The Cost of Wellness

By: WELCOA 5/05/04

In a recent interview, Wellness Councils of America (WELCOA) President David Hunnicutt sat down with wellness guru Ron Goetzel, PhD, Director Cornell University Institute for Health & Productivity Studies, to discuss the cost equation of worksite wellness programs.

The significant outcome of the conversation was that if an employer spends $100 to $150 per employee, per year in health promotion the return on investment is somewhere around $3 for every $1 invested. So if you take $100 to $150, employers can expect to see a return of $300 to $450 in savings per employee, per year. Most worksites begin to see this return about two to three years into the program. So if an organization is willing to wait, their wellness program will be capable of achieving this magnitude of ROI.

The way the ROI is measured is relatively simple. It is of course ideal to have the entire employee population on the wellness program. But let's say that half the people are participating and the other half is not. The entire population of participators begins at the same time. At the end of three years costs are measured. Savings means finding a $300 to $450 difference in the annual healthcare costs of the participants vs. the non-participants. This difference is the realized net savings which can then be compared to program costs to calculate the ROI. It is actually a cumulative savings over the course of the three years. If you spent $100 per employee per year for the program, you can expect to get back $300 per employee per year or $900 per employee at the end of three years on only a $300 investment.

    "There is one thing stronger than all the armies in the world, and that an idea whose time has come."  ~ Victor Hugo