June 5, 2017

ROI and VOI: A strong wellness program measures both

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 workplace wellness program ROI — money saved on health care 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.

When making the business case for your own corporate wellness program, measuring both ROI and VOI will illustrate a broader picture of the impact the program makes.

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
Health care costs
Absenteeism
Employee engagement
Productivity
Overall financials and growth
Recruitment
Disability/workers’ compensation claims
Retention

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 workplace 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 health care savings from wellness programs.

According to the report:

More than 60 percent of survey respondents reported that workplace wellness programs reduced their organizations’ health care 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 health care service utilization, which in turn reduced the health care 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. For more from this report, see our post, 10 statistics that make the case for workplace wellness programs.

When making the business case for your own corporate wellness program, measuring both ROI and VOI will illustrate a broader picture of the impact the program makes.