Calculating the Value of an Employee Assistance Program (EAP) from a CFO Perspective
If you are a human resources professional, or you are a front line manager, your value equation probably includes how the EAP helps you get your work done and makes your life less stressful. You assign a tangible value to having a dependable professional resource helping you manage the unpredictable ebb and flow of employee personal problems that impact the workplace.
However, if you are sitting in the CFO’s seat, more insulated from the disruptions and stresses associated with the daily management of these employee difficulties, you may seek a more quantitative measure of how the EAP provides enough business value to justify the expense.
So for all the CFOs (and those who face the task of convincing their CFOs that your organization will benefit from partnering with a high utilization EAP), please consider the following research studies:
1) The Hartford Group examined all the companies in their book of business for short-term disability (STD) claims. The difference between companies with high utilization EAPs and companies with no EAP were dramatic. Disability claims for psychiatric problems were 17 days shorter at the high use EAP companies than at the non-EAP companies. Furthermore, these differences held up for musculoskeletal and cancer claims as well. Only 2% of employees using the EAP had a STD claim convert to long-term disability (LTD), whereas 9% of those who did not use an EAP went on to file for LTD.
2) The McDonnell Douglas Corporation conducted a landmark study of employees with alcohol/substance abuse and psychiatric problems who received EAP directed behavioral health case management services compared to employees with similar problems who did not receive EAP support. The data demonstrated significant cost savings from several areas over a multi-year period. Other examples of this type of large scale cost-benefit study (with similar positive results) have been conducted at Abbot Laboratories, Chevron and Southern California Edison.
3) The Federal Occupational Health program studied EAP outcomes based on almost 60,000 clients over a period of 3 years. The results demonstrated that the number of employees who reported having “quite a bit” of difficulty performing their work was reduced from 15% to 5% of all EAP cases. Also, unscheduled absences were significantly reduced following the use of EAP services.
4) There are an abundance of high quality studies that demonstrate that more days of work loss and work impairment are caused by psychological issues and psychiatric illness than by other chronic health conditions including arthritis, asthma, back pain, diabetes, hypertension and heart disease.
5) 53% of employers surveyed by Watson Wyatt reported that return to work is more difficult for employees following an absence for psychiatric disability than after an absence for a general medical disability. The significance of this finding is amplified by the fact that short-term disability claims based on psychiatric issues are growing by 10% annually and account for 30% or more of the disability costs for the typical employer. Fortunately, the research also indicates that disability costs can be substantially reduced by providing the kind of early intervention and case management services that EAPs deliver.
6) Several studies document the fact that employees with substance abuse disorders have double the health care costs of non-substance abusing employees. These costs are driven by a general lack of timely clinical recognition of these disorders: exactly the problem EAPs were designed to solve by linking the supervisor’s recognition of work performance problems with the EAP’s delivery of assessment and support services.
What does all this research add up to?
The studies demonstrate the overall return on investment (based on reduced absences, shortened disability, lower health care costs, and reduced work impairment) is between $3 and $10 per $1 invested in EAP services.
I have included just a small sampling of the research data supporting the EAP value proposition for businesses (To receive detailed references for any of the research cited please email me at firstname.lastname@example.org. To review additional studies take a look at the summary of 100 review papers on the workplace value of mental health, addiction and EAP services compiled by Dr. Mark Attridge.)
EAPs are good for employees’ health and well-being and helpful to human resource professionals and others responsible for managing the safety and productivity challenges personal problems can bring to the workplace.
And, as the research demonstrates, these beneficial outcomes deliver a quantifiable return on investment.