The cost of doing nothing refers to the cumulative costs an employer will spend on their company’s healthcare and their employees, without a wellness strategy in place. When it comes to implementing a wellness program at your company, you may be hesitant to invest. A comprehensive wellness program, with an average ROI of $3 for every $1 invested, can be the solution to reducing healthcare costs while making your workforce healthier.
A typical TargetCare client falls in the mid-market space. This client could have upwards of 500 employees, one central home base and several branch locations, and operate in a predominately male-populated industry. Studies show that specific dollar amounts are attributable to different health risks; and when eliminated, financial savings result.
Chronic Condition Risk Reduction.
Onsite healthcare works in several ways, but primarily in reducing risk related to chronic conditions. Risk reduction leads to lower claims by proactively helping people move out of known risk categories. An obese employee costs an employer $3,841 a year. An uncontrolled diabetic costs an employer $16,082 a year and a pre-diabetic who is unaware of how to manage their condition, costs $8,041 a year. Smaller conditions add up as well. Hypertension is typically common in about a third of our company populations (prior to implementing a wellness program). This disease costs $1,164 per employee per year and we’re able to reduce about 50% of that population’s risk of hypertension.
Primary Care Appointments & Emergency Room Visits.
A common fiscal challenge employers face is the cost of emergency room visits, as their employees are not established with a primary care provider (PCP). PCP office visits for either standard care, routine care, health coaching, education or managing chronic conditions can be costly. The average cost for a lifestyle management PCP appointment is $65, for disease management $100, for acute care $140, for a personal health consult $65, and for a non-coaching clinical appointment it’s $65. Our sample employer would have spent an average of $160,000 each year on office visits alone, but instead employees were diverted to their free onsite clinic for all these needs.
Lost work time.
Lost work time, absenteeism and presenteeism can be difficult to measure. Our standard model approximates 3.5 hours away from work (average across rural and city settings) for an off-site appointment and compares this to only half an hour spent in an on-site clinic. An average off-site encounter can cost employers upwards of $70 in lost work fees ($20/hour estimated rate) per employee per visit. In our sample case study, there were an average of 2,320 visits to an onsite clinic each year, potentially saving the client about $135,600 a year.
Absenteeism costs employers thousands of dollars each year. When chronic conditions are not managed or controlled properly, employees are forced to take time off or come to work in poor health. On average, employers can spend close to $70,000 a year just on productivity losses related to chronic conditions like obesity, diabetes, hypertension, and smoking. (Totaled from a TargetCare case study)
Presenteeism is the loss in personal productivity associated with an employee who is at work, but unable to work at their full capacity due to an underlying health condition. These employees may be slow-moving or require more breaks from their work. Similar to absenteeism, when chronic conditions are not managed or controlled, employers suffer. Presenteeism can cost employers up to $530,000 a year when conditions are not managed. This is calculated by the number of occurrences of each chronic disease, the average % loss per occurrence, and then average cost of each employee with a poorly-managed chronic disease.
In total, this client would have seen an average annual cost of $1.9 million dollars on healthcare spending through chronic disease management, office visits, lost work time, absenteeism, presenteeism, and even lab fees. Instead, investing in a wellness program saved about $1.5 million dollars on average each year. The average ROI for this particular client saw a potential savings of $5 for every $1 invested.
When looking at all the different ways that employees can drive up a company’s healthcare spending, it’s clear that the cost of doing nothing does add up. Implementing wellness solutions of any kind - coaching, clinic, engagement program - can save companies thousands of dollars per employee each year.
*Estimates are calculated using recent average U.S. costs as reported by the American Diabetes Association, the American Heart Association, the American Stroke Association, the American Lung Association, the National Heart Lung and Blood Institute, and the National Cancer Institute."