How To Right The Wrongs Of Wellness Return On Investment.
Why should investment in wellbeing, or any human change programme, be judged any differently to any other capital investment?
Calculation of Return on Investment (ROI) is used in almost every business. It’s an essential tool in determining whether a company’s precious capital should be tied up in a particular venture or project by projecting the value or ‘return’ (mostly financial) that it will create for the business. However, in wellness and other human orientated change programmes the importance of ROI has diminished in many circles to the point of derision. Value determination seems to have also lost its mojo.
When promoting wellness programme ROI evaluation to clients and prospects – particularly the companies that are the end-users or consumers – there are three arguments that we usually hear against doing the analysis:
- It’s too hard to collect accurate data i.e. “we don’t have it” or “I don’t trust what we’ve got”
- We don’t need ROI; wellness is obviously the right thing to do
- We don’t trust the numbers coming from ROI calculations because we can’t attribute change to the programme.
The first objection is a challenge that can and should be fixed with a myriad of tools in this digital age. I’d also argue that historical data is potentially unnecessary, and may detract from the true message, but that’s a discussion to be covered in a future post.
For now, let’s focus on the other two main objections.
Objection: “It’s the Right Thing to Do”
Of course it is, and we believe you! But when a CFO critical of human change programmes wants to know the impact of the money that has been spent, what will you show them? You might be able to show how several indicators have moved in the right direction, but will you be able to demonstrate value? Unlikely. Your faith in it being the right thing to do is applaudable, but if your faith is justified, surely it’s worth creating the value calculation to demonstrate that – assuming it can be done.
Too many genuinely good wellness programmes have been cut short because nobody stopped to think about how to calculate the ROI at the inception of the programme. Of course, there should be a multitude of other indicators that appear on your scoresheet to measure the success of the programme, but ROI should be there as an expression of value.
Objection: “We Can’t Attribute Change to the Programme”
Problems with attributing change to the programme are the main reason why the value of ROI of wellbeing programmes has diminished. In their desire to sell their products, some wellness companies have become overzealous in quoting ROIs based on calculations which result in marketing claims that are, put politely, somewhat ambitious. That’s not to say that returns can’t be substantial, but once you scratch the surface of these calculations, you often find the foundational basis for the conclusions is weak.
Firstly, there is a tendency to use changes in cost which, in the time frame used to measure impact, can’t possibly be linked to the programme being measured. Secondly, these calculations assume that all the beneficial change is down to the programme which coincidentally happened to be running at the same time as the reduction in cost, completely ignoring everything else that is going on in the employees’ lives. Although we can talk about an association between cost reductions and the wellness programme, there is no indication that the latter caused the former. In the world of wellness snake oil salespeople, this significant fact has been ignored.
Unattributed ROI has been used as an outrageous promotional argument for programmes of very little value. As attention has been drawn to this, and the value of wellness of ROI has diminished. But we must not throw the baby out with the bathwater. ROI remains a critically important tool for assessing the value of an intervention. How do we solve this?
Rebuilding ROI: The Bridge from Behaviour to Cost
Most companies start with costs when trying to evaluate ROI. As you’re trying to evaluate cost changes caused by the programme, this seems to make intuitive sense. However, as we’ve discussed, most of those cost changes that are measurable are likely to be unrelated to the programme. Related cost changes take time to emerge, and in the meantime many other changes are happening in employees’ lives, causing to cost experience to move.
For any cost change to be linked to the wellness programme, it must pass through four time-sequenced stages:
- Participation – if your employees are not engaging with the programme, any outcome measure change that happens is not due to the programme.
- Behaviour change – if your employees participate (directly, or indirectly), the aim will usually be to get them to do something differently – more exercise, eating better, or smoking cessation. If they don’t modify their behaviour because of the programme, then any change in outcome is not due to the programme.
- Biometric change – in a health and wellbeing sense, one of the first indicators that things are moving as you’d hoped is an improvement in biometric risk markers. Many move quickly as a consequence of behaviour change and are a strong leading indicator of future cost changes.
- Health outcomes and related costs – at the end, and often at some point well into the future, health outcomes will start to improve, and costs will start to turn downwards.
The trick is not to start with cost, but rather to focus on participation and behaviour change. These can be readily linked directly to the programme. Furthermore, technology will also allow us to more accurately track behaviour and behaviour change going forward, making this approach more reliable. The challenge then is converting behaviour change caused by the programme to a realistic statement of impact on future costs.
The Change Craft Approach to ROI
Let’s assume you know with a reasonable degree of confidence what behaviour change is happening. In the absence of technology to achieve this, there are ways of combining participation data with an assessment of your wellness programme design that result in a reliable estimate. Change Craft’s BRATLAB research joins the dots between behaviour change and cost outcomes. By looking at the most credible published studies of the impact of behaviour change on biometric risk markers, health conditions and underlying costs, the Change Craft team has created a robust statement of the likely impact of a programme over time. The determination of behaviour change caused by the programme, and research-supported statements of cost impact for each person changing their behaviour, generates a more reliable, justifiable and robust statement of ROI.
Change Craft’s proprietary online calculator of the impact of wellbeing programmes in the corporate setting, is called the Outcomes Value, and has been used by multinational organisations like Coca Cola and PepsiCo to value programmes across the globe. Using this model, we have also worked with many providers to design bespoke impact measures of their programmes:
- Check4Cancer: The specialist screening company wanted to know if their interventions were creating business value for their clients or were just the ‘right thing to do’. They thought the latter, but I was not surprised when a thorough deep dive of the impact demonstrated that three of their six interventions by cancer site generate a positive ROI for their clients.
- MAXIS: MAXIS serves multinational companies by pooling global risk, and wanted to help them discover the potential value of investing in wellness. So we created the Wellness Intelligence Tool (WIT) to help companies see the potential value of wellness in each country, pivoting on demographic and benefits data held by MAXIS and client determined estimates of potential behaviour change.
- EOH: Health advisory group, EOH Workplace Health and Wellness, wanted to develop a tool to integrate with their data hosting platform (The Health Journey) to convert data into clear outcomes for their clients. We created a version of the Outcomes Value tool tailored for their market, integrated with the data that they proposed to collect.
Before deploying any intervention, we recommend that you take the time to set out your expectations in a scorecard – what will change because of the investment you’re making, and when? Within that scorecard, you should include ROI and invest a few hours upfront thinking about how that can be calculated. When the CFO comes calling, you’ll be ready to justify your investment.
If you want to investigate ROI for wellness or any other human change programme, either as a user or a provider and are not sure where to start, please get in contact. You may be surprised by what’s possible.