Employer Healthcare Strategies


Reducing Self-Funding Risk With Wellness Programs

Posted by Tatiana Spears on March 14, 2017


There is a trend, perhaps you have noticed it: healthcare costs are increasing. Yet, the means of paying those costs is not going up at the same rate. In a country where high deductible healthcare plans are the norm, it becomes more difficult for employees to keep up with preventative care—some of them forgo it completely.

Continued cost increases without corresponding increases in income impede profitability, many employees unable to afford increasing portions of their health insurance premiums. The result? A lack of preventative screenings and poor lifestyle choices can lead to greater problems down the road. According to the Center for Disease Control (CDC), treating those with chronic conditions accounts for 86 percent of the country’s healthcare costs, the majority of which are preventable. This has led to the dramatic rise of employer-sponsored wellness programs for employees.

Many employers, both large and small, are investing in employee wellness programs and benefits that increase the value of their health plans. Some of the more common types of wellness offerings include:

  • Health screenings
  • Smoking cessation assistance
  • Physical wellness: diet and exercise training or company-wide challenges
  • Weight loss support
  • Mental wellness: stress and depression management
  • Financial wellness training

With so many options to choose from, how can employers determine what are the most important (and lucrative)  to offer to employees? The types of wellness options offered by employers varies greatly - and that's how it should be. For example, self-funded employers have more skin in the game when it come claims. You can expect that a self-funded employer will get their hands on aggregate claims data to inform wellness program priorities and anchor efforts with an entire ecosystem to support prevention and intervention.  

Rise of Employee Wellness Programs 

Sustainable, high-quality employee wellness programs should achieve two things: prevention and intervention. Unfortunately, many employer focus too much time and resources on prevention and not enough on intervention. Employers can reduce health care costs by helping employees identify their risks and understand and treat their conditions. Although disease management can be applied to many chronic diseases, diabetes has been a prime target.

A retrospective study reviewing 2 years of claims data from an integrated healthcare system found that patients with diabetes enrolled in their disease management program had average claims of $394.62 per patient per month compared with $502.48 per patient per month for those with diabetes but not enrolled in the  program. According to the researchers, the system saw a return on investment (ROI) of 2.23:1 (that is, $2.23 of savings accrued for every $1.00 invested). This was accompanied by modest—but statistically significant—reductions in hospital admissions and inpatient days. 

Along with the potential of catastrophic costs, it is significantly more expensive for employees to miss work than it is to cover their necessary medical and pharmacy costs. The average employer health-related productivity costs (presenteeism and absenteeism) were found to be 2.3 times the medical and pharmacy costs alone. When adding wellness offerings, employers must think of the short and long term health benefits employees will experience. 

Next Generation Wellness Programs 

Historically, wellness programs focused exclusively on prevention or on tackling a singular disease. Today, smart employers are investing in tools and technology that focus on the intervention and management of chronic disease. The greatest differences in first-generation disease management with today’s programs include: 

  1. The move away from a single-disease focus to a patient focus, which could address multiple disease comorbidities in 1 program;
  2. The improved use of data and access to information through the medical record;
  3. And the addition of incentives to induce patients to adhere to the medical regimen and providers to offer quality care.

With the advent of wearable devices and accessible online resources, the world of wellness is as pervasive as ever. Many programs have integrated with online platforms to allow employees access to health information at all times and access to health and wellness coaches.

In the end, the most successful wellness programs are those that evolve with time to fit employee needs and are exemplified from the top down.


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Tatiana Spears

About The Author

Tatiana Spears

With an MBA mind for analysis and strategy development, Tatiana loves transforming creative ideas into practical application for innovative companies and professionals. She is also the proud owner of an overworked Nespresso machine.

Post Topics Workplace Wellness