Wellness program cuts hospitalizations, not costs

Many U.S. companies now offer wellness programs that encourage employees to adopt healthier lifestyles. A healthier workforce, the thinking goes, could be a cost savings for companies because employees would need less medical care.

But new research at Washington University School of Medicine in St. Louis raises doubts that workplace wellness programs save money, at least in the short term.

The researchers looked closely at the experience of BJC HealthCare, a system that includes Barnes-Jewish and St. Louis Children’s hospitals. The study’s findings are published in the March issue of Health Affairs.

“Although we didn’t see a cost savings, there may be other benefits to the program that we didn’t measure,” says co-author William Peck, MD, the Wolff Distinguished Professor of Medicine and director of the Center for Health Policy. “For example, healthier employees have fewer sick days and generally are more productive.”

Peck and and his colleagues tracked hospitalization rates and medical costs of BJC employees and their families before its wellness program was implemented in 2005 and for two years afterward. During that time, their hospitalizations dropped sharply, by 41 percent overall for six major conditions. But, surprisingly, any savings were erased by increased costs associated with outpatient care.

“This is one of the most rigorous studies yet of wellness programs,” says lead author Gautam Gowrisankaran, PhD, a former faculty member in the Olin School of Business and now a professor of economics at the University of Arizona. “Even though BJC’s program didn’t save costs, that doesn’t mean it is a failure. Keeping employees out of the hospital is good for employers and employees.”

As a comparison, the researchers found no decrease in medical costs and hospitalization rates for employees and family members at two other large St. Louis-area employers that didn’t have wellness programs. Focusing on a single metropolitan area helps to control for local variations in the adoption of new medical practices and technologies.

Workplace wellness programs are likely to garner increasing attention because the Affordable Care Act allows companies to expand financial incentives for enrollment. “While these incentives may reduce hospitalizations and improve employees’ overall health and productivity, they may not significantly reduce health-care spending. Our results suggest that reductions in hospitalizations, among other costly approaches to care, must be sustained if savings are to emerge,” Peck says.

BJC employs 28,000 people and provides health insurance for about 40,000, including spouses and children. To be eligible for the company’s most generous health insurance coverage, called the Gold plan, employees had to enroll in the wellness program.

During the program’s first two years, 82 percent of BJC employees and spouses chose the Gold plan and enrolled in the wellness program, which targeted six medical conditions: high blood pressure, diabetes, heart disease, chronic lung problems, serious respiratory infections and stroke.

As part of the program, employees were required to complete a health risk assessment that included height, weight, blood pressure, cholesterol and blood sugar. They also signed a pledge to maintain a healthy diet and exercise regularly, and smokers had to join a smoking cessation program to get help quitting. For spouses, the health risk assessment was optional, but they had to sign the health pledge, and if they were smokers, had to get help to stop.

The researchers calculated an average $22.20 monthly savings from inpatient hospital visits, which was nearly canceled out by an increase of $19 monthly in outpatient health-care costs, including medications. And when the costs of the wellness program are factored in, adding $500,000 annually, it is unlikely that the program saved money, the researchers conclude.

But BJC acknowledges that its program is about more than just saving health-care dollars.

“At BJC, we understand that changing behavior to improve human health is a journey that is ongoing,” said Steve Lipstein, BJC president and CEO. “It cannot be easily measured in dollar cost savings. Wellness programs are about giving employees the information they need to understand and manage their personal health. Cost savings may follow over time, but nothing is more valuable than achieving and staying in good health.”

Peck and his colleagues will continue to follow the BJC wellness program and those implemented at other companies to understand their long-term impact on employee health and health-care costs.

The research is funded by the Commonwealth Fund, the Missouri Foundation for Health and Washington University.

Gowrisankaran G, Norberg K, Kymes S, Chernew ME, Stwalley D, Kemper L and Peck W. A hospital system’s wellness program linked to health plan enrollment cut hospitalizations but not overall costs. Health Affairs. March 2013.

Washington University School of Medicine’s 2,100 employed and volunteer faculty physicians also are the medical staff of Barnes-Jewish and St. Louis Children’s hospitals. The School of Medicine is one of the leading medical research, teaching and patient care institutions in the nation, currently ranked sixth in the nation by U.S. News & World Report. Through its affiliations with Barnes-Jewish and St. Louis Children’s hospitals, the School of Medicine is linked to BJC HealthCare.