VOI Value on Investment

 

As the wellness industry has matured, employers and HR professionals are seeking tighter metrics for determining whether a benefits program is delivering results. A recent survey amongst brokers determined that the “rising costs of benefits” continues to be one of the main influences on employers’ wellness program buying decisions in 2022. These inflationary pressures have shaped the urgent need for insightful program metrics.

Why the Wellness Industry has Pivoted to VOI Discussions

Way back in 2015, two non-profit organizations shook up the health and wellness industry by changing the dialog surrounding Employee Health Management metrics. At the request of insurers, service providers, and major employers, Health Advanced Research Organization and the Population Health Alliance (PHA) issued a definitive report: “Program Measurement and Evaluation Guide: Core Metrics for Employee Health Management.” The report proposed a set of new Key Performance Indicators (KPIs) and a Value on Investment (VOI) scaffolding that has sparked several years of debate.

Where are we now?

Rob Putnam, Wellness Coaches CEO, explains how VOI has evolved:

“It’s become more than just a buzzword. When a company does a wellbeing program right, employee engagement is high, the population’s health risks are reduced, and the program maintains these outcomes year after year. Since it is well established that costs follow risks, the path to success can be easily defined. However, VOI measurements can go further than this as more inputs are measured. For example, it is no secret that as employees improve their health across the population, employee morale and job satisfaction improve, employees inherently become more productive, and the overall culture of the organization benefits greatly. Having a positive impact in these areas can have a profound impact on an organization.”

ROI versus VOI

ROI was popularized by the desire to have financial metrics showing the monetary returns or cost savings related to a given investment. ROI is still a relevant measure of program success because it captures hard financial data, for example, the reduced medical or Rx claims or workers’ comp costs. At the same time, prospective or retrospective ROI studies can also be time-consuming, cover many years, and are expensive to perform. However, where ROI falls short is measuring the wider impact health and wellness programs can have on an individual’s and the employer’s population: ROI fails to tell the full story. VOI considers the more abstract but equally valuable impact these programs can have on an employer. While it may be harder to measure in certain cases, VOI measurements encompass all the intuitive benefits we know to be true for a healthier workforce, such as increased morale and retention, decreased sick days, increased productivity, improved retention, or enhanced workplace safety.

Constructing a VOI Framework

HERO/PHA’s report suggests seven metrics for evaluating wellness program success; these are summarized in the SHRM article Metrics Beyond ROI Can Capture Wellness Outcomes. The HERO/PHA report identifies VOI as one of the KPIs to consider. Further, the report plots how to construct and operationalize a Value on Investment Framework (pg. 66).

VOI Measures the Right Things

As the Harvard Business Review notes: “Program evaluation is critical to maintaining an accountability for a wellness program.” Wellness programs need to be held accountable for results, yet employers need to measure the right results. HERO/PHA’s VOI framework requires that participants and the purchaser are given a voice. Beyond the hard metrics of productivity and performance, evaluation of a program should include metrics such as participation, risk reduction, engagement, and overall satisfaction with a wellness program. This change of focus is welcome in the post-Pandemic workplace, where burnout and mental health-related issues are on the rise. In the current workplace, it is imperative that employers and service providers factor in crucial intangible benefits such as:

  • creating a healthy workplace wellness culture
  • improving employee morale
  • enhancing teamwork and team health
  • building loyalty to the organization
  • heightening customer loyalty

ROI is not going away but broadening program evaluation metrics to factor in VOI calculations allows employers to more quickly examine the broader impact their wellness programs are having on their organizations.