The Link Between Workforce Health and Safety and the Health of the Bottom Line
                     FAST TRACK ARTICLE
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”
Raymond Fabius, MD, R. Dixon Thayer, BA, Doris L. Konicki, MHS, Charles M. Yarborough, MD,
Kent W. Peterson, MD, Fikry Isaac, MD, Ronald R. Loeppke, MD, MPH, Barry S. Eisenberg, MA,
and Marianne Dreger, MA
• Recently, an article by Loeppke and colleagues,4 reported that
Objective: To test the hypothesis that comprehensive efforts to reduce a work-
for every dollar of medical and pharmaceutical costs spent, an
force’s health and safety risks can be associated with a company’s stock mar-
employer lost an additional $2.30 of health-related productivity
ket performance. Methods: Stock market performance of Corporate Health
costs. Health-related presenteeism (health risks and medical con-
Achievement Award winners was tracked under four different scenarios using
ditions impacting work performance) was shown to have a larger
simulation and past market performance. Results: A portfolio of companies
impact on lost productivity than absenteeism, with executives and
recognized as award winning for their approach to the health and safety of
managers suffering higher losses. Comorbidities demonstrated the
their workforce outperformed the market. Evidence seems to support that
largest effects on productivity loss.4
building cultures of health and safety provides a competitive advantage in the
marketplace. This research may have also identified an association between These facts led to a hypothesis: Companies that create an en-
companies that focus on health and safety and companies that manage other vironment for their employees and dependents that reinforces both
aspects of their business equally well. Conclusions: Companies that build a conscious and unconscious safer and healthier lifestyle choices as
culture of health by focusing on the well-being and safety of their workforce well as provides more effective accessing of appropriate health care
yield greater value for their investors. (ie, surround them with a “culture of health”) should be more pro-
ductive and that productivity should drive business performance and
be reflected in the price of their stock.
growing body of evidence supports the concept that focusing on To more objectively test this hypothesis, we tracked the stockA the health and safety of a workforce is good business. Engaging market performance of companies with proven health, safety, and
in a comprehensive effort to promote wellness, reduce the health environmental programs under four different scenarios. To find such
risks of a workforce, and mitigate the complications of chronic illness companies, we turned to the recipients of the American College
within these populations can produce remarkable effects on health of Occupational Medicine’s (ACOEM’s) Corporate Health Achieve-
care costs, productivity, and performance. The literature is replete ment Award (CHAA). Using simulation and past market perfor-
with examples demonstrating that the health of employees impacts mance, a theoretical initial $10,000 investment in publicly traded
their performance and productivity. In addition, for the majority of award winners was followed from 1997 to 2012 under one scenario
the employers who pay for the cost of health care provided to their and from 1999 to 2012 in three scenarios.
employees, there is a direct impact on the bottom line. Because these award-winning companies are recognized for
Recent statistics have revealed the following: their exemplary efforts in creating a healthy workforce, and a healthy
workforce generates less health care costs and improved productivity,
• More than 22% of working age adults surveyed reported health- we tested the hypothesis that a financial portfolio of these companies
related work impairment from chronic illness in the previous would outperform the marketplace.
