This is Part 2 of the $895 IBISWorld Wellness Industry Report review. Here is Part 1.
What do you get for your $895? To begin with, some of the most creative facts we’ve ever seen, delivered in some of the most creative sentence structures we’ve ever seen, Yet, tempting as it may be, we’re going to completely ignore head-scratchers like:
Wellness firms may offer employers stress management courses and sessions that offer music therapy, aromatherapy, Tai Chi, and post disaster stress reduction through coaching.
Government-funded initiatives that promote wellness to cut costs related to chronic ailments (e.g., obesity and diabetes) has further exacerbated many businesses movement toward purchasing corporate wellness services.
And my favorite:
The industry provides wellness programs to businesses across the United States, including small, medium and large businesses in the private sector and businesses in the public sector.
“Businesses in the public sector”? I knew that many of our legislators are for sale but I didn’t realize they had incorporated.
I’ve read this next one several times and still can’t figure out what they are saying, other than they don’t realize (1) that health screenings and biometric tests are basically the same thing; (2) that it is impossible to take someone’s blood pressure without including both the systolic and diastolic readings; (3) and that prior to publication they should have had this material reviewed by a smart person:
Ok, we’re done completely ignoring these head-scratchers now.
Misinformation
Instead we will focus on the fact that most of what they report is simply wrong, like: “There is increasing acceptance of the value of programs offered by this industry.” For example, they claim that the ROI for corporate wellness, according to RAND, is $3.80 per dollar invested. I would have to exhaust America’s entire strategic reserve of electrons in order to point out everything wrong with that figure. Besides its general ludicrousness, there is the slight problem that RAND itself says exactly the opposite:
How could they be so clueless, even by the standards of wellness? Even though this is a wellness industry report, and most wellness companies don’t touch disease management, they mistook the RAND ROI for disease management as the ROI for wellness. Despite RAND being cited more than 100 times, nowhere did they bother to mention that RAND says wellness loses money. Hello? What did you expect for a measly $895? (In all fairness, if you look hard enough, at one point they say RAND says that “lifestyle management” saves a “mere $6.0 [sic]” per employee per month.)
So basically the fact that wellness loses money–which at this point even the Health Enhancement Research Organization itself acknowledges–is completely missing.
There are also a huge number of statements that make no sense when placed side by side. So “wages comprise 3-4% of industry revenue,” making wellness possibly the least labor-intensive industry in the country. Yet, several pages later, IBISWorld decides that “the industry is labor-intensive.”
The Largest Wellness Companies?
You’d think for $895 they could at least identify the largest independent wellness companies. No such luck. They anoint ComPsych as the largest. I personally had never even heard of them, and what employee is going to give personal health information to a company named ComPsych? IBISWorld got one thing right — ComPsych does at least offer wellness — if you squint hard enough:
The other two they name are ValueOptions, now Beacon Health Options, and Ceridian. Not sure where they came up with the idea that those are the largest. Neither is even in the wellness screening business. They might as well have named Dunder Mifflin or Vandelay Industries.
They Said What? 
Amazing! – and still people bristle at the suggestion that some in the industry lack competence and integrity – Dr. Jon
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Seriously, there are still people who think this industry is populated by competent, honest vendors? At this point, what we previously dismissed as incompetence can safely be called dishonesty. AT this point, the Koop Award committee people know they are lying, assuming they have an internet connection. As Confucius said, if you don;t correct a mistake after it is pointed out to you, it becomes a lie.
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As always, great suff.
ComPsych and the others you mention are big players in the EAP world. CS is the 800 pound gorilla and the other competitors hate them. Why? While they never state it, they figured out a long time ago that EAP programs have negative ROI, but companies need them as a check-the-box liability protection or at least that is the theory. So they are the low cost producer and have crushed industry margins. The counselors they use (independent contractors) are licensed, but the amount they make has been flat to declining for many, many years.
Another factor that makes the EAP industry tough is the low utilization. While EAP providers will talk about all of the wonderful services they can provide, reality is well under 10% of the ee base will ever call them, and of those that do the great majority only call once. I mean really, would any of us want a company paid by our employer to know we had drug, alcohol, depression or whatever to deal with?
So they make promises to do everything for everybody, and do almost nothing. But beacause everyone knows this, they have to price accordingly. The last thing they want is high utilization, it would bankrupt them.
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great points. I can’t say I’m shocked. On multiple occasions Quizzify has been asked to write custom questions to encourage EAP use, and we always set expectations very low.
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Regarding this quote in your comment … ” I mean really, would any of us want a company paid by our employer to know we had drug, alcohol, depression or whatever to deal with?” …. EAP programs were originally designed to combat alcoholism in the work place (think Mad Men with a stocked office liquor cabinet and raucous client meetings). Companies were compelled to offer assistance to employees who couldn’t control their drinking. So EAP’s were not designed to produce ROI, they are very much a liability purchase, as you stated. So “would any of us..” Yes, many of us do want our companies to pay for a problem they created without having to quit or be fired for misconduct. Beyond alcoholism, this includes stress and depression. Now, if you really want to attack EAP’s then stick to the cost structure. Because they expect such low utilization they have driven PEPM numbers so far down that companies that actually want utilization can’t compete, and the employees lose.
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You two both raise excellent points!
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Al,
once again you have nailed it. Keep up the good work.
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thank you. Helps that they provided such rich material to start with.
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Interesting article. As a therapist that’s worked in wellness for about 9 years, I take the animosity and cynical position that all vendors are basically crooks hawking snake oil offensive but I can’t argue against your take on the IBIS report. It sounds ridiculous. Personally I’ve seen transformative changes in some of the employees I’ve worked with over the years and see an average between 10-20% reduction in pain and just over 20% increase in productivity. I would like to see long term statistics on the kind of program I’m a part of but I’m confident in stating that at least in the approach my wellness program takes positive results happen. I can’t speak to the actual roi since I haven’t seen numbers on that.
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Generally my experience is that the folks who actually do the work (such as yourself) are motivated by all the right things, as you describe, and really want to do well by their clients. It’s the ones at the top of the food chain who constantly put their fingers on the scale. We wish you the best of success going forward.
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