Healthcare in the United States has reached a crisis point. The cost of medical treatment is 274 times greater today than in 1950, even though the average cost of all other goods and services has increased only eight fold. What many employers fail to realize is that indirect costs of poor health and unhealthy lifestyles impact their bottom line as much as health insurance premiums.
Take obesity as one example. Nearly three-quarters of all Americans are obese or overweight. In the past 25 years, childhood obesity has tripled. As obesity rates have climbed, so have rates of associated health conditions. Medical expenses for obese employees are estimated to be 42 percent higher than those of a person with healthy weight.
Almost 66 percent of the increase in healthcare spending can be attributed to increasingly unhealthy lifestyles. Productivity is also associated with the employee's health and lifestyle choices. Employers in the United States spend $226 billion a year on productivity losses due to employee and family related health issues.
Recent internal company studies estimate that employers spend 200 to 300 percent more on the indirect costs of poor health than they do on health benefits. For example, only about one in seven employees, 13.9 percent of the workforce, are of normal weight with no chronic condition.
Productivity of non-exercising employees decreases by 50 percent during the last 2 hours of the workday. Unscheduled absences cost American businesses upwards of $74 billion. Absences due to illness cost employers an estimated $55 billion annually. The total cost of absent personnel can equal as much as 36 percent of payroll when combined with the cost of absence related healthcare coverage.
And yet many employers won't spend the equivalent of one hour's pay per month on an employee wellness program to ensure a healthy workforce. According to the Department of Health and Human Services, at least half of all Americans take at least one prescription drug, with one in six taking three or more medications. Drugs in the workplace cost U.S. businesses an estimated $100 billion each year and smaller businesses are more vulnerable.
The CDC now calls prescription drug abuse an epidemic. It kills more people than traffic accidents. Prescription medication expenditures continue to rise rapidly, reaching $445.9 billion. This is a huge concern to the employer since more than 93 percent of private health insurance coverage is obtained through the workplace (from a current or former employer or union). Rising drug costs mean higher insurance premiums and larger co-pays.
Employee turnover, especially due to ill health, may be one of the largest costs in all different types of organizations, yet it's also one of the most unknown costs an employer faces. It is estimated that replacing an established employee costs 30-50 percent of the annual salary of entry-level employees, 150 percent of middle level employees, and up to 400 percent for specialized, high level employees.
These include lost productivity before the replacement is on the job, the time a co-worker spends away from their own work to help fill the gap, the cost of training the replacement, the advertising cost, relocation expenses, and employee morale. Keeping an employee happy and healthy is a proven way to retain them and avoid the expense of a new hire. Employee wellness programs are critically important in maintaining a productive workforce.
They teach employees how to maintain their health, resulting in savings for both the employee and the employer. For example, physically inactive people are twice as likely to develop coronary heart disease as regularly active people. 51 percent of Americans die from heart attacks and strokes compared with less than 3 percent just a century ago due to a proliferation of risk factors that are heavily influenced by unhealthy lifestyle choices.
50 percent of all cancers are preventable through lifestyle modifications. Only 3 in 10 adults get the recommended amount of physical activity. Some 37 percent of U.S. adults report they are not physically active at all. Studies have consistently shown that being active cuts the risk of premature death by about 50 percent for both men and women.
All it takes is a simple employee exercise plan at work to improve health and increase their daily efficiency. Since most people spend more time on the job than anywhere else, it makes perfect sense to begin an active health program at work. Employee wellness programs give their employees the information, support and incentives to modify lifestyle choices and prevent disease. These programs have often been seen as a nice extra, not a strategic imperative, but the data proves otherwise.
Studies at large corporations which implemented comprehensive wellness education and programming found 14 percent to 19 percent reductions in absenteeism. General Electric reported an astounding 45 percent decrease in absenteeism. Many companies including Johnson & Johnson reported that employee wellness programs produce a healthier, happier and more productive workforce.
For every dollar they invested they reaped $4.00 in reduced health care costs. Employee wellness programs are essential to the long-term viability of all businesses. One of the least expensive ways to grow the organization is to grow the individuals that make up the organization. Employee wellness programs improve health, yield major savings and are a wise and necessary investment.
The good news for everyone is that prevention does work. Research shows that the ROI on comprehensive, well-run employee wellness programs is impressive, sometimes as high as six to one. Employee wellness programs have been proven to reduce health care costs and absenteeism, resulting in improved productivity and lower attrition.
Studies show that companies with highly effective wellness programs report lower voluntary attrition. Employees who participate in wellness programs don't leave.Invest in your employees' health and reap returns, many times your investment.
About the Author
Donna Haybarger is a Board Certified Holistic Health Coach and a Member of the American Association of Drugless Practitioners with Way2Wellness. She has developed a Corporate Wellness Audio Series "Eating for Energy and Longevity". Her audio series encourages healthy eating and other lifestyle changes that discourage the development of disease. She can be reached at www.way2wellness.com, firstname.lastname@example.org or 888-659-6604