30 days. Those with impairment averaged 6.7 lost days. This is
equivalent to 2.5 billion impaired days per year.1 BACKGROUND
• A 2003 study found that illness and disability reduced total work
The organization known today as the American College of
hours by approximately 8.6% in 1996, with nearly 8.7 million
Occupational and Environmental Medicine began in 1916 as the
Americans between the ages of 18 and 64 years being unable to
American Association of Industrial Physicians and Surgeons. As the
work. This represented a loss of approximately $468 billion to the
country moved from industrial manufacturing to knowledge-based
US economy.2 In 2006, more than $2 trillion was spent on health
industries, the American Association of Industrial Physicians and
care with three fourths of that amount focused on treating chronic
3 Surgeons adapted itself to meet the changing needs of workers,conditions.
eventually changing its name to the American College of Occupa-
tional and Environmental Medicine to more accurately convey its
work. Today, the ACOEM continues to embody the principles set
From the HealthNEXT LLC (Dr Fabius), Newtown Square, Penn; HealthNEXT forth in 1916, but with a wider scope and mission that responds to
LLC (Mr Thayer), Unionville, Penn; KDK Solutions, Ltd (Ms Konicki),
Chicago, Ill; Health and Wellness Medical Strategies (Dr Yarborough), the health and safety needs of the twenty-first century workplace—
Lockheed Martin Corporate Medical Director, Bethesda, Md; Occupational from industrial medicine to occupational medicine to occupational
Health Strategies, Inc (Dr Peterson), Charlottesville, Va; Health and Wellness health and most recently to corporate health (including international
(Dr Isaac), Johnson & Johnson, New Brunswick, NJ; Brentwood operations).5 Corporate health is defined as the overall integration of
(Dr Loeppke), Tenn; and American College of Occupational and Environ-
mental Medicine (Mr Eisenberg and Ms Dreger), Elk Grove Village, Ill. safety and health in the workplace, enhancing employee well-being
The authors declare no conflicts of interest. and satisfaction and the company’s overall productivity. The quality
Address correspondence to: Raymond Fabius, MD, HealthNEXT LLC, 8 Frog of the work environment has become increasingly important and is
Hollow Lane, Newtown Square, PA 19073 ([email protected]). a central factor in the lives of most Americans. In an era of down-
Copyright ©C 2013 by American College of Occupational and Environmental
Medicine sizing and increased stress and pressures on employees, America’s
DOI: 10.1097/JOM.0b013e3182a6bb75 best companies strive to improve employee health and safety. Having
JOEM  Volume 55, Number 9, September 2013 993
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Fabius et al JOEM  Volume 55, Number 9, September 2013
safer, healthier workplaces results in increased productivity and job environment, and (4) healthy organizations. The scoring for each
satisfaction, stronger bottom-line results, less harmful environmental standard is based on a four-tiered system as follows:
impact, and enhanced community relationships.
Level 1 (program description–scope and quality): The organization
To further advance the mission and vision of the ACOEM,
has evidence that appropriate programs exist for each standard. The
its Board of Directors created the CHAA to recognize the healthi-
application should clearly delineate what programs implemented
est, safest companies and organizations in North America and raise
by the organization are relevant and enable it to meet the standard.
awareness of best practices in workplace health and safety programs.6
Level 2 (program dissemination): The organization has evidence
American corporations have long participated in competitions for
that the programs are well deployed in all appropriate locations
quality and excellence, such as the Malcolm Baldrige National Qual-
7,8 and departments within the organization.ity Award and C. Everett Koop National Health Award. Neverthe-
Level 3 (outcome measures): The organization has developed metrics
less, in evaluating these awards, the ACOEM concluded that a new
for its programs and provides clear data on what it has measured.
award program was needed—a prospective one that focused more
Level 4 (trend data): The organization presents trend data showing
specifically on reviewing both the safety and health programs of
a reduction of health risk, health cost savings, or other impact on
corporations. The CHAA was designed to recognize the “healthiest
the business. Trend data demonstrate the success of progress over
companies in America.” This supported the ACOEM’s goal of en-
time.
couraging employers to invest in the health of workers and to promote
quality health, safety, and environmental management programs. For each scoring category, illustrative “outcome indicators”
In developing the award, the main challenge was to create were developed, similar to those used by the Health Evaluation Data
appropriate scoring guidelines and rating criteria that would identify Information Set 3.0 criteria.11
companies that have exemplary occupational, environmental, and The CHAA Committee made every effort to develop an appli-
health programs. In addition, it was determined that the application cation that allowed for a thorough and comprehensive evaluation of
process should educate company leadership about excellence of oc- each applicant’s occupational and environmental health and safety
cupational and environmental health services whether or not they programs as measured against the ACOEM standards. Participating
received the award. Excellence was defined as reducing health and organizations submit a comprehensive application regarding their
safety risks and demonstrating positive impacts on the business.9 program and undergo a rigorous review by an expert panel to assess
Using the Malcolm Baldrige National Quality Award as its the four key categories. An independent panel of trained examiners
model, along with the ACOEM guidance document on Scope of reviews each application. Examiners look for comprehensive and
Occupational and Environmental Health Programs and Practice, innovative programs with measurable results. In addition to looking
the initial CHAA program development committee identified 22 for comprehensive programs, the examiners want to understand how
standards of practice in four separate categories to be achieved these programs are deployed across the organization and how they
if a program was to be deemed excellent.10 In 2010, overlapping are promoting the health of the organization’s employees. Points are
standards were consolidated, resulting in a total of 17 standards. awarded for each of the 17 standards within the four categories.
