There is more to consider than return on investment (ROI) when measuring the success of your wellness program.
More employers are realizing that looking strictly at ROI — money saved on healthcare costs for every dollar spent on the program — fails to encompass some of the very real, but tougher-to-calculate business benefits of employee wellness.
That’s where value on investment (VOI) comes in.
VOI is broader than ROI in that it measures not just cost savings, but other elements that contribute to business performance, such as improved productivity and high employee retention.
According to an International Foundation of Employee Benefit Plans study, cited by HRMorning, the most popular VOI measures among employers were:
- Health risk assessment data
- Healthcare costs
- Employee engagement
- Overall financials and growth
- Disability/workers’ compensation claims
Other measures that could be factored into value on investment include work satisfaction and overall wellbeing of employees.
VOI also includes “avoidance of costs” related to considerations such as future diseases that don’t occur and stress that is eliminated. These factors also contribute to costs savings for employers and employees.
The emerging focus on VOI doesn’t mean that ROI isn’t still important when it comes to wellness programs.
The U.S. Chamber of Commerce’s report “Winning with Wellness” found that there is solid evidence for healthcare savings from wellness programs.
According to the report:
- More than 60 percent of survey respondents reported that workplace wellness programs reduced their organizations’ healthcare costs.
- Respondents reported reductions in inpatient costs making up 68 percent of the total cost reduction, compared with 28 percent of outpatient costs, and a decrease of 10 percent in prescription drug costs.
- Respondents also reported an overall decrease in healthcare service utilization, which in turn reduced the healthcare cost burden.
- Finally, the study found significant “clinically meaningful” and long-lasting improvements in employees’ weight, smoking status, and physical activity.
The general consensus of the report is that well-designed wellness programs lead to an ROI ranging from $1.50 to more than $3 per dollar invested over a time frame of two to nine years.
When making the business case for wellness programs, measuring both ROI and VOI will illustrate a broader picture of the impact the program is having on your organization.
For further reading, the following articles contain more information on VOI:
- Going after value in employee health, Crain’s Benefits Outlook
- Beyond ROI: Building employee health & wellness value of investment, Optum
- Employers using VOI to measure wellness program success, International Foundation of Employee Benefit Plans