The Downside of Being Unwell and how a Corporate Wellness Program Can Help

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Greg Justice

The Downside of Being Unwell and how a Corporate Wellness Program Can Help

Implementing an effective wellness program can reduce hidden costs tremendously. Health insurance premiums, workers compensation premiums, and direct medical costs can all be reduced significantly. Absenteeism and presenteeism can also be reduced dramatically (part 4 in a series).

By: Greg Justice

Go To Part 3

"Even for a small employer, let's say 20 - 35 people, chances are that 50% or more of their staff is afflicted by some sort of chronic disease, illness, or challenge. "

Can a Company Afford to be Unwell?

The costs of ill health, both in premiums and in lost productivity are staggering, up to $2,800 per employee per year, for those that have issues. And many, many employees do have issues. Even for a small employer, let's say 20 - 35 people, chances are that 50% or more of their staff is afflicted by some sort of chronic disease, illness, or challenge.

Interestingly, depression is one of the most severe diseases in terms of costing employers' sick time and lost productivity. Employers can use www.depressioncalculator.com to see what the likelihood is that their workforce is afflicted with depression and calculate their lost costs from that illness alone.

If a company is lucky enough to escape the depressed employee, they still need to look at their general workforce, and do these calculations:

28.9% of people over 18 have high blood pressure. Of those, 50% don't know if, and of the 50% who do, treatment is not successfully controlling it. 70% of diabetics have high blood pressure.

Depression is a disease for which employers pay a high price in sick time and lost productivity

Next, compare the minimum cost of unwell employees to the average cost per employee of implementing a wellness program. The average cost for an effective wellness program is $100 to $150 per employee per year. The return on that investment is anywhere from $300 to $750.

Over 35% of adult men are considered obese as of 2007. Obesity is a precursor for several illnesses such as high blood pressure, diabetes, and heart disease. ("Obese" is defined as being more than 20% over one's ideal body weight.)
Approximately 9% of men and women suffer from some form of coronary disease.
Approximately 8 in 1,000 people suffer from diabetes.

Unless an employer has one very unfortunate person in their office who has all the obesity, high blood pressure, coronary disease and diabetes there is to go around, chances are they have multiple employees afflicted with disease or other conditions. If you add non-life-threatening illnesses, such as allergies, arthritis and asthma, those statistics start to look pretty grim:

20% of people have allergies.
10% of the population has hay fever.
6.4% of people have asthma.
13.6% of people have arthritis.
28% of people have GERD.
.04% of people have some form of cancer.

So, what do you think the chances are that all of a business' employees are healthy and don't need a wellness program? Can you count up the likely number of employees suffering from some form of disease or illness and multiply that by $2,000? This is the company's real minimum cost of unwell employees.

Can an employer afford for their workforce to be unwell?

If an employer could capture that lost productivity, how much more work could their employees do? How much less frequently would they need to add staff? How much less would they pay for health insurance premiums?

Next, compare the minimum cost of unwell employees to the average cost per employee of implementing a wellness program. The average cost for an effective wellness program is $100 to $150 per employee per year. The return on that investment is anywhere from $300 to $750.

Can employers afford to continue without an effective wellness program?

The Magnified Risk with Key Employees

So far, the numbers we've talked about are averaged amongst all employees. The next thing to consider is something not studied separately, so you will have to use your own anecdotal evidence and musings to determine how important it is to you and what the probable costs are.

This issue is that of unwell key employees. Those key people may be business partners, senior managers, intrapreneurs, super-salespeople, or super-productive staff members. Any of the people upon which a business turns, whether they be cheerleaders, innovators, leaders, or highly proficient technical people - you know who they are - are worth their weight in gold, and probably worth more than they are being paid.

If the average employee costs a company $2,000 to $2,800 when they're down and out, what does it cost you for any of these superstars to be operating at less than full power?

Not only is the company dealing with sub-par performance, and expectations possibly not being met for a period of time, they are also incurring opportunity cost because of the stellar performance that's lacking in the moment.

If a company has a superstar who can barely hold his head up due to illness, depression, anxiety, etc., he will no doubt miss the signs of opportunities coming across his desk that he would normally seize on. Can an employer even begin to put a price tag on this opportunity cost?

What about those high-impact employees that carry a lot of weight primarily due to the sheer amount of work they can perform? If a normal employee being less productive costs a company $2,000 a year - how much does a super-performer being under the weather cost?

What about those corporate cheerleaders? If a company has more than 20 employees, they no doubt have someone who keeps everyone motivated and going forward. Someone who brings sunshine into the office and lifts everyone's mood. Someone who loves the company and helps juice up the loyalty among the rest of the staff. What happens when he's down, dragging or absent? That company is losing more than just his productivity. They're losing the buoyancy of the remainder of their staff.

What if you owned a company and you had a business partner? The yin to your yang? If he's distracted by medical issues or less than optimally productive do things get a bit lopsided? Are you less effective? Is your company less productive?

Having a key employee out of the office due to physical or mental illness can take a great financial toll on your business.

Additionally, key employees, especially business partners, may be insured by a key man life insurance policy. This policy will provide the business with money to keep running while searching for a replacement and to pay the salary of that replacement. If you want to insure a valued employee, the better health they're in, the less expensive that policy!

So you can see that there are certain key individuals in a business whose health is probably more important than you ever thought. Anyone on whom a business owner relies to be more than a cog in the wheel is someone they would want to see committed to achieving the highest possible level of health.

Can an employer force these people to participate in a wellness program, if their health is so important to their company? Legally, probably not. But an employer can apply a great deal of encouragement, enticement, persuasion and motivation. And, as is usually the case, once they start to see the benefits in feeling better, looking better, losing weight, breathing easier, they will want to continue on their own. And they will be even more loyal to their employer for caring.

So What's the Bottom Line?

Here are the cold, hard statistics for an unwell workforce:

Presenteeism accounts for 61% of an employee's total lost productivity and medical costs.

Employees working at diminished capacity cost employers over $250 billion a year. They cost employers $2,000 to $2,800 per employee per year.

Absenteeism costs an average of $789 per employee per year (as of 2002 - It will have gone up by now!)

Average cost of health insurance premium is $8,000 for employee-only, and $12,500 for employee with dependents. Wellness programs can net a 10% to 20% discount in these costs from the healthcare insurer.

Average cost of absenteeism and presenteeism in a workforce is 10% of the compensation.

Average cost of direct medical expenses is 7% of the compensation.

Business owners can gain assistance in calculating their own costs, they may find the Blueprint for Health helpful. It is free and available online. It is a service of the Health as Human Capital Foundation (www.hhcfoundation.org/hhcf).

Implementing an effective wellness program can reduce these costs tremendously. 10% to 20% can be saved in health insurance premiums. Workers compensation premiums can be reduced. Direct medical costs, if a company has a self-insured plan, will plummet. Absenteeism and presenteeism will be reduced dramatically.

Successful implementers of wellness programs indicate a return on investment ranging from $3.00 for every dollar spent to well over $5.00.

About Greg Justice

Go to About Greg Justice for his bio and other articles.

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