The latest selection of Koop Award recipients has sparked debate about the difficulty of measuring return on investment – even for employee health and wellness programs that are recognized as exemplary attempts to improve outcomes and reduce costs.
Questions have been raised about an estimated ROI at McKesson Corporation, which along with O’Neal Industries and its affiliate companies, won the 2015 C. Everett Koop National Health Award – now in its 21st year. Awarded by
But some outspoken critics doubt the ROI claims, question the use of self-reported data and suggest the selection process itself is rife with conflicts of interest.
Behind the numbers
Preliminary findings from an independent research group at Harvard University uncovered roughly 30% ROI for each dollar McKesson invested in its program over a three-year analysis period. Andrea Feigl, Ph.D., the principal investigator, says the estimated relative cost savings were based on differences in employee engagement levels.
Also see: “
Al Lewis, a veteran health and wellness expert who runs Quizzify, a healthcare education app, has repeatedly slammed the Koop Awards for bestowing honors upon organizations with close ties to the judges. He notes that McKesson is a client of Ron Goetzel, Ph.D., president and CEO of The Health Project, a nonprofit private-public consortium which judges the award winners.
However, any of The Health Project’s 19 board members and advisers with a conflict of interest with an award applicant must declare it and recuse himself or herself from the annual review process, says Goetzel. Given his connection to McKesson in his role as VP of consulting and applied research for Truven Health Analytics, he had no role in any discussions or judgments involving the company’s application.
In terms of sponsoring the awards, Goetzel explains that his job as head of The Health Project is to find donations, which he adds has “zero influence on anything to do with the awards itself.”
Also see: “
Still, Lewis maintains that a common thread across Koop Award winners is that they exaggerate “a trivial reduction in risk across the corporation.” In the case of McKesson, he says, “weight went up and down at the same time. That happens all the time. But basically, it’s a trivial risk reduction, and it’s always associated with massive savings.”
Feigl, meanwhile, defends her study and considers the
She explains that the $13.3 million in cost savings in 2012 vs. 2014 refer to a “cohort” examination of 14,629 employees from the final study sample of 18,733 employees with a mean age of 45. The figure was largely attributed to actively engaged program participants (i.e., at least once a week or more). Further, she notes that the preliminary estimate of 30% ROI applies specifically to long-term employees included in the impact evaluation.
Employees who were somewhat or highly engaged, respectively, spent between $916 and $1,238 less on medical expenses in 2014 compared to those with low engagement in 2012 and 2013. Nearly half the study participants were found to be low engagers.
Also see: “
“We took their baseline for a year and looked at their relative incurred medical costs over the time period of 2012 to 2014,” explains Feigl, a visiting scientist at the Harvard Chan School of Public Health, as well as a health economist at Abt Associates and president of Happy Vitals. Health indicators in 2013 and 2014 were adjusted in the analysis, while several sensitivity analyses of the “inter-individual” impact that used a matching approach confirmed the results.
She says “actual verified data” was used from insurance claims, as well as physical activity and biometric indicators. Activity levels in the program run by the Vitality Group Inc., for which she also serves as a consultant, increased by 92% since April 2012.
Hidden costs
ROI estimates in wellness programs often fail to take into account hidden costs associated with the value of financial incentives, including cash rewards, trips or monthly premium discounts, which will skew results, observes Don Powell, Ph.D., president and CEO of the American Institute for Preventive Medicine.
“That all has a value associated with it,” he explains, “so those costs must be added to the price of the program, whether you’re paying a vendor to come in and they’re charging a PEPM [per employee per month] for your entire employee population.”
Also see: “
One lightning rod for criticism in the wellness industry is the use of self-reported data. At McKesson, 4,892 employees and 493 of their spouses reported attending 159,994 Weight Watchers meetings and collectively losing 24,759 pounds. But Lewis says employees tend to lie about their health and will exaggerate any results so that they head “in the other direction.”
Powell agrees with Lewis that there’s a tendency to inflate the success of self-reported data, although he also says McKesson’s 30% ROI pales in comparison to bold claims ranging from 3:1 to 6:1 that others have reported based on meta-analyses. “It’s within reason,” he believes, while expressing caution about whether various hidden costs are included in the calculation.
