There is more to consider than return on investment (ROI) when measuring the success of your wellness program.
More employers are realizing that looking strictly at ROI — money saved on healthcare costs for every dollar spent on the program — fails to encompass some of the very real, but tougher-to-calculate business benefits of employee wellness.
In the 2017 Workplace Wellness Trends report from the International Foundation of Employee Benefit Plans, only 25 percent of employers say controlling or reducing health-related costs is their primary reason for offering wellness programs. The other three-quarters offer wellness programs with the goal of improving overall worker health and well-being.
That’s where value on investment (VOI) comes in.
VOI is broader than ROI. It measures not just cost savings, but also other elements that contribute to work satisfaction, employee well-being and business performance, such as improved productivity and higher employee retention.
The value of employee well-being
According to the 2016 International Foundation of Employee Benefit Plans study, cited by HRMorning , the most popular VOI measures among employers were:
- Health risk assessment data
- Healthcare costs
- Employee engagement
- Overall financials and growth
- Disability/workers’ compensation claims
VOI also includes costs that are avoided–such as future diseases that don’t occur and stress that is eliminated. Avoided costs contribute to cost savings for employers and employees.
Measuring wellness program ROI
The emerging focus on VOI doesn’t mean that ROI isn’t still important when it comes to wellness programs.
The U.S. Chamber of Commerce’s report “Winning with Wellness” found solid evidence for healthcare savings from wellness programs.
According to the report:
- More than 60 percent of survey respondents reported that workplace wellness programs reduced their organizations’ healthcare costs.
- Respondents reported reduced inpatient costs, making up 68 percent of the total cost reduction, compared with 28 percent of outpatient costs, and a decrease of 10 percent in prescription drug costs.
- Respondents also reported an overall decrease in healthcare service utilization, which in turn reduced the healthcare cost burden.
- Finally, the study found significant “clinically meaningful” and long-lasting improvements in employees’ weight, smoking status and physical activity.
The report estimates that well-designed wellness programs lead to an ROI ranging from $1.50 to more than $3 per dollar invested over a timeframe of two to nine years.
When making the business case for wellness programs, measuring both ROI and VOI will illustrate a broader picture of the impact the program makes on your organization.
More on measuring wellness programs
For further reading, the following articles contain more information on measuring wellness program VOI:
- Going after value in employee health , Crain’s Benefits Outlook
- Beyond ROI: Building employee health & wellness value of investment , Optum
- Employers using VOI to measure wellness program success , International Foundation of Employee Benefit Plans
This post was originally published on July 20, 2016, and updated on June 5, 2017.