These standards remained grouped into four distinct key categories: Table 1 provides a comprehensive view of CHAA categories,
(1) leadership and management, (2) healthy workers, (3) healthy standards, and scoring.
TABLE 1. Corporate Health Excellence Checklist
Measured Trends
Program Well Showing Tracked Over Maximum
Exists Deployed Trends Time Points
1.1 Organization and management 75
1.2 Health information systems 75
1.3 Evaluation and quality improvement 75
1.4 Innovation—expanding the envelope 25
1.0 Leadership and management (total points) 250
2.1 Health evaluation of workers 75
2.2 Occupational injury and illness management 75
2.3 Traveler’s health 30
2.4 Mental and behavioral health and misuse of substances 70
2.0 Healthy workers (total points) 250
3.1 Workplace health hazard evaluations, inspection, and abatement 60
3.2 Education regarding worksite hazards 60
3.3 Personal protective equipment 55
3.4 Toxicological assessment and planning 25
3.5 Emergency preparedness, continuity planning, and disruption prevention 50
3.0 Healthy environment (total points) 250
4.1 Health promotion and wellness, including nonoccupational illness and injury 70
4.2 Absence and disability management 60
4.3 Health benefits management 50
4.4 Integrated health and productivity management 70
4.0 Healthy organization (total points) 250
994 ©C 2013 American College of Occupational and Environmental Medicine
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JOEM  Volume 55, Number 9, September 2013 Workforce Health and Health of Bottom Line
Once applications are scored, they are reviewed by a judges’
TABLE 2. Award Winners
panel, which selects those warranting further review. For those
judged by responses on the applications to be possibly exemplary, a Year Recipient
site visit is required to verify any and all information submitted. Af-
ter site visits, applications are rescored and presented to the judges’ 1996–1997 Hughes Electronics
panel for the final decision. Each applicant is judged independently Lockheed Martin
on the basis of its achievements in terms of programs, dissemination, 1997–1998 Boeing
outcome measures, and trends. Each applicant receives formal feed-
IBM
back from the examiners’ panel regarding its program’s strengths,
Johnson & Johnson
weaknesses, and suggested areas of improvement.
Receipt, review, and evaluation of applications and selection First Chicago
of award recipients are conducted in such a manner as to preclude 1998–1999 Glaxo Wellcome
any conflict of interest. Safeguards have been built into the process AlliedSignal
to avoid any conflict of interest on the part of any employee or Baltimore Gas & Electric
member of the examiners’ and judges’ panels or the ACOEM Board City of Indianapolis
of Directors. 1999–2000 Sherman Health
Since the presentation of the first awards in 1996, 29 compa- Dow Chemical
nies have achieved distinction as CHAA recipients (Table 2). These GE Power
companies have demonstrated outstanding achievement and excel-
2000–2001 National Security Agency
lence in employee health, safety and environmental management,
2001–2002 Bristol-Myers Squibb
outcomes, and trends. Awards have been presented to organizations
in manufacturing and service sectors, including city health depart- Eli Lilly
ments, federal agencies, and health care systems. In most years, there IBM
has been at least one award recipient. The majority of the recipients Kerr-McGee
have been publicly traded companies. 2002–2003 BAE Systems
CHAA recipients have demonstrably lower workplace ill- Marathon Oil
nesses and injuries and provide effective health and lifestyle pro- Union Pacific
grams to their employees. Nevertheless, the impact of these programs 2003–2004 Cianbro Corporation
on a company’s financial performance has not been a component of 2004–2005 Daimler Chrysler
CHAA analysis—in contrast with studies of past winners of the
QuadGraphics
National Institute of Standards and Technology’s Baldrige Perfor-
2005–2006 No recipients
mance Excellence Program. Brown reported, “Most studies acknowl-
edge that the Baldrige winners tend to outperform their peers in finan- 2006–2007 Caterpillar
cial and market performance by a significant margin.”12 In the past 2007–2008 No recipients
year, a study was undertaken to analyze the recipients of the CHAA 2008–2009 Southeastern Transportation Authority
program to determine whether they have been more financially suc- 2009–2010 Baptist Health System
cessful than companies that have not achieved this distinction. 2010–2011 EG&G-URS
2011–2012 Johnson & Johnson
METHODS Smithsonian Institutions
Using the list of the ACOEM winners (Table 2), an invest- 2012–2013 American Express
ment portfolio was created to track the stock price performance of
each winner and log the results. Using simulation and past market
performance, we followed an initial $10,000 investment from 1997
to 2012 in one scenario and from 1999 to 2012 in three scenarios. were not included either because they were not publicly traded
Because the CHAA is announced each May, we elected to simulate companies or because they had changed ownership. We elected to
the purchase of stock in those companies that were publicly traded end the investment when award winners were purchased and did not
on July 1 of each year. carry the investment forward to the acquirer (see Appendix).
