Evaluating an employee wellness program
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Evaluating an employee wellness program Sankar Mukhopadhyay · Jeanne Wendel
Received: 20 November 2012 / Accepted: 4 May 2013 / Published online: 9 June 2013 © Springer Science+Business Media New York 2013
Abstract What criteria should be used to evaluate the impact of a new employee wellness program when the initial vendor contract expires? Published academic literature focuses on return-on-investment as the gold standard for wellness program evaluation, and a recent meta-analysis concludes that wellness programs can generate net savings after one or two years. In contrast, surveys indicate that fewer than half of these programs report net savings, and actuarial analysts argue that return-on-investment is an unrealistic metric for evaluating new programs. These analysts argue that evaluation of new programs should focus on contract management issues, such as the vendor’s ability to: (i) recruit employees to participate and (ii) induce behavior change. We compute difference-in-difference propensity score matching estimates of the impact of a wellness program implemented by a mid-sized employer. The analysis includes one year of pre-implementation data and three years of postimplementation data. We find that the program successfully recruited a broad spectrum of employees to participate, and it successfully induced short-term behavior change, as manifested by increased preventive screening. However, the effects on health care expenditures are positive (but insignificant). If it is unrealistic to expect new programs to significantly reduce healthcare costs in a few years, then focusing on return-on-investment as the gold standard metric may lead to early termination of potentially useful wellness programs. Focusing short-term analysis of new programs on short-term measures may provide a more realistic evaluation strategy. Keywords
Wellness · Cost · Absenteeism · Screenings · Return-on-investment
JEL Classification
I11 · I19
Karl Geisler and Tim Morgan provided excellent research assistance. This work was supported by a summer research grant from the College of Business at University of Nevada, and by the employer that provided the data. S. Mukhopadhyay (B) · J. Wendel Department of Economics (0030), University of Nevada, Reno, NV 89557-0030, USA e-mail: [email protected]
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S. Mukhopadhyay, J. Wendel
Before investing in any type of wellness and population health management program, those responsible for demonstrating its success must be realistic about the outcomes that can be achieved and over what period of time (Weltz 2009).
Introduction Return on investment (ROI) analysis is typically presented as the gold standard for evaluating employee wellness program (EWP) outcomes. While some long-established EWPs may earn positive ROI’s, this goal may not be realistic for small and mid-size employers offering new programs. Actuarial analysts argue that wellness programs require investments during early years, prior to earning returns in subsequent years (Fitch 2008). Specification of the program goal and the e
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