Why are workplace wellness programs catching on in some cultures, but not others?

Paying for healthcare expenditures incentivizes employers to adopt wellness programs, but what determines success? 

Why are workplace wellness programs catching on in some cultures, but not others? What incentives drive employers to invest in the overall health of the employees?  In today’s global environment, people are living longer, but not necessarily healthier. Chronic diseases such as diabetes, heart disease and chronic pulmonary conditions are increasingly prevalent and dramatically impact the health, happiness and productivity of individuals.

Employers are key stakeholders in managing the health of their employees. Globally, the rising cost of healthcare is a concern, and employers have the ability to help control long-term healthcare costs. Inactivity, poor diet, and stress impact the day-to-day behaviors of people in the workforce.  In different countries, the responsibility of managing healthcare costs varies.  Some governments provide universal healthcare, while in other countries, the cost is carried by the individual, and in others, healthcare is provided as an employment benefit. More often than not, healthcare is funded by a combination of the government, the individual and the employer. Regardless of the healthcare system, the ability to increase the productivity of employees by reducing absenteeism and presenteeism is extremely appealing to employers, and creates a number of different financial and cultural incentives.

Workplace wellness programs are company strategies to promote health, wellbeing, and reduce risk of disease of its employees. These programs provide access to populations at various stages of healthcare needs and help to encourage people to make healthier choices and reduce the impact of unhealthy lifestyles.  Wellness programs focused on nutrition, fitness, and disease prevention and management tactics like health risk assessments and clinical screenings are increasingly offered as benefits from employers. Commonly cited benefits of wellness programs include opportunities to enhance the work environment, specifically by reducing absenteeism and presenteeism, increasing productivity of current employees, improving retention, and reducing overall costs to the company.  However, as the programs become more commonly offered by employers, the actual value and ROI of such programs are becoming questioned.

Workplace wellness programs appear to be gaining the most traction in the United States. Our hypothesis is that because the health insurance system is primarily supported as a benefit from employers, this causes the employers to carry the burden of the expensive premiums of unhealthy employees. Coupled with the fact that the United States has the highest per capita expenditure on health at $8,608[1] with total health expenditure amounting to 17.9% of GDP (more than 2.5x the OECD average of $3,322[2] per capita and 9.3% of GDP), it is not surprising that employers are incentivized to try different ways to bring down healthcare costs. In other countries, the uptake of wellness programs has

been slow. In most other countries, the employer does not bear the burden of risk, and the return on investment is difficult to quantify. In global environments, multinationals struggle with creating consistent programs that provide incentives to employees in different locations, and developing messages that engage employees to participate in wellness programs.

The interdependence of a country’s healthcare system and the need to support a healthy workforce indicate that while employers may not directly pay for healthcare, they have a stake in the impact of a healthy employee base. As healthcare continues to be a global area of focus, stakeholders will continue to try to identify creative solutions. Because of their role in this ecosystem, employers must seek opportunities to encourage the overall health of the labor force. As wellness programs become increasingly common practice, it will be critical to continue to identify what are the key attributes that drive successful programs, and how employers can continue to innovate and provide offerings that bolster overall health while receiving a return that justifies the costs associated with programs.

By Tuck Council MBA Fellows Maggie Mistzal and Vivien Lee 

[1] Figures denoted in PPP int. $ and reflect data from 2011. Data obtained from The World Health Organization’s Global Health Observatory. http://apps.who.int/gho/data/node.country

[2] Figures denoted in PPP $ and reflect data from 2011. Data obtained from The Organisation for Economic Co-operation and Development (OECD) http://www.oecd.org

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