In addition, we elected to follow the fund’s performance in In analyzing the data and establishing our theoretical invest-
several different ways. The first approach was to purchase stock in ment portfolios, we made what we thought were logical assumptions
the award winner each year starting with the first recipient. The sec- as explained here.
ond approach was to begin our investment after five publicly traded
recipients were identified in order to not be overly influenced by Timing of Investments
the performance of an individual company. This was our featured Because the ACOEM typically announces its winners in
portfolio. The third method weighted the investment into each award May, we decided that the logical initial investment date should be
winner on the basis of their final CHAA award winning score, recog- July 1, which is the beginning of the next business financial quarter.
nizing that some achieved higher total assessment points than others. Therefore, an investment year in our model spans from July 1 to
The fourth approach eliminated both the best and worst performing June 30 of the next year rather than the typical calendar year invest-
companies from the portfolio review to eliminate their potential bias. ment. We felt that waiting until January to make the initial investment
As there are two publicly traded companies that have won was too long of a time given the May announcement. Conversely,
the award twice—Johnson & Johnson and IBM—our methodology because the ACOEM does not have a set announcement date, any
would double our investment in those companies with two separate investment made earlier than July 1 could cause tracking problems
purchases. Nevertheless, because Johnson & Johnson is a very recent in those years when the announcement may have been delayed.
recipient, having won the award in May 2012, we did not have a full
year’s worth of data to include in the results at the time this article Holdings
was written. In addition, because of the significant complexity this As previously noted, portfolios could not be created for every
would add, we did not reinvest dividends. Lastly, some recipients CHAA winner because some of the organizations were private
©C 2013 American College of Occupational and Environmental Medicine 995
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Fabius et al JOEM  Volume 55, Number 9, September 2013
companies or municipalities such as Baptist Health System and the Portfolio Creation
City of Indianapolis (Table 3). Therefore, for our investment portfo- Once we compiled the data of stock returns for each award
lio, we only use those winners that were publicly traded companies recipient, we created several different portfolios, each with different
on the major stock exchanges. In addition, there were 2 years in assumptions to test our hypothesis that CHAA winning companies
which the ACOEM did not have an award recipient (2005 and 2007). would outperform the marketplace.
In portfolio 1, for example, starting in 1999, we invested
Holding Constraints $10,000 equally in Lockheed Martin, Boeing, IBM, Johnson &
Johnson, and Glaxo Wellcome (now Glaxo-Smith-Kline). In 2000,
A few holdings created some complexity in that the companies
we equally redistributed the total investment that had appreciated
were acquired during the course of the investment. For example,
above the initial $10,000 investment to include the latest recipients—
Hughes Electronics was one of the first recipients of the CHAA. In
Dow Chemical and General Electric. In each year thereafter, we
the fall of 1997, the company was split into thirds with a portion being
added all the publicly traded award winners and equally redistributed
sold to Raytheon, a portion to Delphi, and the remainder held under
the original $10,000 investment and the appreciated value of the total
the parent company General Motors (GM). This created many issues
portfolio.
when valuing the company’s stock. Therefore, it was not included in
In addition, we looked at alternative investment strategies.
our hypothetical portfolio.
