Can Workplace Wellness Programs Save Employers Money?

With a rise in healthcare costs and an aging population in Singapore, studies show that workplace wellness programs save employers money every year in healthcare cost savings while providing a strategic advantage for employee satisfaction and employee retention.

You've probably heard a friend or co-worker talk about the different wellness programs they have in their office. We tend to have two schools of thought:

• We can't stop talking about Yoga Fridays

• A nice perk, but not a strategic priority

Businesses in Singapore have adopted employee wellness programs as early as the 1990s. But do these programs save employers money? And more importantly, do they contribute to employee wellbeing?

Growing HealthCare Costs

Although not required by law, it is standard practice in Singapore to provide basic health insurance. Although Singapore's healthcare system is exemplary and efficient, the cost to provide healthcare is one of the highest in South-East Asia and has one of the fastest-aging populations in the world. Ultimately, this sharp rise makes healthcare a growing cost of doing business, where the inflation rate for healthcare grows 10% every year. Unfortunately, chronic diseases, stroke, and heart diseases increase with a rapidly aging population. Fortunately, healthy lifestyles reduce the rate of these illnesses, and a well-executed workplace wellness program can reduce the rate of developing these conditions. With a healthier team, employers can save money on future healthcare dollars spent.

Where Can Employers See Savings?

Workplace wellness programs save employers money in two ways. According to the Rand Corporation, wellness programs result in two types of savings:

• Disease Management Programs

• Lifestyle Management Programs

Disease management programs address immediate health problems like heart disease and businesses realize benefits in the short term. Lifestyle Management Programs mitigate longer-term health risks like poor eating habits, smoking, and exercise—realizing benefits in the long term.

Graph of employer's healthcare cost savings for lifestyle management programs and disease management programs.

We can see that both programs reduce the average cost per member by US$30 per month. That being said, disease management programs make up for 87% of the cost savings—saving US$3.80 for every US$1 invested. Whereas lifestyle management programs make up only 13% of the cost savings and save only US$0.50 for every US$1 invested, according to the Rand study.

The bottom line is that both types of wellness programs result in direct cost savings for employers. 

What Can We Do About This Data?

Given Singapore's continuously aging population, a closer look at the studies suggests that employers should target those who already have chronic diseases first to maximize short-term cost savings.

Employers should pay close attention to the cost of the programs they implement. Although the initial investment for a lifestyle wellness program can be cheaper and easier to implement, prioritizing disease management programs over lifestyle programs provides a higher return on investment (ROI). Focus on where your wellness program dollars are going, health screening vs food campaigns.

That being said, don't neglect setting up a strong lifestyle wellness program for your employees, especially for your young and middle-aged employees. Not only do lifestyle programs ultimately save employers money, but they also mitigate the risk of developing chronic illnesses that contribute to the higher healthcare costs in Singapore. Additionally, you will find that lifestyle wellness programs benefit employee satisfaction and retention rates, indirectly resulting in cost savings.

Reducing Healthcare Costs through Wellness Programs

The financial benefits of wellness programs are also substantial. By emphasizing preventive health measures, these programs have been shown to cut healthcare costs significantly. The CDC reports that well-implemented wellness programs can reduce healthcare expenses by about 25%. This dual advantage benefits employers with lower insurance premiums and employees with reduced personal medical costs.

Effectiveness of Disease and Lifestyle Management Programs

Disease management programs, a component of wellness programs, have been shown to be effective in reducing healthcare costs. These programs address immediate health problems like heart disease and result in benefits in the short term. On the other hand, lifestyle management programs mitigate longer-term health risks like poor eating habits, smoking, and lack of exercise, realizing benefits in the long term.

Healthy lifestyles have been proven to reduce the rate of chronic illnesses. The combination of maintaining a healthy weight, exercising regularly, following a healthy diet, and not smoking can be associated with as much as an 80% reduction in the risk of developing the most common and deadly chronic diseases.

Available Programs

At FITFAMCO, we provide lifestyle wellness programs such as group fitness classes, fitness & nutrition talks, cooking demos, mental wellbeing workshops, and ergonomic workshops. We also provide customized disease management programs like personal training and nutrition coaching to combat chronic diseases such as cardiovascular health and diabetes.

Learn More About Our wellness Programs & How We Can Help You.

This article is contributed by Stephen Lee at ValueChampion, a consumer research and personal finance comparison firm that prides itself in distilling data into actionable, unbiased insights to help people make smarter financial decisions.

Edited by the FITFAMCO Team.