Wellness programs don’t work. Try a new approach.

Implementing one of Honeywell Inc’s first employee wellness programs in North Carolina in 1991 was one of my most rewarding experiences in HR. Many of those employees learned for the first time the importance of maintaining blood pressure and controlling sugar intake and how diet and exercise effect health. Now 31 years later, overwhelming research shows today’s wellness programs, although wildly popular, don’t work.

The program I implemented with the help of Honeywell’s Chief Medical Officer, Dr. John Burns, provided each employee with blood tests, personal confidential reports, and the coaching of a public health nurse. Several employees came forward and thanked me for the program and told me of the lifestyle changes they had made. One confided that her cholesterol had been at 417, and she was determinated to reduce it with medication and changes to her diet, and a new exercise routine. She stuck with it, and it worked.

Several stories like these convinced me that wellness programs based on medical science and with measures could improve employees’ lives and reduce health care costs for employers. Other HR executives can provide similar testimonials to mine. But 31 years ago, the data didn’t exist to verify that wellness programs lead to healthy and more productive employees and lower health care costs.

In US corporations, payroll and benefits costs are often the largest category of costs for an employer and they are rising. According to the Kaiser Family Foundation, average annual worker and employer premium contributions for family health coverage have risen 22 percent since 2016 to $22,221. The worker contribution has increased by 13 percent since 2016 to be $5,969. Please see the chart below.


Wellness costs have also continued to grow and are now half the cost of providing health care benefits. From the 1990s to 2017, the wellness industry has grown to be a $52.5 billion industry in the US and $4.2 trillion worldwide. According to the Global Wellness Institute, wellness expenditures in 2017 have surpassed half of the global healthcare-related spending during the same year, $7.3 trillion.

In the US, the 2010 Affordable Care Act (ACA) encourages firms to adopt wellness programs by letting them offer participation incentives up to 30% of the total cost of health insurance coverage, and 18 states currently include some form of wellness incentives as a part of their Medicaid program.

According to the Kaiser Family Foundation, most large firms and many small firms have programs that help workers identify health issues and manage chronic conditions, including health risk assessments, biometric screenings (blood tests), and health promotion programs. Dislocations caused by the COVID-19 pandemic, including job disruptions, remote work, and social distancing, challenged workers’ abilities to participate in some of the activities associated with these programs. Some employers addressed these challenges by adjusting incentives, adding new services, vendors, digital content or platforms, or expanding service locations.

But is $52 billion of wellness expenditures providing a return on this investment? New research reveals that wellness programs promote higher levels of regular exercise and weight management, but no measurable improvements in health.

For example, in a randomized cluster trial involving 32 974 employees at a large US warehouse retail company, worksites with the wellness program had an 8.3-percentage point higher rate of employees who reported engaging in regular exercise and a 13.6-percentage point higher rate of employees who reported actively managing their weight. However, there were no significant differences in other self-reported health and behaviors; clinical markers of health; health care spending or utilization; or absenteeism, tenure, or job performance after 18 months.

Another study of 5,000 employees for one employer, randomized into experimental and control groups, looked for changes in behaviors, financial incentives, health outcomes and medical costs of the firm. The researchers found strong patterns of self-selection. Program participants had lower medical expenditures and healthier behaviors than nonparticipants. The program persistently increased health screening rates. Still the researchers did not find significant causal effects of wellness program exposure on total medical expenditures, other health behaviors, employee productivity, or self-reported health status after more than two years. In other words, the wellness program did not provide the firms with a return on investment for its investment in wellness.

In addition, the researchers found that the financial incentives (such as lower health care premiums) for wellness program participation shifted higher healthcare costs to lower-paid workers.

These findings are very disappointing.

This research also suggests other factors at play. One is that employees interested in improving their health and avoiding diseases in their family history will practice health lifestyles even if their employers don’t encourage it. This is similar to research on time and attendance programs of the 1980s and 1990s. There, evidence showed that time and attendance incentives didn’t improve time and attendance. Employees who had a great time and attendance records were rewarded for what they would do anyhow, and those with poor time and attendance didn’t change their behaviors.

Another factor at play is that general health guidance (such as WebMD online) and blood tests are readily available these days and often covered in health care plans even without a wellness promotion program. The wellness program is no longer delivering anything new.

One might conclude that if the known higher risk of disease, poor quality of life, and early death are not incentives to choose healthier lifestyles, roughly $600 annual savings in medical premiums won’t be an incentive either.

As with Honeywell Inc. and me in the 1990s, wellness programs are well-intentioned, and on the surface make sense. However, given this evidence what are conscientious employers to do? Let’s look at some options:

1 – Keep offering wellness programs anyway, as part of your brand. These programs are wildly popular during an era of labor shortages and speak to an organization’s interest in employee health. After all, it shows goodwill to continue rewarding employees who address their health concerns.

2 – Curtail your wellness programs and redirect the money to lowering basic health care deductibles and improving other employee benefits. The prefered improvements that employes want, according to PwC, are more paid time off, a 401(k)s with an excellent match, and upgraded learning and career advancement opportunities.  In addition, pundits and researchers for years have been encouraging governments and employers to expand mental health coverage and reduce the stigma of addressing mental health issues.

3 – Invest in permanently providing hybrid work models and redesigning your offices. I know from implementing a hybrid work model in 2012 the benefits it is providing employees in having more control over their workday and the benefit of eliminating commuting time. These factors reduce employee stress and absenteeism and improve their morale and productivity. Employers can benefit from dramatic savings in office space.

4 – Reduce the other factors that add stress to employees, such as harsh managers and toxic cultures. There is a real cost of turnover from employees leaving stressful work cultures. Persistent research shows that successful teams that achieve breakthrough results are based on trust.  MIT researchers recently found that toxic work cultures cause turnover ten times more than pay.

One of the most meaningful experiences of my HR career was implementing the wellness program in North Carolina 31 years ago and learning the significant changes it made to employee lives. It is too bad more employees are not heeding the message. However, conscientious employers have several good alternatives for improving the wellbeing of their employees.

Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and managing partner of InnovationOne.. He works with companies to transform HR and recruiting, implement remote work, and develop extraordinary leaders, teams, and innovation cultures. He is the author of the highly acclaimed book, Hack Recruiting: the Best of Empirical Research, Method and Process, and Digitization. Subscribe to his weekly blogs at www.VictorHRConsultant.com. 

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