Companies with Proven ‘Culture of Health’ Outperform S&P 500 by Over 5% Annually
PHILADELPHIA, PA: SEPTEMBER 11, 2013 — Employee population health can be linked to a company’s marketplace performance, according to a study published today by HealthNEXT, a leading developer of population health strategies. The study, The Link Between Workforce Health and Safety and the Health of the Bottom Line, is published in the September 2013 edition of the Journal of Occupational and Environmental Medicine.
The study is the first of its kind to objectively measure the relationship between workforce health and safety and the marketplace performance of large employers. It found that companies that have been recognized for their outstanding approaches to health and safety by the American College of Occupational Medicine’s (ACOEM) Corporate Health Achievement Award outperformed the S&P 500 for the 15 year period 1997-2012, and the 13 year period 1999-2012. The hypothesis was tested against four model scenarios, each tracking a $10,000 investment in a portfolio of award-winning companies. Corporate Health Achievement Award winners were shown to outperform the S&P 500 in every scenario, with excess annual returns ranging from 3.03% to 5.27%, depending upon portfolio construction.
“This research delivers a much-needed dose of quantitative proof to support the notion that a healthy workforce is a competitive advantage in the marketplace,” said Raymond Fabius, MD, the lead author of the study and vice chairman of HealthNEXT. “At a time when many corporations are looking for ways to cut healthcare expenses, in some cases even dropping coverage for their employees, our results suggest that real path to savings is not dropping health benefits, but rather improving them. Quite simply, we’ve proven that a corporate focus on health and safety is good business.”
The study advances a growing body of evidence suggesting that corporate efforts to reduce health risks and mitigate complications from chronic illness can produce positive effects on worker productivity and performance as well as reduce health care expenses.
“We simply cannot afford to ignore these statistics,” said ACOEM President Ron R. Loeppke, MD, MPH, one of the study’s authors. “Engaging in preventive efforts to mitigate the complications of chronic illness in the workplace is a must for employers and an imperative for the future stability of our economy. Our study suggests that there are clear financial benefits for employers and their investors who follow this path.”
The portfolio of companies in the study consisted of a group of U.S.-based multinational corporations including American Express, Bristol Myers Squibb, Dow Chemical, IBM and Johnson & Johnson, among others. A total of 29 companies were included in the analysis. The full list of ACOM Corporate Health Achievement Award winners is available here.
“By applying a rigorous, peer reviewed methodology to determine stock market performance relative to corporate health and safety performance, we hope to elevate the discussion of corporate health and safety to a C-suite issue,” said Dixon Thayer, HealthNEXT CEO and co-author of the study. “To-date, most efforts to improve workforce population health have focused on ‘soft’ data like productivity and wellness; that paradigm needs to be enhanced. Employee health is directly linked to the bottom line.”
Citation – Fabius R, Thayer RD, Konicki DL, et al. The link between workforce health and safety and the health of the bottom line: tracking market performance of companies that nurture a “culture of health.” J Occup Environ Med. 2013;55(9):993-1000.
Abstract – Objective: To test the hypothesis that comprehensive efforts to reduce a workforce’s health and safety risks can be associated with a company’s stock market performance. Methods: Stock market performance of Corporate Health Achievement Award winners was tracked under four different scenarios using simulation and past market performance. Results: A portfolio of companies recognized as award winning for their approach to the health and safety of their workforce outperformed the market. Evidence seems to support that building cultures of health and safety provides a competitive advantage in the marketplace. This research may have also identified an association between companies that focus on health and safety and companies that manage other aspects of their business equally well. Conclusions: Companies that build a culture of health by focusing on the well-being and safety of their workforce yield greater value for their investors.
Headquartered in Philadelphia, HealthNEXT, is a leading developer of workforce population health strategies. The company has developed a Six Sigma approach to population health that breaks each constituent component of the employee healthcare experience into a series of data points that can be tracked over time. By proactively analyzing and systematically improving performance against these benchmark data points, HealthNEXT, helps companies improve the health of their workforce and bend their health care costs curve. For more information, please visit http://healthnext.com
Founded in 1916, ACOEM represents nearly 4,500 physicians specializing in occupational and environmental medicine who promote the health of workers through preventive medicine, clinical care, disability management, research, and education. The Corporate Health Achievement Award (CHAA) was established by ACOEM in 1996 is to foster awareness of quality health, safety, and environmental programs; identify model programs and outstanding practices with measurable results; and encourage organizational self-assessment and continuous improvement. The monthly peer-reviewed Journal of Occupational and Environmental Medicine (www.joem.org) is ACOEM’s official scientific publication.
J. Roderick, Inc.