VOI as new metric
Powell sees a movement away from ROI and toward a new metric known as “value on investment,” or VOI. While admittedly a softer measure that’s difficult to quantify, he believes it has validity in casting a light on the importance of building a culture of health, improving productivity, engendering loyalty, lowering turnover, and attracting and retaining talent.
But Khanna, who co-wrote the book
Also see: “
He says VOI shows even less return than ROI because intangibles associated with this approach, such as how wellness programs affect employee morale and worksite productivity, cannot be quantified.
Top-down support
The health and wellness program at McKesson, a healthcare services and information technology company, sought to promote “the physical, mental, and social well-being of our employees and their families,” according to Jorge Figueredo, the company’s EVP of HR.
Not only is the wellness program supported by senior leadership, but CEO John Hammergren has achieved the highest tier of wellness status in each year of the program, says Kristin Hunter, a McKesson spokeswoman.
There are also more than 160 health advocates or “wellness champions” in the workforce across more than 120 locations. These individuals coordinate events and provide personal outreach within their respective team of employees. Hunter describes their passion as “infectious,” whether it involves leading the pack of a lunchtime walking group or instigating a step challenge among groups of employees, monitored by company-sponsored FitBits.
Also see: “
“Once program adoption reached critical mass among employees, the commitment to wellness became ingrained in McKesson’s culture,” she says.
Jacob Paquette, who works as a compensation program specialist at McKesson offered anecdotal evidence of the company’s successful approach to wellness.
“After completing my annual health-risk assessment in early 2014, I learned that my blood pressure and cholesterol levels had crept into a near-danger zone,” he said in a news release. “I realized I needed to do something and got serious about using the tools the McKesson wellness program offered. I began completing online education courses and webinars in addition to logging my daily workouts and taking 10,000 to 15,000 steps a day with my Fitbit pedometer. Now, almost two years later, I’ve lost 20 pounds and my blood pressure and cholesterol are under control.”
The other 2015 Koop Award recipient was O’Neal Industries (ONI), a metals service center business with about 3,000 employees worldwide, which achieved net cost savings of about $500,000 annually and a $1.52 ROI for every dollar spent on its wellness program.
Also see: “
There has been more than 82% employee participation in ONI’s employee wellness program, while more than 150 individuals reportedly quit using tobacco, more than 200 and 150 people, respectively, lowered their blood pressure and body mass index to normal, and more than 400 individuals increased exercise to five or more days a week.
Caveats and high expectations
While these wellness success stories may contain lessons for other employers, they also come with caveats. It’s important for HR and benefit professionals to remember that the employee wellness industry “is completely unregulated, unsupervised and unlicensed. So essentially, the wellness vendors and consultants can say whatever they want, and there’s no adult supervision,” says Lewis, who engaged in a spirited debate at the 16th Annual Population Health Alliance Forum on whether employee wellness programs demonstrate ROI. His sparring partner: Goetzel, who’s also a senior scientist for the Institute for Health and Productivity Studies at the Johns Hopkins University Bloomberg School of Public Health.
Also see: “
While acknowledging the existence of many poor wellness programs, Goetzel argued during the appearance that the industry’s mission is to find the right design based on “science and evidence-based principles.”
Goetzel says he has been involved in applied health research for the past 30 years during which he has published 171 articles mostly on the health and economic impact of workplace health promotion programs, and in some cases, the ROI that’s involved. “The methods that are used in establishing program impact are open and available to researchers,” he says. “We’re very explicit about methodology used, and importantly, the limitations of the methodology.”
All information about the Koop Awards is publicly available and there’s no cost to apply for the honor, which he says is difficult to win.
With increasing attention being given to the difficulty of measuring program ROI, Powell thinks wellness gets held to a higher standard than other types of benefits. “Where’s the ROI related to offering a 401(k)?” he asks rhetorically. “Where’s the ROI related to having a daycare on site? Where’s an ROI related to bringing in a financial wellness program? Where’s the ROI related to eldercare, and so on?”
