For those of us who actually think wellness outcomes should be evidence-based, a landmark study was released today: the first evidence provided by a major organization voluntarily (as opposed to being outed by us, like British Petroleum and Nebraska) that wellness doesn’t work. January’s Health Affairs features a case study of PepsiCo, authored by RAND Wellness Referee Soeren Mattke and others, in which a major wellness program was shown to fall far short of breaking even.
The specific highlights of the PepsiCo study are as follows:
- Disease management alone was highly impactful, with an ROI of almost 4-to-1;
- Wellness alone was a money sink, with each dollar invested returning only $0.48 in savings;
- The wellness savings were attributed to an alleged reduction in absenteeism, as self-reported by participants. There was no measurable reduction in health spending due to wellness.
Even though the wellness ROI was far underwater, we suspect that the ROI was nonetheless dramatically overstated, for several reasons. First, the authors acknowledge underestimating the likely costs of these programs, focusing only on the vendor fees without considering lost work time, program staff expense and false positives. Second, no matter how hard one tries to “match” participants with non-participants (the wellness industry’s most utilized measurement scheme), it simply isn’t possible to compare mindsets of the two groups. We learned from one of Health Fitness Corporation’s many missteps that participants always outperform non-participants, simply because they are more motivated. Third, the absenteeism reductions were self-reported, by participants.
Finally, PepsiCo’s human resources department, having made the mistake of accepting Mercer’s advice to implement one of these programs, was already taking some political risk by acknowledging failure. Had they incorporated the adverse morale impact, lost productivity due to workers fretting about false positives, Mercer fees and staff costs, participant bias, and self-reporting bias, the ROI could easily have turned negative (meaning the program would have been a loser even if the vendor had given it away) and the HR staff could have been taking serious career risk.
Therefore we suspect the reason for the nuanced finding lies more in the politics than the economics. It’s to his great credit that Dr. Mattke got PepsiCo to do even a nuanced mea culpa.
This result, of course, will surprise no longtime THCB readers. It might raise the eyebrows of Harvard health economists Katherine Baicker and David Cutler, whose 3.27-to-1-ROI mantra helped turbocharge the current mania, and Emory University’s Ron Goetzel, the wellness industry’s go-to guy for defending the indefensible, or in the case of Nebraska’s program, giving awards to the indefensible. (Expect to hear from Mr. Goetzel in the next few weeks furiously spinning this into something positive, having bet his career on wellness saving money.)
Another surprised party will be the Business Roundtable, whose Health and Wellness Committee has lobbied noisily for more corporate wellness to “empower workers to live longer, healthier lives,” even as Committee Chairman Gary Loveman, CEO of Caesars World, knowingly and purposefully exposes his employees to more second-hand cigarette smoke than all but two or three companies in the country.
But then again, wellness is nothing if not ironic, since employees usually resent and sometimes revolt against programs designed to “help” and “empower” them, so that — in a further irony — corporations can save money through reduced healthcare expenses, though none including PepsiCo ever has.
Al Lewis is the author of Why Nobody Believes the Numbers, co-author of Cracking Health Costs: How to Cut Your Company’s Health Costs and Provide Employees Better Care, and president of the Disease Management Purchasing Consortium.
Vik Khanna is a St. Louis-based independent health consultant with extensive experience in managed care and wellness. An iconoclast to the core, he is the author of the Khanna On Health Blog. He is also the Wellness Editor-At-Large for THCB.
Vik and Al will be the first authors of THCB’s new e-publishing venture. Their jointly authored book, Surviving Workplace Wellness: With Your Organs, Dignity, and Finances Intact, will be released in the late winter/early Spring 2014. Vik’s solo e-book, Your Personal Affordable Care Act: How To Make Yourself Scarce In The Dysfunctional US Healthcare System will be simultaneously. Pre-orders are being taken now at this link, where you can also sign up to receive additional information.