Employers are increasing the pressure on their wellbeing vendors to demonstrate tangible improvements in employee health outcomes. A recent survey by the Business Group on Health reveals that employers are not only maintaining or expanding their investment in wellbeing programs but also raising the bar for vendors to prove their effectiveness. This shift highlights a growing emphasis on accountability and results in the corporate wellness landscape.
The Push for Measurable Outcomes
The Business Group on Health’s survey, which included 131 firms employing 11.2 million people, found that 93% of employers plan to maintain or expand their wellbeing programs in 2025. However, a significant 94% of those surveyed stated they would increase their expectations for wellbeing program vendors to show improvements in outcomes. This indicates a clear trend: employers are no longer satisfied with simply offering wellness programs; they want to see concrete evidence that these programs are making a difference.
Jim Winkler, chief strategy officer for the Business Group, explained that this trend isn’t new, but employers are intensifying the pressure on vendors. Contracts now include performance metrics and guarantees to ensure vendors meet specific targets.
Why the Increased Pressure?
Several factors contribute to this growing demand for measurable outcomes:
- Rising Healthcare Costs: Employers are grappling with escalating healthcare expenses and are seeking ways to mitigate these costs through preventive care and wellness initiatives. By holding vendors accountable for outcomes, they aim to ensure their investments translate into tangible cost savings.
- Focus on Employee Wellbeing: There’s a growing recognition that employee wellbeing directly impacts productivity, engagement, and retention. Employers are increasingly viewing wellbeing programs as a strategic tool to enhance their workforce’s overall health and happiness, leading to a more productive and satisfied workforce.
- Value on Investment (VOI) and Return on Investment (ROI): Companies are increasingly focused on both the Value on Investment (VOI) and Return on Investment (ROI) of their employee wellness programs. They want to see not just cost reductions but also improvements in employee satisfaction, engagement, and morale.
- Evolving Understanding of Wellbeing: Modern wellness programs now encompass a broader range of factors, including mental, emotional, and financial health, in addition to physical wellbeing. This holistic approach requires more sophisticated metrics to assess the impact of these programs.
Key Areas of Focus
The survey also highlighted specific areas where employers are focusing their wellbeing efforts:
- Nutrition and Healthy Eating: There’s a renewed interest in nutrition as a preventive health measure, with employers providing resources and ensuring healthy food options are available in the workplace.
- Financial Health: Financial wellbeing is increasingly recognized as a crucial aspect of overall wellbeing, with most employers including it as a dimension of their programs and planning to expand these offerings.
- Mental Health: A significant number of employers are adding emotional/mental health components and metric tracking to help employees manage stress and improve sleep.
Measuring Success: ROI and VOI
To effectively gauge the impact of wellbeing programs, employers are focusing on both Return on Investment (ROI) and Value on Investment (VOI).
Return on Investment (ROI) focuses on the quantifiable financial benefits gained for every dollar invested in the wellness program. Metrics include:
- Cost savings from reduced absenteeism and sick leave
- Lower healthcare administration overhead
- Savings in employee health claims
- Reductions in ER visits
Value on Investment (VOI) takes a broader view, measuring not just cost savings but also elements that contribute to work satisfaction, employee wellbeing, and business performance. VOI metrics include:
- Improvements in employee engagement and productivity
- Higher employee retention rates
- Positive changes in employee morale
- Health risk assessment data
- Reductions in disability and workers’ compensation claims
Strategies for Improving Outcomes
To meet the rising expectations of employers, wellbeing vendors need to adopt strategies that drive measurable improvements in employee health. These strategies include:
- Data-Driven Approaches: Utilizing data analytics to identify specific health needs within the employee population and tailoring programs to address those needs.
- Personalized Interventions: Offering personalized coaching, resources, and support to help employees achieve their individual health goals.
- Incentive Programs: Implementing incentive-based programs that reward employees for participating in wellness activities and achieving health targets.
- Technology Integration: Leveraging technology to deliver engaging and accessible wellness programs, track progress, and provide real-time feedback.
- Focus on Preventative Care: Emphasizing preventive care measures, such as health screenings and vaccinations, to identify and address health risks early on.
- Partnerships and Collaborations: Working with healthcare providers and other organizations to offer comprehensive and integrated wellness solutions.
Pricing Models Aligned with Outcomes
The shift towards outcome-based expectations is also influencing pricing models in the corporate wellness industry. Several pricing models are emerging to align vendor compensation with the achievement of specific health outcomes:
- Outcome-Based Pricing: Compensation is directly tied to achieving measurable health outcomes, such as reductions in healthcare costs or improvements in employee health metrics.
- Per Employee Per Month (PEPM): A set fee is charged per employee per month, providing access to a range of wellness services.
- Tiered Pricing: Companies can choose from different service levels based on their budget and requirements.
- Hybrid Pricing: Combines elements from different pricing strategies to customize a wellness initiative that aligns with the organization’s goals and financial plan.
- Fee-for-Service: Charges for distinct services such as fitness classes or health screenings, giving individuals the freedom to opt into specific offerings.
The Importance of Employee Engagement
Regardless of the strategies and pricing models employed, employee engagement remains crucial for the success of any wellness program. Vendors need to create programs that are engaging, accessible, and relevant to employees’ needs. Strategies for boosting engagement include:
- Communication and Promotion: Effectively communicating the benefits of wellness programs and promoting participation through various channels.
- Gamification: Incorporating game-like elements, such as challenges and rewards, to make wellness activities more fun and engaging.
- Social Support: Fostering a sense of community and social support among employees participating in wellness programs.
- Leadership Involvement: Encouraging leadership to actively participate in wellness programs and demonstrate their commitment to employee wellbeing.
- Customization: Tailoring programs to meet the diverse needs and preferences of the employee population.
The Future of Corporate Wellbeing
The corporate wellbeing landscape is evolving, with employers demanding more accountability and measurable results from their vendors. This shift presents both challenges and opportunities for vendors. By embracing data-driven approaches, personalized interventions, and innovative pricing models, vendors can demonstrate their value and help employers create healthier, more engaged, and more productive workforces.
As employers continue to prioritize employee wellbeing, the pressure on vendors to deliver tangible outcomes will only intensify. Those vendors who can adapt to this changing landscape and demonstrate a clear return on investment will be best positioned for success in the years to come.
