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Wellness Culture Linked to Stock Value

 |  By John Commins  
   September 16, 2013

Researchers say companies that have won an award for their employee health and safety cultures also outperform the Standard & Poor's 500, but they cannot yet say that causality has been identified.

What does a company's employee wellness program have to do with its stock price?

A study appearing in the Journal of Occupational and Environmental Medicine suggests there may be a link between employee population health and the stock performance of large corporations.

It found that companies that have won the Corporate Health Achievement Award for their employee health and safety cultures also outperform the Standard & Poor's 500 by 3.03% – 5.27%.

Study coauthor R. Dixon Thayer, CEO and co-founder of HealthNEXT consultants, concedes that the study cannot categorically link the higher stock performance with better wellness and safety programs. "What we cannot say from this research is that there is causality. What we can say is there is a high correlation between one and the other," he says.

"Maybe companies that invest highly in their workforce wellness also are just better run companies. And one of the reactions we have and we hope others will have to that is 'so what?' The point is that well-run companies that are achieving superior returns make these investments."

The study comes as a number of high-profile companies, including Walmart, pizza maker Papa John's, Trader Joe's, and Lands' End clothiers' have said they will re-examine business operations and would consider reducing employee hours or dropping healthcare coverage to contend with mandates in the Affordable Care Act.

Study lead author Raymond Fabius, MD, vice chairman of HealthNEXT, says an increasing amount of evidence is suggesting that for every dollar spent on healthcare costs, companies lose about $3 of productivity."So, what we are starting to see is that a lot of this intuitive understanding that we are seeing is now being much more significantly proven by metrics with a financial basis," he says.

Thayer says it's not earth-shattering news that companies that take better care of their employees generally have more productive employees who stay on the job longer, have fewer sick days, and are more productive.

"It is common sense, but it is amazing how many companies have had a hard time finding their way to the fact that a significant impact on their EBITDA [earnings before interest, taxes, depreciation and amortization] would then translate into earnings per share which translates into share price," Thayer says.

"While we're all in agreement that this is intuitive, the list of companies in the Fortune 500 who have made a significant commitment to building a culture of health which is well beyond providing health benefits is very small number. Our research at suggests that it may be as few as 25 out of the Fortune 500."

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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