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Question: How is Wellness the Opposite of King Midas and Gold?

Do you know whether heartburn pills are safe for long-term use?

Answer:  Everyone who touches wellness turns to stupid.

Speaking of which, we are going to do a two-part review of the IBISWorld report Corporate Wellness Services in the US.  The difference between the worthless information in this report and all the other worthless information on wellness economics is that this worthless information will set you back maybe $895.

The first statistic you learn — and you don’t even have to buy the report to “learn” this statistic because it’s right on their home page — is IBISWorld says this $7-billion industry employees a whopping 3,120 people.


To give you an idea of how wildly low that jobs figure is, I myself have more than 3,120 Linkedin friends in the wellness industry. And that’s despite the fact that no one in wellness likes me.

Just Healthways alone, a company that is deemed too trivial to even mention in this report (they’re in good company — I am ignored as well), employs 2700 people. I guess the consulting firm’s Young Turks (including Sarah Turk) lack access to a calculator. Otherwise they might have wondered how wellness could be one of the most profitable industries in the world: sales per employee are roughly $2.3-million, more than twice that of Goldman Sachs.

And that misinformation is featured right on their website.  If anyone sues to get their purchase price back, IBISWorld’s best defense could be: “You knew it was wrong before you bought it.”

Report Highlights

We know employees aren’t getting paid seven figures to poke us with needles. Likewise, there is no significant capital involved in wellness, so with $2.3-million/employee in sales, these companies must be insanely profitable, right?   Maybe that home page display is a tease to get potential industry entrants to buy the entire report in order to learn how they can get a piece of this action.

And yet…

After you buy the report, you learn the whole thing was a setup — profits are precisely $434.6-million, or only 6% of sales.  (Precise or not, this figure is made up, since no wellness company is going to disclose its profits.)  So where is all the employer’s money going, if not to wages, profit or depreciation (0.6% of revenues, they say)?  Apparently, IBISWorld has a plug category for “purchases.” I guess their computer program uses this category for whatever is left over after fabricating the other figures:

IBISworld cost structure

What is in the category “purchases”? Mostly software and lab equipment, they say. I guess with only 0.6% of revenues going to depreciation, somehow these massive capital expenditures don’t get depreciated, perhaps because what most HRA/screening vendors do is worthless to begin with.

They are also confusing capital expenditures, which are never listed in a bar chart of “expenses” because they aren’t an expense, with purchased services, which are. It’s understandable that these people don’t understand wellness economics — most wellness vendors and consultants don’t understand wellness economics. However, for $895, a customer purchasing a financial report should be able to assume the report-writer understands financial reporting.  (Several pages later, by the way, they put capital expenditures themselves at 0.6% of revenues.)

Here is the list of what they classify as “purchases”:

IBISWorld purchases

Notice anything else about this paragraph, besides making no accounting sense?  It makes no wellness sense.  They seem to have somehow confused biometric screening with health risk assessments (HRAs): “To provide health risk assessments, corporate wellness service companies may need equipment that helps extract biometric data.”

Leaving no stone unturned, the biometric data include not just  “blood pressure” but also “systolic and diastolic blood pressure.” IBIS, hate to tell you this but even the dumbest wellness vendor knows you need both those values to create a reading.  Otherwise it would be like the George Carlin sportscaster routine:  “And here’s a partial score from a game in progress:  New York Knicks 46.”

Perhaps IBISWorld assumes that the $895 price tag itself convinces buyers that they must know what they’re talking about. And yet, as we’ll see in the next installment, in addition to confusing screening and capital expenditures with operating expenses, they also don’t understand the difference between wellness and disease management.

Continue to Part 2.

In the immortal words of the great philosopher Pat Benatar, hit me with your best shot.

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