Healthcare Business News

RAND, PepsiCo study casts doubt on wellness programs' return on investment

By Joseph Conn
Posted: January 27, 2014 - 2:30 pm ET

The belief that investments in wellness programs will cut overall healthcare costs is being questioned in a new study conducted by researchers from the RAND Corp. and PepsiCo, whose employees were studied.

The portion of Pepsi's employer-sponsored wellness program that included fairly low-tech home monitoring of patients with chronic diseases produced a positive return on investment, but its “lifestyle” management component did not, according to the study, published in the policy journal Health Affairs.

Chronic-disease management produced a return of $3.78 in healthcare costs saved for every $1 invested in the program, while lifestyle-management programs produced just $0.48 in returns for each dollar spent, for a net loss of $0.52 per dollar pumped into Pepsi's lifestyle programs.

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While lifestyle-management programs produced a “small decrease in absenteeism,” they have no statistically significant effect on healthcare costs,” the authors said, noting, “these findings cast doubt on the widely held belief in a strong business case for lifestyle management” and that “the blanket claims of 'wellness saves money' are not warranted.”

That's a cautionary message for employers that take as an article of faith that investment in the increasingly popular programs will provide them with a return on investment, according to the eight-page report, “Managing Manifest Diseases, But Not Health Risks, Saved PepsiCo Money Over Seven Years.” in the magazine's January edition.

More than 90% of large employers (those with more than 50,000 employees) operate employee wellness programs, and about half of employers with at least 50 workers do as well, according to the article's authors.

The researchers looked at data from seven years of Pepsi's wellness efforts, dividing the multiple programs offered into two categories: those programs targeting employees with 10 chronic conditions, such as asthma, diabetes, hypertension and coronary artery disease; and those programs focused on health risks identified in a voluntary employee health risk assessment, such as stress, poor diet and lack of overall fitness. Both programs for chronic conditions and lifestyle issues relied principally on home telephone monitoring and interviews.

With the chronic-disease management program, the interviews with a nurse lasted 15 to 25 minutes per call and from six to nine months until it was determine an employee had successfully managed his or her condition, the report authors said.

The study covered nearly 47,800 workers with at least two years of participation in one or both categories of Pepsi wellness programs and a year of patient data before joining.

Healthcare costs were based on hospitalizations and emergency visits per participating employee plus an estimated cost per employee for absence from work.

Return on investment was calculated as a ratio of estimated reduction in healthcare costs over program costs, the latter of which were confined to vendor fees for operating the wellness programs.

Follow Joseph Conn on Twitter: @MHJConn

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