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Why Well-Being and Self-Funding are Better Together
By Melina Kambitsi, Ph.D., Vice President of Business Development and Member Services, The Alliance

Self-funded employers take employee well-being seriously.

That’s because they know that every dollar saved by improving employee well-being — whether it’s from spending less on health care for chronic conditions or gaining more from higher productivity — has a direct impact on the bottom line.

Shifting the Focus

A decade ago, wellness programs focused on nutrition and exercise. Companies hoped helping employees improve fitness or lose weight would pay off with lower health care costs. Employers and employees alike provided positive feedback, although it was hard for researchers to measure the impact.

Over time, employers expanded their efforts to include the full range of employee well-being by adding emotional, social and even financial well-being.

New research examined the impact on employee satisfaction, productivity and turnover. And the payoff from happier, healthier employees began to emerge.

Productivity Rises, Turnover Falls

For example, an August 2017 study by the University of California – Riverside looked at the impact that participating in an employer-based wellness program had at Midwestern commercial laundry plants.

The wellness program aimed to improve nutrition, increase exercise and reduce stress. In the year after employees took part, employee productivity increased by an average of 4 percent. Among sick workers, that increase topped 10 percent.

Improved productivity was a $57,558 gain for the laundry company, while the wellness program cost $32,640. That translates to a 76.3 percent return on investment.

Wellness has also been shown to have a positive impact on employee turnover, according to the Mercer National Survey of Employer-Sponsored Health Plans. The 2016 survey found turnover rates of 18 percent for large employers who adopted five or more well-being best practices. For companies that adopted three to four best practices, the turnover rate increased to 22 percent. If zero to two best practices were in place, the turnover rate went up to 29 percent.

A Holistic View

Companies that self-fund their health plans tend to be proactive, forward-thinking organizations. They understand that taking control of employee health has the potential to create a positive ripple effect for the entire organization. 

But self-funding also has specific advantages for companies that are interested in boosting employee well-being as a business strategy. These advantages include:
  1. Access to data. Data can help you understand how many employees have specific health conditions and how that impacts your bottom line. This data reflects the employee population as a whole but does not identify individuals. Knowing how many employees are being treated for diabetes, for example, can help you decide whether to pursue services that help diabetic employees manage their care. Some companies also offer free health screening to employees, which can provide data about issues such as pre-diabetes or obesity rates.
  2. Flexibility in plan design. Self-funded employers can design coverage to match the needs of employees, as long as they follow regulatory guidelines. For example, an employer with a high obesity rate might choose to add coverage for weight loss surgery.
  3. A head-start on creating a culture of well-being.  Companies that self-fund understand the impact that employees’ health decisions have on the bottom line. That helps them quickly grasp the value of creating a healthy work environment, which can include everything from encouraging healthy break room snacks to offering mindfulness classes at the worksite. Over time, many self-funded companies refine their workplace culture to nurture employee well-being, which generates positive results for productivity, recruitment, turnover and more.
Make the Shift to Well-Being

If you’re an employer looking to improve employee health by shifting your focus from wellness to well-being, you can tap into this step-by-step advice to get started. As self-funded employers have shown, boosting employee well-being can have positive results for you and your employees.
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