If Ron Goetzel keeps telling the truth, at some point we need to believe him.
The July 20 Chicago Tribune quotes Mr. Goetzel as saying that wellness can reduce risk factors by 1% to 2%. Yikes! He’s right. Mr. Goetzel is finally telling the truth. Or, in the immortal words of the great philosopher Rick Perry, even a stopped clock is right once a day.
More importantly, the debate on savings is over (again). We have learned, also in the immortal words of the great philosopher Rick Perry, whether or not who is right.
Let’s see what happens if Mr. Goetzel is right…
That 1% to 2% reduction, by the way, are outcomes from the allegedly best wellness programs, the ones that have won his Koop Awards. Here is a list of winners, along with the risk factor reduction. The risk factor reduction doesn’t count failures, meaning dropouts and non-participants . Not counting people who fail is a wellness industry tradition. Imagine if they counted that way in education. Every school would have a 100% graduation rate. But let’s cut Mr. Goetzel some slack and agree to assume that his 1% to 2% reduction in risk factors is correct.
Let’s apply this assumption to the HERO guidebook chapter that says wellness-sensitive medical events constitute about 5% of total events. (This proportion is higher if you include disease management-sensitive events. This 5% estimate includes only events from conditions people don’t know they might possibly have until they get screened and find out how sick they are, a revelation which will certainly increase their productivity and focus on the job.)
Since hospitalizations comprise roughly 40% of cost, that means 2% of all costs can be addressed with pry, poke and prod programs. Reducing that 2% by the upper bound of Ron’s risk-reduction estimate of 2% yields a grand total of 0.04% reduction in costs.
What is that in dollars? If an average covered person costs an employer $6000, Mr. Goetzel says wellness could save $2.40. This figure excludes the extra doctor visits, drugs and follow-on tests that might be ordered after the initial screen.
So what is the ROI for wellness, assuming Mr. Goetzel’s savings figures are correct? Mr. Goetzel says that a typical wellness program costs $150/employee/year. (That, by the way, is a large multiple of what Quizzify costs, so Quizzify can get immediate savings simply by not being a wellness program.)
And the envelope please…
Using Ron Goetzel’s very own assumptions for both the benefits and the costs, the ROI is: $2.40/$150, or 0.016-t0-1. This is not a misprint: for every dollar spent, a company loses almost 99 cents. No wonder, as he says, most programs fail. Yikes! He’s right again. Looks like Mr. Perry better check his clock.