For example, in portfolio 2, we rebalanced the portfolio each year on
If a company changed ownership during the course of being
the basis of the total score of the award winners. We constructed a
held in our hypothetical investment portfolio, we used the closing
methodology that did not wait until there were five stocks to start the
value of the stock on the last day when it was publicly traded. This
portfolio, but rather began investing $10,000 with the first recipient
was done because we did not know whether the new company had
Lockheed Martin—portfolio 3. Lastly, we also followed portfolio 4,
the same characteristics as the CHAA winner.
which eliminated the highest and lowest performers as outliers.
Rebalancing VALIDATION
Given that our investment year was July 1 to June 30, we Our methodology was tested by a well-known financial insti-
assumed that each rebalance of the portfolio was at the close of tution’s wealth management division using well-recognized financial
business on June 30. tools (Thomson-Reuters and Bloomberg), historical pricing, and ge-
ometrically linked price returns. Although deemed accurate, these
tools have not been audited.
RESULTS
TABLE 3. CHAA Award Winners Excluded from
the Portfolio Portfolio 1: Five Securities to Start Portfolio
A stock portfolio normally contains more than one or two
Year Company Reason for Exclusion equities. Therefore, for portfolio 1, we did not start the hypothetical
investment portfolio until there were a minimum of five publicly
1997 Hughes Electronics Wholly owned subsidiary traded CHAA winning companies. This did not occur until 1999.
of GM later split and The first portfolio initially consisted of the first five publicly
sold traded award-winning company securities and began on July 1, 1999.
1998 First Chicago Acquired by Bank One Therefore, the annualized returns for the results of the study begin
1999 Baltimore Gas & Regulatory changes on July 1 and end June 30 of the next year. Subsequent equities were
Electric resulted in becoming a added as of July 1 after the year in which they were recognized as
CEG subsidiary award winners and were publicly traded. Each holding was equally
1999 City of Indianapolis Municipality with no rebalanced at the beginning of the period on the basis of the number
public equity of securities and the yearend market value. The results of the period
1999 AlliedSignal Merged with Honeywell from July 1, 1999, through June 30, 2012, are as follows:
2000 Sherman Health Privately held hospital
• The initial $10,000 investment grew to $17,871.52, a cumulative
2001 National Security Government agency with
Agency no public equity return of 78.72% for the research portfolio. During the same pe-
riod, the S&P 500 had a cumulative return of −0.77% and the
2002 Vanderbilt University Private university
final investment value of $9923.14 (Fig. 1).
2004 Cianbro Corporation 100% employee-owned
company
2005 QuadGraphics Private company at the
time with no public
equity
2009 Southeastern Part of the City of
Transportation Philadelphia
Authority municipality
2010 Baptist Health System Privately held
organization
2012 Smithsonian Government agency/
Institutions award too recent
2012 Johnson & Johnson Award too recent
2013 American Express Award too recent
CEG, Constellation Energy Group; CHAA, Corporate Health Achievement
Award.
FIGURE 1. Portfolio starting at five winners versus S&P 500.
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JOEM  Volume 55, Number 9, September 2013 Workforce Health and Health of Bottom Line
• The annualized return for the portfolio was 4.57% versus the S&P • The initial $10,000 investment grew to $24,058.29, a cumulative
500 annualized return of −0.06%. return of 140.58% for the research portfolio. During the same
• The portfolio outperformed the S&P 500 in 9 of the 13 annual period, the S&P 500 had a cumulative return of 53.89% and the
periods included in the analysis. final investment value of $15,389.20 (Fig. 3).
• The arithmetic average annual excess return of the portfolio over • The annualized return for the portfolio was 6.03% versus the S&P
the S&P 500 was 4.67%. 500 annualized return of 2.92%.
• The portfolio outperformed the S&P 500 in 10 of the 15 annual
periods included in the analysis.
