Evaluating an employee wellness program.

What criteria should be used to evaluate the impact of a new employee wellness program when the initial vendor contract expires? Published academic literature focuses on return-on-investment as the gold standard for wellness program evaluation, and a recent meta-analysis concludes that wellness programs can generate net savings after one or two years. In contrast, surveys indicate that fewer than half of these programs report net savings, and actuarial analysts argue that return-on-investment is an unrealistic metric for evaluating new programs. These analysts argue that evaluation of new programs should focus on contract management issues, such as the vendor's ability to: (i) recruit employees to participate and (ii) induce behavior change. We compute difference-in-difference propensity score matching estimates of the impact of a wellness program implemented by a mid-sized employer. The analysis includes one year of pre-implementation data and three years of post-implementation data. We find that the program successfully recruited a broad spectrum of employees to participate, and it successfully induced short-term behavior change, as manifested by increased preventive screening. However, the effects on health care expenditures are positive (but insignificant). If it is unrealistic to expect new programs to significantly reduce healthcare costs in a few years, then focusing on return-on-investment as the gold standard metric may lead to early termination of potentially useful wellness programs. Focusing short-term analysis of new programs on short-term measures may provide a more realistic evaluation strategy.