Wellness Programs May Not Reduce All Health Care Costs

January 7, 2014 (PLANSPONSOR.com) – A new study shows that corporate wellness programs may reduce some health care costs but not others.

The study from RAND Corporation, “Managing Manifest Diseases, But Not Health Risks, Saved PepsiCo Money Over Seven Years,” finds that while workplace wellness programs can lower health care costs in workers with chronic diseases, parts of the programs that encourage workers to adopt healthier lifestyles may not necessarily reduce health costs or lead to lower net savings.

The study examines a large employee wellness program offered by PepsiCo. Results show that efforts to help employees manage chronic illnesses saved $3.78 in health care costs for every $1 invested in the effort. At the same time, the wellness program’s “lifestyle management” components, which encouraged healthy living, did not deliver returns higher than the program costs.

“The PepsiCo program provides a substantial return for the investment made in helping employees manage chronic illnesses such as diabetes and heart disease,” says Soeren Mattke, the study’s senior author and a senior natural scientist at RAND, a nonprofit research organization.

The Boston-based Mattke adds, “The lifestyle management component of the program, while delivering benefits, did not provide more savings than it cost to offer.”

The study also reveals that it may be easier to achieve cost savings in people with higher baseline spending, as was the case with those who participated in PepsiCo’s disease management program. Results show that the disease management participants who also joined the lifestyle management program experienced significantly higher savings. This suggests to Mattke and his coauthors that proper targeting can improve the financial performance of lifestyle management programs.

“While workplace wellness programs have the potential to reduce health risks and cut health care spending, employers and policymakers should not take for granted that the lifestyle management components of the programs can reduce costs or lead to savings overall,” says Mattke.

The study assesses PepsiCo’s “Healthy Living” wellness program over a seven-year period. The program includes components such as health risk assessments, onsite wellness events, lifestyle management, disease management, complex care management and a nurse advice phone line. The study evaluates the experiences of more than 67,000 workers who were eligible for the disease management or lifestyle management programs.

The disease management program reduced costs among participants by $136 per member per month, or $1,632 annually, driven by a 29% drop in hospital admissions, according to study results. Among people who participated in both the disease management and lifestyle management programs, the savings were $160 per month with a 66% drop in hospital admissions.

More information on the study can be found here.

A separate RAND study found that about half of U.S. employers with at least 50 workers, and more than 90% of those with more than 50,000 workers, offered a wellness program during 2012.