Portfolio 2: Weighted Portfolio • The arithmetic average annual excess return of the portfolio over
The ACOEM has a documented scoring process when deter- the S&P 500 was 3.03%.
mining which company, if any, will receive the CHAA. Some award
winners scored higher than others. For portfolio 2, we decided to test
how the hypothetical investment portfolio would do if we were to Portfolio 4: Excluding Outliers
weight the holdings on the basis of their companies score in the year When analyzing the stock performance of the CHAA winners,
when they won. we were concerned about outlier influence. In particular, we did not
The second portfolio also initially consisted of the first five want one holding to deter or overstate performance. To help alleviate
publicly traded award winning company securities and began on the potential skew of one holding, we deleted the best and worst
July 1, 1999. Therefore, the annualized returns for the results of the performers from portfolio 1, which started the investment once there
study begin on July 1 and end June 30 of the next year. Subsequent were five holdings. The two securities excluded were GE and UNP
winners were added as of July 1 after the year in which they were (see Appendix for full results).
award winners. The portfolio was rebalanced in each July 1 by cal- This portfolio is built upon portfolio 1. The first portfolio
culating the arithmetic weighted average of the CHAA score when consisted of five publicly traded securities and began on July 1, 1999.
the company was an award winner. The results of the period from Therefore, the annualized returns for the results of the study begin
July 1, 1999, through June 30, 2012, are as follows: on July 1 and end June 30 of the next year. Subsequent winners
were added as of July 1 after the year in which they were award
• The initial $10,000 investment grew to $17,569.21, a cumulative winners. Because GE and Union Pacific were large outliers, they
return of 75.69% for the research portfolio. During the same pe- are excluded from this portfolio. Excluding them, each holding was
riod, the S&P 500 had a cumulative return of −0.77% and the equally rebalanced at the beginning of the period on the basis of the
final investment value of $9923.14 (Fig. 2). number of securities and the year-end market value. The results of
• The annualized return for the portfolio was 4.43% versus the S&P the period from July 1, 1999, through June 30, 2012, are as follows:
500 annualized return of −0.06%.
• The portfolio outperformed the S&P 500 in 10 of the 13 annual • The initial $10,000 investment grew to $19,404.12, a cumulative
periods included in the analysis. return of 94.04% for the research portfolio. During the same pe-
• The arithmetic average annual excess return of the portfolio over riod, the S&P 500 had a cumulative return of −0.77% and the
the S&P 500 was 4.47%. final investment value of $9923.14 (Fig. 4).
• The annualized return for the portfolio was 5.23% versus the S&P
500 annualized return of −0.06%.
Portfolio 3: Portfolio Starting With the First Winner
Portfolio 3 is the most basic portfolio. It takes the award
winners for each year and tracks the performance. Because there is
no minimum number of holdings, it starts in 1997 when the first
award was announced.
The third portfolio initially consisted of one publicly traded
security (Lockheed Martin) and began on July 1, 1997. Therefore,
the annualized returns for the results of the study begin on July 1
and end June 30 of the next year. Subsequent winners were added
as of July 1 after the year in which they were award winners. Each
holding was equally rebalanced at the beginning of the period on the
basis of the number of securities and the year-end market value. The
results of the period from July 1, 1999, through June 30, 2012, are
as follows: FIGURE 3. Portfolio starting with the first winner versus
S&P 500.
FIGURE 2. Portfolio weighted by winners’ score versus
S&P 500. FIGURE 4. Portfolio excluding outliers versus S&P 500.
©C 2013 American College of Occupational and Environmental Medicine 997
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Fabius et al JOEM  Volume 55, Number 9, September 2013
• The portfolio outperformed the S&P 500 in 10 of the 13 annual Employers can realize similar results by implementing the best
periods included in the analysis. efforts in prevention, early detection, and evidence-based treatment
• The arithmetic average annual excess return of the portfolio over for their workforce and covered lives. A 2010 critical meta-analysis
the S&P 500 was 5.27%. of 22 research studies in the scientific literature has found that
medical and pharmacy costs fall by about $3.27 and absenteeism
Regardless of our approach, the market performance of the
costs fall by about $2.73 for every $1 invested in wellness.16 This
ACOEM’s CHAA winners bested the stock market S&P 500 average.
results in a return on investment of 6 to 1.
