Proof that Health is Good for Market Performance

You may have already seen this, considering it was published in the September edition of the Journal of Occupational and Environmental Medicine (subscription site). But just in case, I thought this study by Stethoscope on money backgroundHealthNEXT was still worth sharing. (Here’s HealthNEXT’s release about it.)

The Philadelphia-based developer of workforce-health strategies says its study is the “first of its kind to objectively measure the relationship between workforce health and safety, and the marketplace performance of large employers,” according to the release. Whether truly first or not, it’s findings offer powerful proof that healthy companies — i.e., companies with healthy employees — perform better on the stock market than unhealthy ones.

The data show that companies recognized for their outstanding approaches to health and safety by the American College of Occupational Medicine’s Corporate Health Achievement Award outperformed the S&P 500 for the 15-year period from 1997 to 2012 and the 13-year period from 1999 to 2012. The hypothesis that the two entities were linked 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 percent to 5.27 percent, depending upon portfolio construction,” the release says.

The study adds confirmation to the growing belief 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 healthcare expenses.

Or put another way: “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,” says Raymond Fabius, 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 [the] 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.”

ACOEM President Ron R. Loeppke, one of the study’s authors, further warns that “we simply cannot afford to ignore these statistics.”

“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,” Loeppke says. “Our study suggests that there are clear financial benefits for employers and their investors” who take active steps toward reducing health risks and mitigating complications from chronic illness.