Wall Street investors take note: stock in companies recognized for outstanding employee health and wellness programs outperforms the Standard & Poor's (S&P) 500 Index, according to three studies in the January Journal of Occupational and Environmental Medicine, official publication of the American College of Occupational and Environmental Medicine (ACOEM).
The studies provide evidence that effective health promotion programs favorably affect a company's stock valuation—above and beyond the savings produced by lower health care costs and higher productivity. Three research groups, following similar methods, performed simulations comparing the return on a $10,000 investment in companies winning awards for excellent workplace health programs versus the S&P 500.
Dr. Ron Goetzel, President and CEO of The Health Project and colleagues, evaluated a strategy of investing in winners of the C. Everett Koop Award, which promotes employer achievements in improving population health cost-effectively. Over ten years, investing in Koop Award winners yielded about $22,000 more in returns, compared to the S&P 500.
Dr. Jessica Grossmeier of the Health Enhancement Research Organization and colleagues assessed a strategy of investing in companies that scored high on the "HERO" Scorecard—reflecting implementation of evidence-based workplace health promotion programs. Over six years, stocks in the HERO portfolio appreciated by 235 percent versus 159 percent for the S&P 500.
Doris Konicki and colleagues evaluated a portfolio of stock in companies scoring high on health and/or safety on the ACOEM's Corporate Health Achievement Award. Over 14 years, companies with high scores for health achieved returns of up to 333 percent—whether or not they were at the highest level of safety scores.
The results don't necessarily mean that that investing in employee health causes a company's stock to rise, according to an editorial by Dr. Michael Patterson O'Donnell of University of Michigan. Rather, Dr. O'Donnell believes that employers who develop such excellent wellness programs "also understand how to manage their core business in such a way that revenues and profits will grow...which in turn causes the stock value to outperform the market."
Source: Journal of Occupational and Environmental Medicine