The portfolio that was structured by waiting for five publicly traded
Long recognizing the merits of a healthy workforce, the
award recipients, and which began tracking in 1999, outperformed
ACOEM believes that the marketplace has underestimated the full
the S&P 500 with a total return of 78.72% during a period when there
impact of poor health in the workplace and on the economy. Employ-
was no growth in the S&P 500 ($17,871.52 vs $9923.14). The fund
ers would benefit by having a better understanding of the diseases and
that started in 1997 with an investment into Lockheed Martin also
conditions that impact their employees and should implement pro-
outperformed the market ($24,058.29 vs $15,389.20). Lastly, the
grams to mitigate their consequences. There is a connection between
portfolio that eliminated the outliers also outperformed the S&P 500
the health and safety and the productivity of workforces. Health care
($19,404.12 vs $9923.14). Nevertheless, weighting the investments
costs should be viewed as an investment in their employees rather
on the basis of the award-winning companies’ actual score did not
than an expense. Health improvement strategies have proven to pro-
enhance the portfolio.
duce excellent returns. Comprehensive programs focus on primary,
DISCUSSION secondary, and tertiary prevention.
17
The workplace offers unique advantages for the implemen-
Our results strongly support the view that focusing on the
tation of health improvement initiatives. Roughly one quarter of
health and safety of a workforce is good business. Engaging in a
our population is employed. When including retirees and family
comprehensive effort to promote wellness, reduce the health risks
members, this reach includes the majority of Americans. The work-
of a workforce, and mitigate the complications of chronic illness
place environment and the corporate culture can reinforce healthy
within these populations can produce remarkable impacts on health
behaviors. Powerful communication and educational assets can be
care costs, productivity, and performance.
leveraged. Incentives, penalties, and mandates can be built into com-
This portfolio of publicly traded award-winning companies
pensation and health benefits. Tenured employee relationships can
clearly outperformed the market. Although correlation is not the
promote sustainability. Finally, employers possess the capability to
same as causation, results consistently and significantly suggest that
measure the impact of health improvements on performance, pro-
companies focusing on the health and safety of their workforce are
ductivity, and business results.
yielding greater value for their investors as well. More research
The logic behind investing in workplace health is straightfor-
needs to be done to better understand the value of building these
ward. A large proportion of illness is preventable by reducing health
“cultures of health” in the workplace. Perhaps such efforts as this
risks.18–22 Health risks can be improved through workplace health
simply identify “smart” companies that outperform, but the evidence
programs.23–27 Reductions of health risks can lead to reductions in
seems to be building that healthier workforces provide a competitive
health costs.13 Worksite health programs produce a positive return
advantage in ways that benefit their investors.
13 on investment and value on investment.
16,23,28–30
Edington has demonstrated that companies who do not pay
Moreover, research supports a corporate-wide impact. Tow-
attention to elevating the health status of their workforce will see their
ers Watson has demonstrated that employers with highly effective
employees develop increasing health risks and health care costs. His
health and productivity programs generate 20% more revenue per
results show that nonmanaged workforces acquire increased health
employee, realize a 16.1% higher market value, and deliver 57%
risks and conditions, resulting in increased costs over time. In fact,
higher shareholder return.31
Edington’s research has found that within nonmanaged populations,
The results of this study support the evidence in the literature
the low-risk cohort diminishes by approximately 5% whereas the
discussed earlier. CHAA-winning companies have made consider-
moderate- and high-risk segments increase by approximately 8%
14 able investment into the health, safety, and productivity of their work-and 11%, respectively, over a 3-year period. Edington has also
forces. These benchmark organizations should benefit in remarkable
demonstrated that it is possible to markedly reduce this trend through
ways from this pursuit. By keeping employees safe and well, they
the execution of worksite risk-reduction programs.
are able to be more productive and perform at the height of their
Preventive services can stem the progression of health risks,
potential. This, in turn, should translate into providing a competitive
chronic conditions, and medical costs. RAND Corporation estimates
advantage in the marketplace.
that by 2020, one fifth of all health care expenditures will be devoted
to treating consequences of obesity. Lowering obesity rates to 1998 LIMITATIONS
levels could lead to annual productivity gains of $254 billion as well
This article features the performance of only a small col-
as the avoidance of $60 billion in annual treatment expenditures.
