HOW TO CALCULATE WELLNESS ROI FOR THE OUTBREAK
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 for The Outbreak.
WELLNESS ROI OF HEALTH BENEFITS FOR THE OUTBREAK
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.
HOW WE DETERMINE THE NUMBERS
THE COST OF PHYSICALLY INACTIVE EMPLOYEES
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.
THE NUMBER OF PHYSICALLY INACTIVE EMPLOYEES
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.
PARTICIPATION AND TRANSITION TO ACTIVE
These are numbers specific to our product, as indicated by our server and survey data.
– 93% of participants report increased physical activity during our challenge
– 75% of participant’s report that they have created habits that they intend to maintain as a result of the Challenge
FORMULA FOR THE OUTBREAK HEALTH BENEFITS ROI
[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 PARTICIPANTS:
$606 x (200 x 0.27 x 0.75) = $24,543
One need only compare this number against the cost of our services for a final ROI calculation.
*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 The Outbreak, as reported by our usage data and survey data
For a practical application of this method, view our Wellness ROI Case Study of Lee County School District, who realized a 7:1 ROI on The Outbreak.
“Everything about it was fantastic. Everything was so easy and smooth. A ton of people want us to do another one.”
– Heather Parker, EMPLOYEE WELLNESS COORDINATOR, LEE COUNTY SCHOOL DISTRICT
WELLNESS ROI OF INCREASED PRODUCTIVITY FOR THE OUTBREAK
While some would say that benefits like a productivity increase would fall into the Value On Investment (VOI) category, there is enough scientific data to generate financial numbers associated with increase performance, hence we look at it as a supplementary ROI number to health benefits ROI.
AMOUNT OF PERFORMANCE INCREASE
There are numerous studies showing a direct link between happiness and work-related productivity (also often referred to as engagement), like the 2015 Happiness and Productivity: Understanding the Happy-Productive Worker study by economists at the University of Warwick.
Similarly, studies show that increasing physical activity increases happiness, like this 2017 study performed by the Universities of Cambridge and Essex, Happier People Live More Active Lives: Using Smartphones to Link Happiness and Physical Activity.
FORMULA FOR THE OUTBREAK INCREASED PRODUCTIVITY ROI
[NPE] x [APPIA] x ([AWSE] x [WiC]) x [API] = [Savings in Increased Productivity]
NPE = Number of Participating Employees.
APPIA = Average Participants with Increased Activity (93%)*.
AWSE = Average Weekly Salary of Employees.
WiC = Weeks in Challenge.
API = Average Performance Increase (10%)** ***
EXAMPLE COMPANY WITH 200 PARTICIPANTS AND AN AVERAGE ANNUAL SALARY OF $40,000:
200 x 0.93 x ($40,000 / 52 x 6) x 0.1 = $85,846
One need only compare this number against the cost of our services for a final ROI calculation.
*Proprietary to The Outbreak, as reported by our usage data and survey data
**Increased Physical Activity Increases Happiness, Universities of Cambridge and Essex: http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0160589
***Happiness and Productivity: Understanding the Happy-Productive Worker, University of Warwick: https://warwick.ac.uk/fac/soc/economics/staff/dsgroi/impact/hp_briefing.pdf
For a practical application of Wellness ROI methodologies, view our Wellness ROI Case Study of Lee County School District, who realized a 7:1 ROI on The Outbreak.
“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