Which Wellness Programs Serve Up Healthy ROI?
Research into the different components of PepsiCo’s workplace wellness program showed that chronic disease management was more cost effective than lifestyle management.
Return on investment for a workplace wellness program is about $1.52 for every dollar invested, according to a new study by RAND Corporation—but that’s only half of the story.
The study, which looked at a 10-year data set from PepsiCo’s wellness program, found that different components of the company’s program were more cost effective than others. The two subsets that the researchers identified were lifestyle management (to help employees stop smoking, encourage exercising and healthy eating, and so on.) and chronic disease management (to help people with heart disease, diabetes, and other illnesses).
“We saw that almost all of the cost reductions came from the disease management portion of the program,” said Soeren Mattke, senior scientist at RAND Corporation and managing director of RAND Health Advisory Services. “If you only looked at disease management, it had a return on investment of over $3 for every dollar invested, whereas the lifestyle management component only returned a quarter for every dollar invested. Basically, you have to pay money in order to run the lifestyle management component.”
What makes disease management programs more cost effective, Mattke said, is that the people who enroll in them are spending a lot more money on healthcare than a healthier, working-age adult.
“If you look at the disease management population, they have meaningful medical spending—several prescriptions, regular physician visits, hospital admission or two–per-year, specialty-care visits—to help manage their conditions, so there’s plenty of opportunity to realize cost savings,” said Mattke. “Conversely, it’s going to be extremely hard to cut healthcare costs for people who already aren’t spending a lot. It’s biologically and statistically implausible.”
Many associations can’t afford to run a wellness program as sophisticated as Pepsi’s, which includes a massive data infrastructure, vendors to screen employees, and thorough educational programs. But it’s not about how much you spend, Mattke said.
Pepsi invests in their wellness program to the degree that they believe they are getting maximum ROI and to the degree that it makes them competitive in recruiting and retaining employees, he said. “For smaller organizations, they can usually get many of those same services through their health plan—most health plans now offer disease management. They can usually piece together a lifestyle management program that is reasonably cheap. You just have to be a little creative.”
Mattke suggests talking with your health plan provider about what kinds of resources they offer, and shopping locally to see what offerings you can bundle and make accessible to employees without breaking the bank.
“That’s one of the main lessons that came out of that study: Since the cost savings from managing health risks are so limited, you really want to be very deliberate on how much you spend on these programs,” Mattke said. “You want to be creative, frugal, and targeted in what you do in order to get good return on investment.”