Spa Business Handbook 2012

CORPORATE WELLNESS

Why do employers invest in corporate wellness? Like it or not, it all comes down to dollars and sense. Companies are investing in cor- porate wellness programmes because it inevitably costs more to take care of pop- ulations in poor health. Furthermore, these programmes have the ability to increase productivity and retention, decrease absen- teeism and improve overall quality of life. The data speaks for itself:

■ On average, medical costs are US$1,429 higher1

(¤1,050, £895) for obese employees – up to 117 per cent2 higher

■Heart disease risk: costs are 228 per cent higher per employee2 ■ Stroke risk: costs are 85 per cent higher per employee2 ■ Fitness programmes can reduce sick days by 13 per cent3 ■ Presenteeism and absenteeism costs: US$42.8bn1

(¤32.1bn, £26.8bn) ■ Fitness programmes can reduce staff

Wall Street Journal, May 7, 2010; 2 2011; 3

Stress, AFPA Newsletter

Moreover, given the rising costs of health- care, companies are incentivised to fi nd ways to infl uence a healthier workforce, particularly since much of the costs are driven by diseases that are preventable. The fi gures are certainly alarming. The US’ Center for Disease Control and

Prevention (CDC) estimates that cardiovas- cular disease and stroke costs US$313.8bn (¤235.2bn, £196.7bn) in medical expenses each year; and diabetes costs US$116bn (¤87bn, £72.7bn). Yet 80 per cent of all premature heart disease, stroke and dia- betes can be prevented according to the World Health Organization.

100 spa business handbook 2012

turnover as much as 250 per cent3 1

CDC obesity study, Occhipinti M, Fitness Programmes & Workplace

Fitness programmes can reduce sick days by 13 per cent and staff turnover by 250 per cent

How lucrative is corporate wellness? Like spas, corporate wellness is a business that takes the right mix of products, services and demand to be profi table. For physical facilities – where construction and equip- ment can be quite costly – it can be diffi cult to make a traditional return on investment (ROI). However, these costs are generally passed on to the company procuring the service or facility and ROI is measured by the impact to the overall health of a com- pany’s population over time such as lower healthcare costs, increased productivity, retention and less absenteeism. In return, the provider is compensated for equipment, staffi ng and/or services, gener- ally via a cost-plus model where they charge a premium on top of their basic spend. Some may also charge fees for intellectual prop-

erty associated with proprietary technology and/or methodology used to deliver serv- ices. Depending on the approach selected by the company – whether it includes facilities or services or a mix of both – the provider can secure net operating income or margins of up to 40 per cent.

Are spas well-positioned to offer corporate wellness? Yes! In fact, many services which are offered by spas today – including massage, yoga, meditation, nutritional counselling and personal training – could be consid- ered as corporate wellness services. The key would be identifying those services that are proven to deliver health-related benefi ts. Spas that can tie their services to evidence-based research and medical

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