RAND’s Soeren Mattke said it best:
The industry went in with promises of 3-to-1 and 6-to-1 ROIs based on health care savings alone. Then research came out that said that’s not true. They said, “Fine, we are cost-neutral.” Now research says: “Maybe not even cost-neutral.” So they say: “It’s really about productivity, which we can’t really measure, but it’s an enormous return.”
In other words, whenever you invalidate one metric, they come up with another one. We then have to shoot that one down, and the cycle repeats. It’s invalidity-meets-Whack-A-Mole. After the healthcare spending ROI fiction imploded, Michael O’Donnell, editor of the wellness industry trade journal, asked dismissively: “Who cares about ROI anyway?”
Since ROI wasn’t working, they then tried value-on-investment (VOI), which turned out to show even greater losses than a straight ROI calculation.
Continuing that tradition, Michael O’Donnell of the American Journal of Health Promotion presents: Return on Allocated Resources, or ROAR. ROAR counts everything, including productivity. By counting everything, ROAR shows far greater losses than VOI.
Michael says that a 1% increase in productivity is worth $1933:
However, a much greater 3.75% (90 minutes of a 40-hour workweek) reduction in productivity only costs $2184:
How did he accomplish this sleight-of-hand, where a 1% increase in productivity practically offsets a 3.75% decrease? Simple: by putting both thumbs and every other appendage on the scale. He accounts for lost work time at an employee’s hourly rate. So far so good. However, he then applies a magic multiplier to the hourly rate to calculate increases in productivity based on hypothetically enhanced corporate revenues due to the productivity increase. So if payroll is 30% of revenues, and productivity climbs 1%, then revenues would also automatically climb 1%. That means in dollar terms revenues climb more than three times faster than productivity.
Had he used the same revenue multiplier for the certain 3.75% productivity decrease due to wellness-induced lost work time that he used for his speculative 1% productivity increase, his time-off-for-wellness scheme would cost a whopping $7143/employee/year.
And wellness vendors wonder why line managers are so reluctant to allow employees to work out on company time.
So while per-employee losses from wellness based purely on added healthcare spending and program expense are “only” in the three figures, the net reduction in productivity from a (speculative) 1% increase less a (certain) 3.75% decrease due to lost work time amount to a mind-boggling $5210/year.
And that is probably an understatement. The 3.75% lost work time due to wellness doesn’t include the time employees spend changing clothes after their workouts, lying on HRAs, standing in line to be screened and “coached,” complaining to HR that they haven’t received their incentive checks yet, and hanging out at the water cooler dissing the program.
If you’re keeping score at home, this is the third time Michael O’Donnell has strayed off message. Just like some people are convinced that Donald Trump is a closet Democrat trying to torpedo the GOP, you would be excused for thinking that Michael O’Donnell is a member of our Welligentsia group, trying to sow chaos amongst the Wellness Ignorati.
He isn’t, but nonetheless I count him among our greatest assets. First, he admitted that up to 95% of wellness programs don’t work. Then he admitted that studies done using randomized control trials lose money. And now this one, detailing — using his own math — by far the greatest losses that a wellness metric has ever shown.
Ron Goetzel is probably tearing his hair out over his crony’s unforced errors on the eve of our debate. Or, in the immortal words of the great philosopher Warren G. Harding: “I can handle my enemies. It’s my friends who have me pacing the floor at night.”