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RAND Study: PepsiCo's Wellness Program is Minally Effective

Update Date: Jan 07, 2014 11:28 AM EST

Health care costs do not only affect individuals, they also affect productivity levels for their employers. When people get sick and are forced to skip work, companies are then negatively affected by their absence. Due to the link between health and productivity, many companies have adopted programs that are meant to encourage employees to live a healthy lifestyle, which would ideally reduce health care costs. According to the nonprofit research group, RAND Corporation, PepsiCo's wellness program, which is one of the longest and most-praised programs out there, does not work in reducing healthcare costs.

The study, which is being called the most comprehensive examination of the company's wellness program, analyzed data on PepsiCo's employees over a span of seven years. The researchers concluded, according to Reuters that "blanket claims of 'wellness saves money' are not warranted." This means that the amount of money put into wellness programs, which is a $6 billion-a-year industry, might not be worth it.

For the study, lead researcher Soeren Mattke and colleagues, who included two PepsiCo executives, analyzed the two-part PepsiCo's "Healthy Living" program. The first portion is called disease management. In this section, employees suffering from any of the 10 chronic illnesses, such as diabetes or asthma, received regular phone support with a nurse. The conversations are meant to help the employee maintain his or her condition. The researchers found that disease management reduced costs by $136 per person per month due to the fact that the program resulted in a 29 percent reduction in hospitalizations.

In the other section titled the lifestyle management component, which is often viewed as the company's wellness program, the company assessed employees' health risks via a questionnaire regarding their lifestyle habits. The program then provided different levels of care based on the employees' answers. For example, an employee that smokes regularly would receive smoking cessation help. In this particular component, the researchers found that even though some employees reported lower absenteeism, there were no changes to the amount of healthcare costs.

In 2012, roughly 50 percent of all employers within the U.S. that had more than 50 workers offered a wellness plan. In 2013, over 90 percent of companies employing 50,000 or more workers offered a wellness plan. PepsiCo's program started in 2003. The RAND's findings that these programs might not be effective are alarming especially since President Barack Obama's Affordable Care Act (ACA) is actively promoting them. The ACA will allow companies to reward employees who take part in the wellness programs and to penalize those who do not.

Despite the fact that wellness plans are created to encourage employees to adopt a healthier lifestyle, many people are not to keen on the award/penalize portion of the program.

"You're making employees do something that invades their privacy and that goes against medical advice, and now we're seeing [in the PepsiCo study] that it doesn't even save the employer money," said Al Lewis, founder and president of the Disease Management Purchasing Consortium International. This company assists self-insured employers and state programs with reducing healthcare costs.

The study was published in Health Affairs.

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