Companies Increasingly Implementing Health, Disease Management Programs; ROI Still an Issue

A survey of major U.S. employers finds that businesses are growing increasingly sophisticated in using incentives to encourage employee participation in health and disease-management programs. Businesses also face the challenge of maintaining employee motivation while demonstrating that these programs make strict business sense, according to the survey conducted by the ERISA Industry Committee (ERIC), the National Association of Manufacturers (NAM) and IncentOne Inc.

When broken down by type of program, companies with disease-management programs are less likely to offer incentives for those programs than for other types of programs, the survey found. This indicates that employers are targeting programs and incentives based on the needs of their employees rather than simply building a generic program, according to the organizations that conducted the survey. Since use of incentives with health and disease-management programs was seen as a way to "create buzz" and "improve completion rates" among employees, application of incentive programs for people with chronic conditions to maintain motivation and drive continued program participation may be an opportunity for growth and expansion as these programs mature.

The findings of the survey of 242 major employers were announced on June 21 at Institute 2007-AHIP's Annual Meeting in Las Vegas.

"As health-care costs rise, employers of all sizes continue to seek ways to control costs while increasing quality of care. Health and wellness and disease-management programs have shown great promise," said John Engler, president and CEO of NAM. "This survey indicates that the American business community is highly interested in innovative strategies to improve their employees' health and productivity."

On average, employers said that health management should have a positive impact on the bottom line. For example, respondents strongly agreed with the statements that "productivity will improve with health management" and that "return on investment (ROI) increases as employee participation increases."

While measuring ROI was deemed important, almost two-thirds (62 percent) of companies offering incentives had not attempted to measure ROI for their programs, and only 14 percent of respondents had been successful in obtaining such measures. However, among respondents who were willing to estimate ROI for their programs, more than 75 percent estimated an ROI greater than break-even.

"Clearly, employers are finding that investing in their employees' health is both the smart thing to do and the right thing to do for both employers and employees," said Mark Ugoretz, ERIC president. "And directing resources toward workers' health must be balanced with an understanding of how programs can both reduce benefit expenditures and improve workers' productivity. This survey shows that employers are serious about understanding the business case and they anticipate a return as these programs mature. It's a win-win for both employees and employers."

Among other key findings of the survey:

  • Three-quarters of the surveyed employers offer health-management programs to their employees, and of those companies offering these programs, two-thirds encourage their employees to participate with incentives.
  • The most common incentive offered across health-management programs is premium reductions, with 40 percent of companies using these as incentives. A strong second is cash or bonuses, offered by 29 percent of companies.
  • Disease-management programs that did offer incentives were more likely to use health account contributions, although premium reductions were the second most popular incentive.
  • The most serious challenge reported for health-management programs is maintaining employee motivation over time.

"We have long been of the opinion that health-management programs in general and the use of incentives in particular makes good business sense," said Michael Dermer, president and CEO of IncentOne. "But maintaining employee motivation, seen as a serious challenge among those employers surveyed, suggests that there is a need to use a combination of incentive design strategies and unique but effective employee communication techniques."

The Web-based survey was sent to members of both organizations, resulting in a response by 242 companies (a 35-percent company response rate). The membership of NAM and ERIC were surveyed about the use of incentives in employee health-management programs. NAM, ERIC and IncentOne sponsored the survey.

The survey was conducted to determine if employers believe that incentives are an important component of health, wellness and disease management programs and to understand the types of incentives used by employers for such programs, and whether they offer a positive return on investment (ROI). The survey also sought to understand the challenges employers faced in implementing and operating these programs.

ERISA Industry Committee: http://www.eric.org

National Association of Manufacturers: http://www.nam.org

IncentOne: http://www.IncentOne.com

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