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BGM costs: financing, funding and ROI

May 17, 2024
Employee sits at desk and calculates BGM costs

The costs, financing, funding and return on investment in the occupational health management are important aspects that companies should consider if they want to invest in the health, satisfaction and well-being of their employees. 

The question of the costs and promotion of BGM measures and the assessment of ROI play a decisive role in planning, analysing, implementing and evaluating health-promoting measures in the workplace. 

In this article, we will take a closer look at how companies can finance OHM, what funding opportunities exist and how the ROI of investments can be evaluated.

Why it makes sense for companies to make voluntary and long-term investments in OHM

Although additional health programmes are a voluntary benefit for companies, there are numerous reasons why it is worth investing in the health of employees.

  1. Employee health and well-being: Healthy employees are generally more motivated, more productive and less likely to be absent due to illness. This can lead to an increase in job satisfaction and loyalty.
  2. Attractiveness as an employer: Companies that actively look after the health and well-being of their employees are perceived as attractive employers from the outside. This can help to attract qualified specialists and improve employer branding.
  3. Working atmosphere and working environment: WHF measures help to create a positive working atmosphere and a health-promoting working environment. This can improve teamwork and communication and reduce the risk of conflict and stress.
  4. Long-term cost savings: Although investments in OHF measures are usually initially associated with costs, they can pay off in the long term. By reducing sickness absence, increasing productivity and lowering the staff turnover rate, companies can save other costs in the long term.

Investing in health has a high economic benefit for the company and can increase employee satisfaction enormously!

What costs are incurred in OHM (internal costs and external costs)

In general, two types of costs can be incurred in the company for the OHM:

  1. The personnel costs of internal employeesresponsible for OHM, for example a health manager from the HR, marketing or legal department.
  2. The costs for external service providerswho support the planning and implementation of health-promoting measures, for example consultants, digital health platforms or external trainers.

The level of costs incurred in practice naturally depends heavily on which measures are implemented and realised in the company. However, the size of the available budget is not necessarily decisive for the success of the measures.

It is possible to develop a very successful OHM concept even if only internal measures are implemented for which no external costs are incurred.

As long as the internal measures are implemented cleverly and efficiently, the company can achieve great success without having invested a single cent in an external provider.

Which BGF measures are implemented, at best together with the preparation of the be planned as part of the company's systematic OHM strategy. The WHF measures must fit in with the overarching strategy of the OHM and be designed to achieve the company's objectives.

A running group, for example, is a free measure

Free company health management measures

In this section we give you Some examples of free measuresthat can be implemented internally in the company as inspiration.

  1. Health-promoting events: Organisation of various health-promoting events, such as workshops on topics like stress management, healthy eating or exercise in the workplace. These events can sensitise employees and give them practical tips for a healthier life.
  2. Movement in the workplace: Initiation of programmes to promote exercise in the workplace, such as joint lunchtime walks, exercise breaks or short fitness exercises that can be carried out during working hours.
  3. Mental health: Awareness-raising measures on mental health in the workplace, such as information events on dealing with stress, conflicts in the workplace or a positive working atmosphere.
  4. Health-related information materials: Provision of information materials on various health-related topics, such as brochures on healthy eating, tips on coping with stress or instructions on ergonomic working at the computer. These materials can be made available to employees free of charge.
  5. Health circles or working groups: Organisation of regular health circles or working groups in which employees come together to discuss health-related topics and develop ideas for improving health in the workplace. This promotes the exchange of experiences and supports collegial solidarity.
  6. Work-life balance: Initiatives to promote a good work-life balance, such as the introduction of flexible working time models, the option of working from home or remotely and the organisation of company outings or team events. 

These measures can help to improve the health and well-being of employees, without incurring external costs for BGM measures. The variety of options is huge, even if they only use internal resources.

What BGM budget do German companies have at their disposal?

The study "#whatsnext - Working healthily in the hybrid world of work"In 2022, the Institute for Occupational Health Consulting (IFBG) analysed, among other things, how much financial resources German companies allocate to OHM/BGF each year (excluding personnel costs). At the end of 2022, around 30% of the companies surveyed that less than 10,000 euros per year for BGM and BGF are available.

External costs for occupational health management

You have now learnt that the success of OHM does not necessarily correlate with the amount of costs invested.

However, the involvement of external providers can offer advantages over the exclusive use of internal resources:

1. experience in BGM: A qualified service provider brings valuable experience in the field of OHM. They know best practices, have insights into industry-specific challenges and can offer customised solutions for better prevention based on their expertise.

2. special offers for employee needs: Some BGM providers have special offers and products that are tailored precisely to the needs of employees. This can range from stress management courses to healthy canteen meals. External providers can often offer a more diverse range of services that are better tailored to the individual needs of employees.

3. avoidance of internal resource expenditure: Implementing a comprehensive OHM requires time, resources and extensive expertise. It can be a lot of work to handle everything internally and new jobs may even have to be created, which in turn incurs additional costs. By working with external providers, companies can reduce the internal workload while drawing on expertise and experience.

Workshop

Some specific cost points illustrate why it makes sense to involve external providers in OHM:

Strategy, process design and analysis: Developing an effective OHM strategy requires extensive analysis and expertise. External providers often have specialised experts who can carry out an objective analysis and help develop tailor-made solutions. This can help to identify potential risks at an early stage and implement cost-effective measures.

