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Investing in health

By Joe Hockey - posted Tuesday, 9 September 2008

Traditionally health has been seen as a bottomless pit for taxpayer funds. Providing health services has been something that governments do because they have to. Of course there has been some movement around the most cost effective way of spending the health dollar, but ultimately the dividend of that spend has been perceived to be low.

Specifically, there is a perception that investment in health by industry and even individuals has a relatively low yield but I am going to challenge the notion that investment in our health is a venture with no economic upside.

In reality, particularly in the services industry, but also across the board, the economic prosperity of any corporation, enterprise, or community comes down to its people. Human capital is an increasingly scarce resource for industry. To make the most of any enterprise we need to invest in our people: in employees, in citizens. Specifically, we need to invest in their health and their wellness.


The idea of looking at the wellness of employees is one that has gained more traction in the United States than in Australia, because of the role of employers in providing health care as part of an employment package: so a sick worker bares direct health costs to employers.

Recently, however, some large multinational corporations have started to look at indirect health costs and come to realise that poor health and specifically a high rate of chronic disease costs an enormous amount in terms of productivity. Even excluding direct health costs, indirect health costs due to absenteeism and presenteeism - where people are physically at work but feel so rotten that they perform at sub peak performance - are enormous.

Productivity losses due to chronic disease are reportedly as great as 400 per cent higher than the cost of treatment, according to Price Waterhouse Coopers analysis. Chronic diseases are only going to increase as the effects of our sedentary and time pressured lifestyles take their toll. (Working Towards Wellness: The Business Rationale, Julie Epstein et al.)

As a result companies have been increasingly looking to set up workplace wellness programs to address the health of their employees. These programs are able to capture a large group of employees who can easily have targeted health messages delivered to them. In many cases these employees are men aged between 25 and 45 who are noticeably absent from the GP’s waiting room. Buy-in from senior management enforces the importance of the wellness message in the workplace. Results to date are promising.

A study conducted by Unilever at their sites in the UK showed that implementing a workplace wellness program led to an increase of 8.5 per cent in workplace performance, compared with no significant change over baseline by the control group without such a program. A conservative estimate of the return on investment for this program is 3.73 to 1.

This and other workplace wellness programs run by companies including Dow Chemical, Eskom, Discovery Holdings, and Becton Dickinson were recently reviewed and presented at the World Economic Forum in Davos, Switzerland in 2008. The health section of the conference was a collaboration between the World Health Organization and the World Economic Forum, which indicates how seriously this issue is being taken now by industry.


Most of the strategies that were presented as success stories had parameters that were small and targeted, focusing on diet, physical activity, obesity and diabetes prevention. However, their results were among the best  seen from any targeted lifestyle intervention strategies attempted to date.

For a start, they collected sound data and were able to document improvements in their participants. For example, many of the wellness programs presented undertook to measure fitness by allocating a numerical score to participants at the start of the program. It would probably come as no surprise to anyone that when the programs started, only 25 per cent of employees met the baseline score. By the following year that number had increased to 75 per cent and only two years later that number was 81 per cent. (Preventing Noncommunicable Diseases in the Workplace through Diet and Physical Activity, WHO/World Economic Forum Report of a Joint Event, by Timothy Armstrong et al.)

The participants also had their lipid (or cholesterol) profiles measured. At the start of these programs, around 46 per cent of employees had a poor cholesterol level and profile. Within a year that number was down to 30 per cent.

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About the Author

Joe Hockey is the Federal Shadow Minister for Health and Ageing and Leader of Opposition Business in the House of Representatives.

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