Measuring ROI for wellness can seem tricky because the financial benefits are largely based on factors that can, on the surface, seem somewhat intangible. Examples would include things like disease prevention, reduction in absenteeism, or increase in productivity and engagement. These are not theoretical, however, as the effects and associated costs have been empirically determined by doctors, scientists and economists.
That the associated statistics aren’t as readily available as, say, an interest rate, gives many HR managers and CFOs reason for pause, and because the data is dissipated across so many sources it can be hard to pin down what to use and how to use it.
That’s why we’ve developed this guide to measuring wellness ROI.
Among the chief benefits of an effective corporate wellness program is more physically active (healthier) employees, which is where our walking challenges excell. It cannot be understated just how expensive an inactive, unhealthy population can be to companies, especially those that are self-insured.
Calculating the ROI of health benefits is actually quite simple. We must simply understand the cost associated with each inactive employee, the number of physically inactive employees in the population, and how many we can move from physically inactive (high risk, high cost) to physically active (low risk, low cost). This is an ROI methodology similar to that used by BlueCross.
In the widely cited 2012 study, Ten Modifiable Health Risk Factors Are Linked To More Than One-Fifth Of Employee Health Care Spending by Ron Z. Goetzel et. al., it’s shown that each inactive employee costs his/her employer, on average, an additional $606 dollars per year over more physically active employees.Read Study
According to the 2018 Participation Report, an annual study tracking sports, fitness and recreation participation in the U.S. conducted by The Physical Activity Council, 27% of the U.S. population falls into the “physically inactive” category.Read Study
These numbers will be unique to your group and the results of your wellness solution. We’ll use A Step Ahead as an example:
[AFR] x ([NPE] x [AIP] x [APPTA]) = [Financial Risk Reduction]
AFR = Additional financial risk of inactive employee vs Active ($606)*.
NPE = Number of Participating Employees.
AIP = Average Inactive Population (27%)**.
APTA = Average Participants that transition to active (75%)***.
Example Company With 200 A Step Ahead Participants
$606 x (200 x 0.27 x 0.75) = $24,543 Financial Risk Reduction
To complete the ROI calculation, compare the Financial Risk Reduction against program cost. We’ll Use our 6-week Ground Zero challenge ($19.95 per participant) to complete this example.
$24,543 Financial Risk Reduction / $3,990 Challenge Cost = 6.15 ROI
*Ten Modifiable Health Risk Factors Are Linked To More Than One-Fifth Of Employee Health Care Spending, Ron Z. Goetzel: https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2011.0819
**2018 Participation Report, Physical Activity Council: http://www.physicalactivitycouncil.com/PDFs/current.pdf
***Proprietary to A Step Ahead, as reported by our usage data and survey data
“We had people on our teams meeting before work to walk for an hour, and they’re still currently doing that and this is months and months after the challenge is over. People still walk in the halls, but they’re also still doing those things that they weren’t doing beforehand.”
– Heather Parker, Employee Wellness Coordinator
Lee County School District