Financial Wellness

Corporate Wellness Doesn't Just Save Money; It Makes Money

Corporate Wellness Doesn't Just Save Money; It Makes Money

The "double whammy" of skyrocketing healthcare costs and a sputtering economy-as if the cost of healthcare wasn't a concern in the years before the recession-have put companies in an almost impossible situation. At the same time staffs are being reduced, providing healthcare for the remaining workforce demands more expense and more sharing of the load with employees, leaving everyone feeling a little sick about healthcare.

To put in perspective the reality of the crisis, according to the current Towers Perrin Health Care Cost Survey, an employee's average medical costs have increased by 7 percent over 2009(1). The average employee share of medical costs has increased 10 percent. According to the same report, workers' earning have increased 37 percent since 2000, but that hardly dents the 149 percent rise in active employee health care costs during the same period[1].

Of course, most businesses are facing the same affordability gap. Healthcare reform raised hope that some relief might be on the way, but many experts (and most executives) agree employers won't see the benefits as much as employees will and, while benefits may improve and some questionable practices may change, cost will remain an issue for both employer and employee.

Businesses have typically cut benefits and raised co-pays and contributions to counter the increases, but employees can't take much more of the burden, especially when they are feeling the pain of the post recession economy, too, and when there are fewer of them to absorb the cost. But what if a company could reduce health and disability insurance costs, cut employee sick days by more than 10 percent, and increase productivity while decreasing turnover? Companies can, and do, every day.

The Myth of Wellness "Luxury"

In less trying economic times, the "luxury" of so-called company wellness programs was viewed as costly and unproven. Ironically, now that financial belts have been pulled tighter, these same programs are emerging as the best way for businesses to get a handle on healthcare costs. Often considered a "spend money to save money" proposition-a sort of necessary evil-most wellness programs actually have the potential to contribute to revenue, just like sales and marketing.

But those advantages are just beginning to be acknowledged; cost savings are the undisputed primary driver. The obvious savings are via reduced claims. Healthy employees need less medical attention.

A low-ball estimate points to at least 50 percent of healthcare costs being attributed to preventable illness. Looking at the risk factors-smoking, inactivity, weight gain, depression, high stress and hypertension being the most referenced-and the fact that most employees spend the majority of their waking hours working, it seems elementary that a workplace health program would mitigate a number of these factors and the associated health issues/costs.

Of course, healthy employees are also more alert and engaged, tending to work more carefully and with better focus, resulting in fewer accidents and reduced disability claims, stabilizing or even shrinking disability insurance rates.

The More Business Saves, the More Insurance Companies Make

Many-if not most-insurers are hyper aware that reducing healthcare costs relies on a partnership between the employer, employee and the insurer. Each needs to be on board for any program to work and that's why insurers are incentivizing businesses to initiate wellness programs. Discounts, extensive workforce support-such as a visiting nurse or personal health coaches-and employee rewards are a few of the many ways insurers make the initial expense and maintenance of a wellness program more palatable.

It's in an insurer's best interest that clients' "experience ratings" are favorable. The rating-a method most insurers use to determine the rate for a company-relies heavily on the history of claims (particularly large claims) and overall utilization (how often an employees accesses health resources).

The better the rating, the better the rate. A number of insurers, over time, will actually commit to holding rates flat or even reducing them, based on a company's favorable rating consistency. That the insurers have invested so much in promoting wellness and providing support is strong evidence that the programs work. Remember, these are companies that make their money when clients don't submit claims.

Can Corporate Wellness be Profitable?

Saving on insurance is just one of the bottom line benefits of a wellness program. It can also contribute to improved productivity and reduced turnover. There are fewer sick days; employees feel good and, thus, are working at maximum capability. And when people feel energized, they generally feel positive about things around them, including co-workers and the company. Take, for example, a workforce educated in healthy eating and the habits that help keep the flu at bay, versus a workforce that isn't.

The latter is more likely to suffer a higher absentee rate through the flu season, impacting production, while raising healthcare costs. On the flip side, a full, healthy staff during flu season can translate to a competitive advantage with better productivity and reduced temporary staff costs. Or, consider the mental and holistic health workshops many programs include.

A seminar on "better communication" may begin with the objective to improve the work environment and reduce stress, but ask any operations executive what improved communication does to productivity, safety and efficiency and you begin to see how the halo effect of a wellness program goes far beyond personal weight goals of employees and the cost savings goals of the company. It can actually evolve into a tool for growth and profit.

A final consideration: employee recruiting and retention. These may seem like distant needs to many companies in this economy, but things will start to improve, eventually. When that time comes, a strong healthcare offering could very well be the carrot that keeps valued employees or lands a new one-especially those with families. Salary is still king in the decision process, but when that part of the compensation package is comparable, healthcare coverage-the extent of the benefits and the cost-immediately move into the driver's seat.

Waiting until the economy starts to turn around is too late to begin a wellness program. The existing workforce needs time to "test" it, benefit from it and value it so that it will be very hard to give up should a competitor offer more money. And nothing sells a company better to a new recruit than seeing happy (and healthy) employees.A workplace wellness program is quantifiably the best way to reduce the long-term cost of employee healthcare.

But the benefits don't stop there. Designed smartly, with the company's unique characteristics in mind-type of work, demographics, geographic location, cultural considerations -an employee health program can become a secret weapon that actually adds to the bottom line, as opposed to just preserving it.And that leaves everyone feeling pretty well.

About The Author

Catherine A. Rudat is one of the nation's leading Health and Wellness Experts, with nearly a decade of experience in the field. Catherine recently earned the 2010 California Fit Business 'GOLD' award for one of her clients, recognizing the wellness program she developed as "the best well-rounded Wellness program."

Based in Newport Beach, California, Catherine's company specializes in all aspects of health and wellness including Fitness, Health & Nutrition, Safety, Stress Management, and Personal Development, to name a few. Catherine Rudat's Wellness Corporation provides cutting edge programs to businesses intent on controlling healthcare costs through the development and maintenance of an objectives-based employee wellness program.

The company provides dedicated, hands-on consulting and support to help businesses research, develop and implement customized programs designed to improve employees' health, productivity, career satisfaction and safety awareness. The company also sets itself apart with exceptional customer service, a "long term investment" approach to client relationships and proven program success.

For a complimentary assessment to start an employee wellness program, or to evaluate an existing program against benchmark criteria based on the award-winning program used by Catherine Rudat's Wellness Corporation, call (714) 956-6166 or email

We will also work with your insurer to determine what factors can improve your company's experience rating and what the insurer can offer to assist with that. Get control of your health costs, provide significant value to your employees and bolster your productivity and staff engagement- TODAY! 1 Source: Towers Perrin 2010 Health Care Cost Survey

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