Measures that cannot usually be handled internally: Some OHM measures require specific expertise or infrastructure that is often not available internally. These include, for example, the construction of rest and relaxation rooms, the provision of ergonomic workplace equipment or advice from experts such as psychologists, physiotherapists or sports scientists. External providers can provide support here with customised solutions and a broad network of specialists to improve the effectiveness of occupational health management.

Options for financing a BGM and tax benefits

If you are prepared to budget for the introduction and implementation of a OHM, there are financial support measures available to you. 

  1. Self-financing: Companies can finance the OHM from their own financial resources. This means that they directly bear the costs of planning, implementing and realising the health-promoting measures. These investments can be very profitable in the long term if the strategy is well planned. In the case of self-financing, key figures, such as absenteeism, should be defined in advance as an indicator for measuring effectiveness.
  2. External funding: Companies can also utilise external funding to finance the OHM. These include state funding programmes, EU funding, regional funding programmes or grants from associations and organisations. These funding programmes can help to reduce the financial burden on the company and provide access to additional resources.
  3. Support from health insurance companies:  Although WHP is a voluntary service for companies, it is a mandatory service for statutory health insurance funds. For this reason, many companies rely on the support of health insurance companies when implementing the programme. They not only provide financial support, but also help with the concrete planning and implementation of measures. The basis for this is § 20 of the German Social Security Code. Section 20 of the German Social Code (SGB V) describes the possibilities for statutory health insurance funds to support health promotion and prevention measures. The Health insurance companies can provide money for measures, For example, through sports courses, nutritional counselling or stress management courses.
     
  4. Tax advantages: In Germany, there are tax incentives for companies that invest in health promotion. The Income Tax Act (EStG) and the Social Security Code (SGB) allow companies to claim the costs of health promotion measures against tax. Since 1 January 2008, tax exemption in accordance with Section 3 No. 34 of the Income Tax Act (EStG) has supported the promotion of employee health. Employers can Up to 600 euros per employee and per year tax-free for additional services to prevent and reduce the risk of illness and to improve health. Employers can utilise health-promoting measures to promote the health of their employees.

You can find detailed information on the tax benefits here: https://www.bundesgesundheitsministerium.de/themen/praevention/betriebliche-gesundheitsfoerderung/steuerliche-vorteile 

Costs and benefits in OHM - How do you know if you have a good return on investment?

The question of the return on investment in OHM is of crucial importance. The aim is to ensure that the Financial resources used effectively and bring measurable benefits for the company and its employees. Here are some key considerations for evaluating ROI in OHM:

  1. Set measurable goals: Before implementing measures, it is important to set clear and measurable goals. These can relate to reducing sick days, increasing employee satisfaction, improving productivity or other relevant key figures.
  2. Before and after comparisons: In order to determine the respective benefits, you should compare the situation before the implementation of measures with the situation afterwards. This can be done by analysing data such as sickness rates, employee satisfaction, productivity indicators and other relevant key figures.
  3. Cost-benefit analysis: You should carefully weigh up the costs of the measures against the benefits achieved. Both the direct costs of implementing the measures and the indirect costs such as loss of productivity or sickness absence should be taken into account.
  4. Consider long-term effects: The benefits can only be realised after a certain period of time, as most measures do not have a direct impact on the health of your employees. It is therefore essential that you consider the long-term effects of your investments, such as the lasting positive impact on employee health, the increase in employee loyalty or the strengthening of the company's image as an attractive employer.
  5. Feedback and evaluation: Continuous feedback and regular evaluation of the measures are crucial in order to monitor the benefits of the introduction over time and make adjustments if necessary. Employee feedback, key performance indicators and other feedback can help to assess and improve the success of the measures.

A good ROI in OHM is demonstrated by the fact that the resources invested are effectively utilised to increase the health, satisfaction and performance of the workforce and sustainably promote the company's success. By continuously evaluating and optimising your measures, you can ensure that you achieve sustainable and measurable benefits.

What is the ROI of BGM?

Studies on ROI show that the return on investment of OHM measures can be very high. According to the Institute for Healthy Work, the Average ROI of 2.7:1. This means that for every euro invested, companies get €2.7 back. For mental health measures, it is on average even at 5:1. This ratio actually makes a discussion about investment in healthcare measures superfluous. 

You can carry out your own calculation relatively simply on the basis of sickness-related absences. To do this, take a look at the sickness rate and calculate the continued remuneration for these periods. If you have made savings since the introduction of the OHM, you can compare these with the expenses for the OHM.

Example calculation of the ROI of BGM measures

If we assume that the company invests around €100,000 per year in its holistic occupational health management programme, this results in an ROI of 3:1, which means that the introduction of occupational health management is definitely worthwhile in order to achieve the Reduce sickness rates

What do various OHM measures really cost? 

Of course, this is difficult to generalise, but there are reference values that allow a comparison. However, you should pay very close attention to what the individual measures really achieve. 

Example of the BGM costs for various measures

Conclusion: costs, promotion and ROI in occupational health management

From self-financing to external funding opportunities, there are numerous ways for companies to invest in the health of their employees.

Through careful Cost-benefit analysis and consideration of long-term effects companies can ensure that their investments in workplace health promotion bring sustainable and measurable benefits for employees and the company itself. The ROI serves as an important indicatorto evaluate the success of the investments made and make adjustments if necessary.

Whether you rely primarily on internal resources for workplace health promotion or whether you involve external providers depends on your objectives, your budget and the demand from the workforce.

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