Managing Manifest Diseases, but Not Health Risks, Saved PepsiCo Money Over Seven Years

Published in: Health Affairs, v. 33, no. 1, Jan. 2014, p. 124-131

Posted on RAND.org on January 01, 2014

by John P. Caloyeras, Harry H. Liu, Ellen Exum, Megan Broderick, Soeren Mattke

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Research Questions

  1. How did participation in a workplace wellness program at a Fortune 100 employer affect medical costs?
  2. What was the relative cost impact of the lifestyle management and disease management components of the program?

Workplace wellness programs are increasingly popular. Employers expect them to improve employee health and well-being, lower medical costs, increase productivity, and reduce absenteeism. To test whether such expectations are warranted, we evaluated the cost impact of the lifestyle and disease management components of PepsiCo's wellness program, Healthy Living. We found that seven years of continuous participation in one or both components was associated with an average reduction of $30 in health care cost per member per month. When we looked at each component individually, we found that the disease management component was associated with lower costs and that the lifestyle management component was not. We estimate disease management to reduce health care costs by $136 per member per month, driven by a 29 percent reduction in hospital admissions. Workplace wellness programs may reduce health risks, delay or avoid the onset of chronic diseases, and lower health care costs for employees with manifest chronic disease. But employers and policy makers should not take for granted that the lifestyle management component of such programs can reduce health care costs or even lead to net savings.

Key Findings

  • Overall, the two component programs reduced the employer's average health care costs by about $30 per member per month.
  • But disease management was responsible for 87 percent of those savings, despite the fact that only 13 percent of employees participated in this component.
  • The overall return on investment for the employer was $1.50, but returns for the individual components differ strikingly: $3.80 for disease management but only $0.50 for lifestyle management.

Recommendations

  • Employers should not assume that workplace wellness programs will reduce health care costs.
  • Employers seeking a healthy return on investment from their programs should target employees who already have chronic diseases.
Access further information on this document at Health Affairs

This article was published outside of RAND. The full text of the article can be found at the link above.

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