lection of companies on the stock market for a limited number of
Seven chronic conditions alone (cancer, heart disease, hy-
years. To strengthen or challenge the evidence presented here, the
pertension, mental disorders, diabetes, pulmonary conditions, and
authors recommend that this study be repeated every 5 to 10 years. It
stroke) currently cost the US economy more than $1 trillion per year.
should also be reiterated that this study was limited to those award-
Assuming that the current trend continues to 2023, this would result
winning companies that were publicly traded. Nearly one quarter of
in a 42% increase in cases of the seven diseases for a total of 230.7
the CHAA winners were privately held institutions and thus were
million cases with $4.2 trillion in treatment costs and lost economic
not included in this portfolio. We also elected to remove award-
output.
winning companies from the portfolio after they were purchased by
Plausible estimates of potential gains in 2023 associated with
others. We selected this approach because we could not ensure that
reasonable improvements in prevention, detection, and treatment of
the investment in the health and productivity of the workforce would
just those seven conditions include the following:
be maintained by the acquiring organization. In two cases (Hughes
• Preventing 40 million fewer cases of illness Electronics and First Chicago), this approach was detrimental to the
• Cutting annual treatment costs in the United States by $217 billion portfolios’ performance because the purchase of the CHAA-winning
• Reducing annual health-related productivity losses by $905 billion company occurred shortly after the award and they were not included
• Yielding more than $1 trillion in labor supply and efficiency15 in the portfolio. If the methodology had included them, the portfolios
998 ©C 2013 American College of Occupational and Environmental Medicine
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JOEM  Volume 55, Number 9, September 2013 Workforce Health and Health of Bottom Line
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APPENDIX
6. Peterson KW, Yarborough CM, Ferguson EB, Matthew SJ. The American
College of Occupational and Environmental Medicine’s Corporate Health Hughes Electronics, the first recipient of the CHAA, received
Achievement Award. J Occup Environ Med. 1996;38:969–972. the award in spring 1997. At the time, Hughes was a subsidiary of
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10. ACOEM Committee Report. Scope of occupational and environmental health Corp, respectively. Given that Hughes Electronics won the award, it
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11. NCQA. Health Evaluation Data Information Set (HEDIS) 3.0. Washington, of all the subsidiaries that were sold off.
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12. Brown MG. Baldrige Award Winning Quality: How to Interpret the Baldrige of that year, the bank was acquired by Bank One in a $30 billion
Criteria for Performance Excellence. 17th ed. New York, NY: Productivity merger that created the fifth largest bank in the country. We did not
Press; 2008. use the newly merged bank’s stock history (Bank One) because we
13. Edington DW. Emerging research: a view from one research center. Am J did not know whether the corporate culture of health that led to the
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2009. In 1999, Baltimore Gas and Electric was one of the CHAA
15. DeVol R, Bedroussian A. An Unhealthy America: The Economic Burden of winners. At the time, there were many changes in the regulatory
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Available at: http://www.milkeninstitute.org/pdf/chronic disease report.pdf .
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Available at: http://www.cdc.gov/nchs/healthy people.htm. Accessed May 28, Also in 1999, the City of Indianapolis was an award winner. As
2013. a municipality, the City does not have a publicly owned stock to track.
©C 2013 American College of Occupational and Environmental Medicine 999
Copyright © 2013 Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited.
Fabius et al JOEM  Volume 55, Number 9, September 2013
In 2000, Sherman Health was one of three award winners. In 2005, QuadGraphics was one of two award winners. At the
Sherman Health is a privately held hospital located in Elgin, Illinois. time of the award, it was a privately held company. (In 2010, the
In 2001, the National Security Agency was the sole winner of company purchased publicly traded Worldcolor and became a $4.8
the CHAA. As a government agency, the National Security Agency billion publicly traded company under their name with the symbol
does not have publicly owned security. QUAD.)
In 2002, Vanderbilt University was one of several award win- In 2009, the Southeastern Transportation Authority was the
ners. The university is not publicly traded. recipient of the CHAA award. The Southeastern Transportation Au-
In 2004, Cianbro Corporation was the sole winner of thority is not a publicly traded company.
the CHAA award. The 64-year-old company is 100% employee In 2010, the sole recipient of the CHAA award was Baptist
owned. Health System. It is also not publicly traded.
1000 ©C 2013 American College of Occupational and Environmental Medicine
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