Importance of Employee Health & Wellbeing + How You Can Improve Employee Health

Why Employee Health and Wellbeing Matters

At the Berkshire Hathaway’s annual shareholders’ meeting in May 2017, Warren Buffett said, “Medical costs are the tapeworm of American economic competitiveness.”

He suggested that, instead of cutting corporate taxes, businesses would best be served by working to reduce the rising healthcare costs throughout the United States.

Employee health and wellbeing constitutes a huge portion of not only a company’s budget but also a significant hidden cost. It affects the capacity of employees to be productive and creative at work as well as their ability to be happy in their personal lives. In this article, we’ll cover some of these reasons in more details.

Company health insurance premiums

It’s no secret that companies spend a lot of money on health insurance.

In the article “You Run a Health-Care Business Whether You Like It or Not“, CFO Magazine noted that GM spends more on healthcare than it does on steel

Similarly, according to Starbucks CEO Howard Schultz, the company spends more on health insurance than they do on coffee beans

Many don’t realize just how much spending has shot up. Since the year 2000, premiums have increased over 300%.

The Kaiser Family Foundation reported that annual premiums for employer-sponsored family health coverage reached $19,616 in 2018, increasing 5% from the previous year. Since the year 2000, premiums have increased over 300%.

That means, on average, healthcare accounted for 8% percent of operating expenses in 2016.

“Estimates of fraud, waste, and abuse in health care range from a low of 30% (Institute of Medicine) to over 50% (PwC) but are little known among employers,” states CFO Magazine. 

What would it mean to your business if you reduced operating expenses by 4%?

Employee out-of-pocket costs

Facing skyrocketing prices, employers are naturally seeking ways to control costs.

A common method of reducing employer health spending is to shift the costs to the employee, often by offering high deductible health plans.

Proponents of high-deductible health plans believe that by giving employees more “skin-in-the-game”, they will incentivize employees to shop around for better prices and guard against overspending. However, the impact is more complicated than that. Not to mention, the American healthcare system is confusing by nature. Many employees may lack the tools they need to make informed decisions regarding their health plans.

40 percent of Americans are unable to cover an emergency expense of $400. With the average deductible exceeding $1,500, it’s increasingly likely that employers are offering plans that their employees simply cannot support.

Instead of becoming smart consumers, a nearly impossible task given the complexity of the American healthcare system, many employees simply avoid care altogether. A recent national poll found that 44 percent of Americans did not go to their doctor, despite being sick or injured, because of financial concerns. Meanwhile, 40 percent claimed to skip a recommended medical test or treatment because of the cost.

Moreover, those who often need care the most – underserved, low income, and chronically-ill populations – are most negatively impacted by this trend.

Engagement, loyalty, and turnover

Improving turnover rates can both significantly reduce the cost of recruiting and training new employees as well as improving revenue by diminishing the effects of unramped sales reps.

By some estimates, the cost of replacing one employee costs as much as his or her annual salary.

There are many examples of companies dramatically improving their employee turnover rate by crafting a healthcare strategy that meets the needs of their employees and their families.

Orlando-based Rosen Hotels is an industry leader in healthcare strategy. Through RosenCare®, a self-insured healthcare model, Rosen Hotels has saved $340 million in healthcare costs since rolling out the program. Healthcare costs for Rosen Hotels are about one half of the national average.

"The beauty of this program is that, despite the savings, our benefits are not sacrificed at all," said Harris Rosen, founder of the hotel company.

RosenCare still provides excellent coverage and employee experience: turnover rate is in the low teens, compared to the hospitality industry average of 50-80 percent.

The good news is that Rosen Hotels is not unique in this regard.

A survey conducted by the large employer benefits consulting firm Mercer showed that employers that implemented five or more “wellbeing best practices” saw employee turnover 11 percentage points below companies that that implemented two or less. The results held up across industries.

This makes sense: employees who feel valued and respected by their employer will be more engaged and will want to stay there longer.

Absenteeism and presenteeism

Absenteeism – missed work due to unplanned illness, injury, or other reasons – is also a significant factor in the cost of employee wellbeing.

The CDC estimates that productivity losses from missed work due to medical issues cost employers $1,685 per employee each year.

When we take in account factors like workplace stress and depression, the impact is even higher. PwC estimates that the cost of presenteeism – reduced productivity while at work due to stress, depression, or other conditions – actually exceeds the cost of absenteeism.

Mental health conditions affect 1 in 5 adults, and they have a huge impact on an individual’s wellbeing. Even moderate mental health conditions are estimated to cause 150 hours of lost productivity per year for that employee


With healthcare costs rising, there is a real need for companies to do their due diligence and find ways to save costs.

Fortunately, there are many examples of companies crafting healthcare strategies that not only save money but also do the right thing for their employees: improving their health in cost-effective ways.

By designing and implementing a truly great healthcare strategy, company leaders can make their colleagues feel important while helping them get and stay healthy in the process. Not only is this the right thing to do, it makes great business sense. Win-win!

Looking to start helping your employees'  health and wellbeing? Read Eden Health's 19 Things You Can Do Right Now To Boost Employee Wellbeing for an easy and actionable list of ideas.

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