Measuring your health in dollar terms - study shows short-term ROI of $1.17 per $1.00 spent
By Mike Hanlon
September 9, 2008
September 10, 2008 A program to reduce weight and improve health risk factors in obese employees produces a short-term return on investment (ROI) of $1.17 per dollar spent, according to a University of Georgia study. Just as important, the ROI model used in the study provides a relatively simple and inexpensive tool to help companies estimate the dollar benefits of investing in employee wellness programs. The ability to simulate the cost savings associated with reducing employee health risks could help in building a "credible and defensible case" for investment in employee wellness.This story really got us thinking that it might also pay for individuals to begin considering what the ROI for investing in their health would be – if there’s a short term benefit measured in dollars for your employer to pay for you to get healthy, what’s the long term ROI for investing in your optimum health with all those other personal gains to be considered – such as happiness, a feeling of well-being and a few extra years of painless mobility.
A program to reduce weight and improve health risk factors in obese employees produces a short-term return on investment (ROI) of $1.17 per dollar spent, reports a study in the September Journal of Occupational and Environmental Medicine, official publication of the American College of Occupational and Environmental Medicine (ACOEM).
The researchers analyzed a group of 890 overweight or obese employees participating in an obesity management program called Healthyroads. The workers received coaching and other services to support their efforts to lose weight, improve eating habits, and increase physical activity. The participants' average age was 44; about three-fourths were female. The average body mass index (BMI), a standard measure of weight for height, was 30.6. (A BMI between 25 and 30 indicates overweight, while a BMI of 30 or higher indicates obesity.)
Over one year, the participants had reductions in seven of ten health risk factors, including poor eating habits and poor physical activity. On average, the participants lost about ten pounds, with a BMI decrease of 0.9.
To assess the financial impact of the program, the researchers used a recently developed ROI model, which estimated the changes in medical costs and worker productivity resulting from reductions in health risks. The results suggested a total projected savings of nearly US$312,000. About 60 percent of the savings resulted from reduced health care spending; the remaining 40 percent resulted from improvements in productivity.
The model estimated an overall ROI of $1.17 to $1.00—for each dollar spent on the obesity management program, costs decreased by $1.17. The total cost of the Healthyroads program averaged $300 per employee per year.
Overweight and obesity have a major impact on costs for employers. However, companies deciding whether to invest in health improvement programs may need economic justification, including an estimate of the ROI resulting from such programs.
The new study shows that an obesity management program like Healthyroads can provide a significant improvement in employee risk factors with at least a "modest" ROI in just one year. The lead author of the new report is Kristin M. Baker, M.P.H., of University of Georgia. "Employers could potentially achieve bigger savings in health care costs and productivity if the observed risk changes persisted beyond the study period," according to Ms. Baker and her coauthors.
Their results support the use of the ROI model as a lower-cost alternative to formal evaluation studies that would otherwise be needed to build a business case for health promotion programs. The ability to simulate the cost savings associated with reducing employee health risks could help in building a "credible and defensible case" for investment in employee wellness, the researchers conclude.