ORLANDO, Fla.-Royal CU has made a significant investment in a wellness program for employees, but reports it is also seeing strong ROI.
Royal, which is self-insured, uses an outside vendor to provide Health Risk Assessments, at a cost of about $360 per adult per year. Its program covers 310 adults, for an approximate total cost of $112,000. Although it has recently added a surcharge for employees who do not participate (see related story), VP Rick Schem said Royal is not counting on that revenue doing much to offset costs.
"The real test on ROI is medical claims data, although savings may also come in changes in absenteeism and productivity," said Schem. "Immediately after start up in first year you see a bump in costs as people who had medical conditions they didn't know about start going on meds, start seeing therapists, etc. When we started to see the decline was from July of '08 to July of '09. Claims were down, but we think we just had a good claims year. Twelve months is just not enough data."
Noting that in the absence of actual claims data predictive modeling costs are needed, Royal CU used data from the University of Michigan Health Management Research Center Cost/Benefit Analysis report over 30 years from 1979-2009.
In July of 2007, Royal CU employees averaged 2.2 risk factors. Its wellness program reduced that figure to 1.5, and Schem said the vendor it uses has some clients below 1.0.
"In the program year 2007-08 we believe we saved more than $600 per adult per year had we not reduced risk factors," he said. "The reduction of risk factors would predict several times the expense. With 90% participation we are going to save $416,000 from July of 2010 to July of 2011. Over the long run we save about $1,000 per participant for year, vs. cost of $360 per year (for the wellness program), so ROI is $2.80 for every $1 spent. We can safely estimate the wellness program is currently saving us about $267,000. That number will be larger if we get more employees involved."
