Defining Well-Being Program Value: ROI Versus VOI

Evaluating a well-being program is important. It allows an organization to determine its effectiveness, identify areas for improvement, allocate resources efficiently, ensure the program is aligned with the needs of participants, and justify its existence, all with the goal of maximizing the program’s positive impact on health and well-being.

Calculating the return on investment (ROI) and the value on investment (VOI) are two ways to evaluate a program. Here is a quick look at each.

Well-Being ROI

ROI primarily focuses on assessing quantifiable financial returns. It allows organizations to justify program cost.

• ROI is typically calculated using estimated metrics like assumed reduction of healthcare claims or measured absenteeism rates.
• Cost-avoidance figures are difficult to quantify and can be an unreliable measure of healthcare cost containment. For example, you cannot monetize an avoided hospital stay or a prevented heart attack.

Well-Being VOI

VOI encompasses a broader perspective, including intangible benefits such as improved employee morale and increased engagement and productivity. These are all positive impacts on company culture.

• VOI is typically calculated using metrics from surveys, employee feedback, and qualitative assessments of overall employee satisfaction and performance.
• VOI enables organizations to assess the overall positive impact of a wellness program on employee well-being and long-term organizational health.

Recommendation: Focus on VOI

While ROI emphasizes the financial benefit of a well-being program, isolating its impact from other influencing factors can be challenging. Long-term health improvement, claim avoidance, and behavioral changes are difficult to correlate directly with the intervention, as some benefits may take years to manifest fully.

Shifting the focus to VOI is a best practice in today’s workplace economics. VOI encompasses a wider range of benefits and considers the total value of an investment, including non-financial benefits. While these benefits are not always easily quantifiable, they are still highly valuable and contribute to a thriving workplace culture. VOI recognizes that employee health and well-being extend beyond mere cost savings.

Examples of VOI metrics include the following:

• Increased employee morale and job satisfaction
• Reduced absenteeism
• Improved employee retention
• Enhanced workplace culture
• Improved employee productivity and performance

It is important to note that effective well-being programs can motivate individuals who previously avoided care (potentially increasing overall healthcare costs and usage) to prioritize their health and seek medical intervention.

We recognize that every company has specific needs and organizational goals. Use these recommendations as a guide to design your unique employee health and well-being strategy. Contact Hylant for more information about effective health and well-being programs.

Related Reading: How to Navigate a Growing Array of Benefits Options

Hylant Health Strategies Team

The above information does not constitute advice. Always contact your employee benefits broker or trusted advisor for insurance-related questions.