Employee Physical Exams: Healthy Employees = A Healthy Bottom Line

Health Care Cost Reduction

The seven most common chronic diseases, hypertension, stroke, heart disease, diabetes, cancer, and mental and pulmonary disorders, cost employers at least $1.3 trillion each year.[ix]

However, many of these diseases can be readily detected during their early stages via the basic tests such as blood pressure monitoring, complete blood counts, chest X-rays, and urinalysis that comprise a typical physical examination, and early detection saves money.  Indeed, by providing employee wellness programs that include event-specific physicals, many nationwide employers have decreased their employee health care cost burden by $1 – $3 for every dollar spent.[x]  Other analyses show that wellness programs, including annual physical exams, have reduced employers’ health costs by an average of 26.1%.[xi]

In 2010, Health Affairs released an analysis of wellness programs that include employee physical exams.  This study found that such initiatives reduced companies’ health costs by $3.27 for every dollar spent.[xii]  Another investigation discovered wellness programs and physical exams diminish workers’ compensation and disease management costs by up to 32%.[xiii]

Here is yet another example of the cost-saving benefits of corporate physical examination programs.  Since 1983, Bank One has conducted executive physical exams at its corporate headquarters. During a three-year period, Bank One discovered that it paid $5,361 in medical claims for executives who received annual physical exams. In contrast, it paid $6,426 per executive who was not evaluated each year.  In other words, the company’s physical examination program allowed Bank One to save over $1,000 per employee on an annual basis.[xiv]

Further examples of cost-savings tied to physical examinations abound.  In an effort to ease medical costs, Chippewa County, Wisconsin, established a wellness program for county employees that includes a physical exam with biometric testing, resulting in a total health care cost reduction of $500,000 in 2008 alone.[xv] Lafarge North America, a large supplier of construction materials, saw similar results with its “Building a Better You” program, which includes on-site physicals. Over a span of three years, the company saved $30 million in medical and pharmacy costs and saw fewer employee hospital visits and less disability incidence due to healthier employees.[xvi]  Finally, by offering employees annual physical exams and other wellness initiatives, Confluence, a financial services software provider, decreased its healthcare premiums by 13%.[xvii]

As the previous examples demonstrate, the short-term costs of annual employee physicals are far less than the long-term expenditures that result from employee illnesses, hospitalizations, and surgeries.  Time after time, researchers have found that by investing proactively in employee healthcare, companies have been able to realize a much healthier bottom line.

Absenteeism

In addition to unpredictable or seasonal illnesses, employee absenteeism can be caused by hospitalizations, surgeries, and other medical procedures that become necessary to provide care for chronic conditions.  Multiple costs result when employees are away from work.  For example, businesses must pay for employee sick and disability leave and may need to invest time and money in finding a temporary or replacement employee.  However, it is possible to take preventative steps to mitigate these costs.  Indeed, according to a 2013 Cornell university study, by emphasizing and investing in employee health to identify diseases and latent conditions, many US-based companies have been able to reduce absenteeism by 28% while cutting health care and workers’ compensation claim costs by similar margins.[xviii]

US companies aren’t the only ones working to reduce absenteeism via investment in employee health, and the cost savings from lower rates of absenteeism has been noted worldwide.  In recent years, a wide range of global companies have taken steps to reduce the financial impact of absent employees by implementing employee physical exam programs. For example, by setting up on-site physical exam clinics, Parcelforce Worldwide, an express parcels provider, has decreased rates of employee absence due to illness by nearly 30%.  Similarly, Foyle Food Group’s physical exams have helped diminish absenteeism by 15% overall, have kept short-term absence below 3% of the workforce, and have decreased the number of employees out of work for more than seven days by 84%. Furthermore, Ernst & Young’s London headquarters’ annual employee physicals have resulted in a 3% fewer days lost to absence across the total workforce, even though the total size of the workforce has grown.[xix]

The financial benefits of physical exams and employee wellness programs have been well-documented in leading American-based healthcare publications and journals. Health Affairs noted that for every dollar spent on employee wellness, absenteeism costs fell by $2.73.[xx] The publication also revealed that wellness programs that include a physical exam can moderate sick leave, disability costs, workers’ compensation, and other health plan-based costs by at least 20%.[xxi]

Frequently, companies’ solutions to absenteeism, including temporary hiring and work-from-home alternatives, constitute immediate fixes instead of long term solutions to the problem.  However, as the previous examples demonstrate, by identifying employee illnesses during physical exams, companies can lessen the financial burden of absenteeism.  Importantly, exams also provide companies with an opportunity to make sure employees are up-to-date on all of their vaccinations, another crucial means of staving off seasonal illness and promoting general good health.

Productivity

Often, employees opt to continue to work on a full-time or part-time basis in the midst of illness, disease diagnosis, and other health maladies, but this decision can lead to weakened on-the-job performance, often referred to as “presenteeism”.  Employees who are physically weakened or overwhelmed by health conditions cannot fully concentrate on job responsibilities, leading to diminished productivity, project postponements, and below-average work quality, all of which negatively impact a company’s bottom line.

Employee productivity is a primary concern for any employer. In fact, a report released by Hewitt Associates found that 65% of surveyed employers viewed employee health and productivity as one of the top three business issues.[xxii]  Across the globe, organizations are reacting to employee presenteeism by developing worksite clinics and offering wellness programs with annual physicals to their employees.

For example, by providing on-site health clinics and physical examinations, Parcelforce Worldwide has increased employee productivity considerably.  Indeed, productivity increased by nearly 13 percent following implementation of the company’s exam program.  In a similar vein, AstraZeneca saved up to £700,000 as a result of wellness programs, and much of this savings was tied to enhanced employee productivity.[xxiii]   In yet another example, by offering employees prevention-focused healthcare programs such as blood pressure monitoring, GlaxoSmithKline has increased employee performance and productivity by 7 to 13 percent.[xxiv]