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Evaluating an employee wellness program

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  • Sankar Mukhopadhyay
  • Jeanne Wendel

Abstract

What criteria should be used to evaluate the impact of a new employee wellness program when the initial vendor contract expires? Published academic literature focuses on return-on-investment as the gold standard for wellness program evaluation, and a recent meta-analysis concludes that wellness programs can generate net savings after one or two years. In contrast, surveys indicate that fewer than half of these programs report net savings, and actuarial analysts argue that return-on-investment is an unrealistic metric for evaluating new programs. These analysts argue that evaluation of new programs should focus on contract management issues, such as the vendor’s ability to: (i) recruit employees to participate and (ii) induce behavior change. We compute difference-in-difference propensity score matching estimates of the impact of a wellness program implemented by a mid-sized employer. The analysis includes one year of pre-implementation data and three years of post-implementation data. We find that the program successfully recruited a broad spectrum of employees to participate, and it successfully induced short-term behavior change, as manifested by increased preventive screening. However, the effects on health care expenditures are positive (but insignificant). If it is unrealistic to expect new programs to significantly reduce healthcare costs in a few years, then focusing on return-on-investment as the gold standard metric may lead to early termination of potentially useful wellness programs. Focusing short-term analysis of new programs on short-term measures may provide a more realistic evaluation strategy. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • Sankar Mukhopadhyay & Jeanne Wendel, 2013. "Evaluating an employee wellness program," International Journal of Health Economics and Management, Springer, vol. 13(3), pages 173-199, December.
  • Handle: RePEc:kap:ijhcfe:v:13:y:2013:i:3:p:173-199
    DOI: 10.1007/s10754-013-9127-4
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    References listed on IDEAS

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    5. Matthew J. Eichner & Mark B. McClellan & David A. Wise, 1997. "Health Expenditure Persistence and the Feasibility of Medical Savings Accounts," NBER Chapters, in: Tax Policy and the Economy, Volume 11, pages 91-128, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Bolh, Nathalie & Wendner, Ronald, 2021. "Conspicuous leisure, time allocation, and obesity Kuznets curves," MPRA Paper 108644, University Library of Munich, Germany.
    2. Nicolas Ziebarth, 2014. "Assessing the effectiveness of health care cost containment measures: evidence from the market for rehabilitation care," International Journal of Health Economics and Management, Springer, vol. 14(1), pages 41-67, March.

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    More about this item

    Keywords

    Wellness; Cost; Absenteeism; Screenings; Return-on-investment; I11; I19;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I19 - Health, Education, and Welfare - - Health - - - Other

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