Wellness & The ROI on Workers' Compensation Costs
A lot has been written on the topic of wellness, but until recent years, it’s been a challenge for employers to tangibly quantify an ROI.
However, now more than ever, we are able to measure the return on investment with a properly executed wellness program.
One area of significant ROI is how an effective wellness program can reduce an organization’s spend in the area of workers' compensation. A recent Assurance client in the Construction space was able to quantify a 5:1 ROI for their worker’s compensation program.
There are not only tangible financial impacts, but also ancillary culture and employee well-being impacts that eventually tie back to financial performance of the program.
To begin, why are we seeing more employers spend time and money on wellness? There is a lot of data behind the notion now that employees participating and engaged in a wellness program experience better job satisfaction, well-being, and productivity.
When wellness first became a larger conversation in the workplace, the immediate thought went to reducing an employer’s spend on employee benefits and health care costs. While an effective wellness program can sometimes impact this, a study by Aldana in 2016* revealed that 91% of employers offer a wellness program for reasons other than a reduction of health care costs.
The core crux of wellness is now coming into clearer view: Wellness can improve the physical and mental health of an employee and can better engage an employee to reduce turnover. These key items can have a measurable impact on both worker’s compensation claims prevention, as well as the impact on the individual cost of a claim once it occurs.
Some key areas of focus should be:
- Not just physical wellness, but mental wellness programs
- Driving engagement by creating a wellness committee or team
- Engage with a 3rd party (broker or wellness consultant) to take part in those conversations
- Track your results
How to quantify it
There is anecdotal evidence that a mentally and physically healthier employee is a safer employee, and the cheapest worker’s compensation claim is the one that never occurs.
Too often employers are deploying a blindfolded approach to wellness. It goes something like this: Try some initiatives, spitball on how it went, get employee feedback, try some new initiatives, and rinse and repeat.
Instead, an employer needs to consider some key data points and questions. These can give you a starting point:
- What are my loss drivers in my work comp program?
- What is the tenure demographic of my workforce?
- Do I have a wellness program? If so, is my wellness program derived from data and my loss drivers?
- What data do I have on: Lost time claims and days away from work?
- Do I know the metrics on the average cost of each claim?
- Am I tracking how these changes over time?
- Do I have data on how some key behaviors & conditions (obesity, smoking, etc.) can impact this number?
- Do I know metrics on the ancillary costs, not just the cost of medical bills & wages?
- Are the people helping my organization with safety and wellness collaborating together?
If your organization can’t answer all these questions, don’t be alarmed. You’re not alone. But it also means you’re not extracting the most ROI in the area of wellness.
Need help? Contact us today to have a further conversation!
*Source: Wellness Program Engagement
- Wellness Metrics to Track Webinar Replay
- 3 Steps to Effectively Measure Your Wellness Program's ROI
- Wellness E-Book
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