productivity due to cigarette breaks, healthcare expenses, absenteeism and presenteeism.

The figures for treating diseases commonly caused by smoking – such as chronic obstructive pulmonary disease (COPD) – are even more alarming. According to a 2015 study published in the journal Chest, the total economic burden of COPD in the United States is USD 36bn – USD 32.1bn of these costs are due to medical expenses and USD 3.9bn are as a result of absenteeism.

It was in an attempt to gain control of costs such as these that led the Union Pacific Railroad (UPRR) to roll out its company-wide smoking cessation programme back in 1990. At the time, 40% of the company’s 52,000 staff were smokers. Since the implementation of the initiative, which includes free access to nicotine replacement therapies and smoking cessation counselling, UPRR saw smoker numbers fall by an incredible 15% – down to 25% of staff – in just over a decade.  

Stress: However it comes about – a hectic job, family issues or financial worries – stress takes its toll on our health. So much so that research compiled by the Occupational Safety Program at the Eastern Kentucky University (EKU) found that healthcare costs for those who report being stressed are up to 46% higher than those who don’t. And that’s not all – EKU found that approximately one million employees in the USA miss work due to stress, which translates to financial losses of around USD 602 per employee per year for every day missed. That’s on top of an estimated USD 150m in lost productivity due to presenteeism.

 

Here in Southeast Asia we can expect the financial impact to be comparable, given that 70% of Malaysian employees who answered a recent survey said they experience stress-related illness, while a poll from Singapore found that 55% of respondents cited stress as the main cause of mental fatigue. As for what employers can do to bring down these numbers – and associated costs – look no further than US health insurer Aetna. Faced with an increasingly stressed and burnt-out workforce, Aetna rolled out two wellness initiatives aimed at improving the situation. The Mindfulness at Work and Viniyoga Stress Reduction programmes gave employees access to meditation and yoga classes, which according to staff surveys reduced stress by 36% and 33% respectively. 

Mental health: As well as working with employees to improve physical health, corporations have a duty of care to help safeguard the mental wellbeing of their staff. And as well as the obvious human benefit, helping employees manage conditions such as depression can also boost the bottom line. A 2015 study published in the Journal of Clinical Psychiatry put the total economic burden of major depressive disorders in the US at USD 210.5bn, with approximately 50% of this figure attributed to workplace costs. Meanwhile, another study conducted by professors at the London School of Economics and King’s College London found depressed employees cost European businesses GBP 77bn (USD 97bn) per year.

A study conducted by professors at the
London School of Economics and King’s College London
found depressed employees cost European businesses
GBP 77bn (USD 97bn) per year.

While arguably harder to tackle than physical illness, there’s still plenty that can be done to help staff with mental health issues. A great example of this comes from Australian workplace specialists Entity Solutions. It took a number of steps such as offering access to mental health professionals, partnering with a mental health charity, running regular mental health workshops and making educational and supportive resources available via intranet to all employees. Since the roll-out of the schemes, Entity Solutions has reported an increase in staff productivity and engagement, as well as a reduction in the number of sick days.  

Winning with wellness

As mentioned earlier, in judging the effectiveness of wellness initiatives we must rely on what really matters – the numbers. So, it’s only fitting that we end on perhaps the most convincing numbers of all. A 2012 review of over 60 studies into the benefits of workplace wellness programmes, published in the American Journal of Health Promotion, found that businesses with schemes in place had 25% lower costs for sick leave, health plans, workers’ compensation and disability insurance.

And it’s not the only study to come to such conclusions. Another, conducted by the Harvard Business Review, found the average increase of annual healthcare costs for US businesses with comprehensive wellness programmes to be just 1% to 2%, much lower than the national average increase of 7%.

Stats like these speak for themselves: Wellness works.

Not only from an altruistic perspective but a business one too.

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Inova care is an industry leading consulting and health care administration company specializing in managed care, clinical pathways and cost containment solutions for corporations and insurance companies.

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