0 Comments | May 01, 2010

Wellness ROI: Quality has a Quantity All Its Own

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There’s a growing group of smart wellness folks gathering in a new online community called the Employee Wellness Network. It’s where all the cool kids in wellness are hanging out. And we’re there too (snuck in while nobody was looking).

There’s an interesting discussion unfolding around the topic of wellness program ROI. We’ve quoted wellness ROI studies and results in our white paper on healthcare cost reduction, and in various posts and pages around our site, but haven’t delved deeply into the statistical underpinnings of the studies and surveys we’ve cited.

There are three good reasons for that. First, not many folks have funded wellness studies. Second, not many of them are peer-reviewed, rigorous, scientific studies. Many of the statistics available on the topic are survey-derived, without a great deal of academic rigor beneath them. We cite our sources, of course, but don’t lift the lid on all of the statistics.

Third, and most importantly, it doesn’t really matter. If your CFO isn’t getting the wellness picture, you’re likely not going to win her over with ROI math.

What follows is an excerpt of my contribution to the aforementioned wellness ROI discussion on tEWN (I mention that here because we have also listed Zoescent on the site as a wellness vendor, and I’m a big fan of full disclosure):

There’s an unasked question, though: should we even be trying to nail down a number? Wellness stands more on the qualitative argument that holistic employee lifestyle improvement enhances productivity, reduces adverse healthcare cost trends, and creates a positive and attractive work environment (which speaks to recruitment and retention). Because it is but one part of a far more complex business whole, it’s difficult to nail down a return multiplier with any degree of precision, for all of the reasons above. However, just because there isn’t a tremendously reliable, scalable, and universally applicable formula for wellness ROI across a broad scope of wellness implementations and business climates does not mean that the argument for wellness lacks teeth or merit.

[Regarding] publication bias, I think the phenomenon is endemic to studies of all kinds in all industries. Wellness is not unique in that regard. You can’t apply bias in methodology within the study and survive even a rudimentary peer review, but you sure can apply bias in what you choose to publish, a favorite trick of industry backers for ages.

I think there are two takeaways. First, effectiveness depends entirely on execution. I’ve seen brilliant programs in myriad categories fail catastrophically due to poor implementation, leadership, or both. And even a modest program can work wonders when applied energetically, enthusiastically, and smartly.

Second, when you make the wellness argument to numbers-oriented decision makers, I think it’s important to address the disparity in ROI. Mention that some companies achieve in the high 5’s while others barely return their outlay (again, the numbers really do depend on whom you believe). Then make the winning point that execution makes the difference between winning big or breaking even, which is precisely why your program is postured for success in your expert hands.

Until we really can nail down a quantitative argument (an extremely difficult proposition), I think ROI has to be a supporting player in a more qualitative game. Most execs I’ve worked with recognize circumstances where trying to nail down the numbers is like eating soup with a fork, and can sense when a decision can be made by feel rather than by precise metrics.

At the end of the day, unless your business utilizes commodity labor, the argument isn’t really whether a program that keeps employees at work rather than on sick leave, and producing more effectively while at work, and experiencing positive personal growth, is a sound business decision. Rather, the real argument is which suite of programs, which providers, and which methods are most effective.

Is there enough available information to make a rock-solid qualitative argument for wellness? Absolutely. Is there also enough high-quality data available to demonstrate positive quantitative outcomes? Absolutely.

That’s not the hard part. When’s the last time a car commercial spent time convincing us that automotive transportation was necessary or beneficial? It’s all about differentiation, niche, and functionality.

And that’s where we need to take wellness as well. Not if, but when. Not whether, but which. There’s not really a profitable long-term alternative for businesses, particularly in light of exploding healthcare costs, and the fact that the majority of remaining domestic employment requires relatively high degrees of ingenuity, innovation, engagement, intelligence, and expertise.

Personally, I think we’re right around the corner. As healthcare legislation realities start to come home to roost, wellness programs will seem much less like a leap of faith and much more like a business imperative.

Which, ironically, will make the ROI math substantially easier.