How to measure employee wellness program savings: ROI vs VOI

Healthcare costs are continuing to rise for both employers and employees, and along with the costs, employee expectations for workplace culture are rising as well. Many companies are considering employee wellness programs to address these costs and meet these expectations, but they are proceeding with caution. Employers want to know which programs will help them understand how to effectively measure employee wellness. What’s more, they want to know the expected wellness program ROI for the solution they implement, so that they know it is worth the investment they put in. Are wellness program savings really worth the cost? 

ROI vs VOI: Goals of an employee wellness program and how to measure success

How can an employer determine the value of a wellness program? First, a company should consider the goals they are trying to achieve from the wellness program, and the measures used to determine success. Typically, the main objectives for employee wellness programs fall into 1 or more of these 4 categories: 

• Controlling healthcare costs
• Improving employee well-being
• Reducing disease risk
• Improving employee productivity, engagement, and retention 

To understand the potential wellness program savings and how those measure up to the costs, it’s important to consider both the ROI (return on investment) and VOI (value on investment) of an employee wellness program. 

ROI on employee wellness programs

The ROI for employee wellness programs can be calculated by taking the total wellness program savings and dividing by the total amount spent on the wellness programs. This isn’t always as straightforward as it sounds, as quantifying the total dollars saved for a wellness program can be a challenge.

However, it is possible to estimate the number of health risks that a lab-based screening program will identify in an employee population.

For a population with 10,000 employees, an annual population health screening program will identify approximately 2,000 unrecognized cases of chronic disease.⁶

VOI on employee wellness programs

While the potential wellness program savings are significant, there are also other, harder-to-measure benefits that come from implementing well-being programs. For example, the potential benefits of an employee wellness program include fewer employee sick days, increased employee productivity, as well as the ability to attract and retain talent within an organization.

These “softer” benefits that can’t be as easily quantified are known as value on investment, or VOI. If an employer only calculates the medical cost savings of implementing a well-being program, they are missing out on the bigger picture. While cost savings are important, it is the combination of the physical, mental, and emotional health of employees that gives much more insight into day-to-day employee performance. That is why an employer needs to understand both ROI and VOI when making decisions about which wellness programs to implement. 

What’s the hard return on employee wellness programs? 

Understanding the hard return on employee wellness program depends on numerous factors. However, we have been able to gather some statistics on the benefits of investing in wellness programs with Quest. For a population of 10,000 employees screened, as many as 2,000 cases of chronic disease may be uncovered—affecting as many as 1 in 5 employees. In addition, another 1 in 100 employee screening participants will realize benefits that may be less dramatic, but very concrete, such as addressing diet and weight issues, investigating smoking cessation, and/or increasing physical activity. The actions taken by these employees will potentially impact their long-term health and may help to prevent chronic disease.

High-costs conditions develop over time, and with effective identification, connection to care, and intervention, employers can reduce the incidence of high-cost conditions among their employees. 

• Participants in laboratory-based wellness programs that can identify chronic disease risks spend 30% less in overall per-employee per-year claims¹⁰
• Prevention of type 2 diabetes through a Diabetes Prevention Program and lifestyle changes may result in 34-44% lower medical costs attributable over 10 years due to lower hospital, emergency room, urgent care, and outpatient services¹¹

Quest’s comprehensive population health programs help reduce healthcare spending and improve the health of employees

Each year, healthcare costs for both employers and employees continue to rise, growing over 5% annually over the past 5 years.¹² The increased prevalence of high-cost chronic conditions due to unmanaged health risks is a large contributing factor to these increasing costs.¹² In fact, high-cost claimants make up approximately 1.2% of a workforce’s population, but drive over 31% of healthcare costs.¹² At least half of those costs are caused by chronic conditions.

In order to improve the health of their population and reduce healthcare spending, employers should focus on comprehensive population health solutions that include the following 3 elements: targeted testing programs to accurately identify chronic disease risks, connection to needed medical care to diagnose and potentially improve current chronic conditions, and targeted health interventions to reduce the incidence of high-cost conditions.

Quest Diagnostics, an industry leader in testing diagnostics in the United States, and a large self-insured employer, showcases how designing a population health solution that focuses on identification, connection to care, and intervention helps mitigate healthcare costs, while giving employees the tools they need to become more effective healthcare consumers.