The Wellness Budget
By Joseph A. Leutzinger, Ph.D.
Director, Health Promotion
Union Pacific Railroad
For years there was
talk about doing health promotion programs at no cost to the company.
Ask yourself if there are other departments in the company that operate
on no budget. The answer is no. At the very least, budgets in some departments
include staff, travel, and some discretionary money. Like a small business,
it is completely acceptable to grow the business or department over time.
However, even small businesses operate on loaned money versus no money.
Therefore, as practitioners
of viable programs, we need to focus attention on three areas of budgeting.
These include: 1) budget principles; 2) budget justification; and 3) budget
sustainability. In this article, these three aspects of the budgeting
process will be explored in detail.
Preparing and controlling
a budget is critical to the success of a program. Depending on the size
of the program, a worksite health promotion practitioner may have full
budget responsibility or may need to work with someone within the company
who has budgeting expertise and responsibility. Regardless of the situation,
the health promotion practitioner should be familiar with the company's
budgeting process as well as standard budgeting principles.
practitioners are likely to be faced with one of two distinct situations
when planning a budget. While they have similarities, there are philosophical
differences between them.
The first one, top-down,
may be the least desirable, but likely the most common budget planning
process. The main premise behind the top-down approach is that the health
promotion practitioner is given a finite dollar amount and then told to
run their operation within that defined limit. As you can quickly determine,
this budgeting process creates questions, such as: Which programs are
most important? Should I keep the long tenured programs that keep going
up in price? How do we fund new initiatives? Do I deliver the program,
hire staff, or worse yet, keep the current staff?
using this top-down approach are faced with growing expenses along with
lower budgets over the years.
What are the strengths
of your current budget and budgeting process? How would you like it to
change over the next several years? How can Leutzinger's experience help
you accomplish those changes?
The other common
budget planning process is the bottom-up approach, or sometimes referred
to as the zero-based budgeting. The main principle behind this process
is that the health promotion practitioner is expected to submit a budget
itemizing the program offerings. On the surface, practitioners may prefer
this approach, however, it also raises some difficult questions, such
as: How much is too much? There's the fear of leaving out an initiative
because you are concerned it will not be approved, but the outcome is
unknown if never presented. On the other hand, proposing too large a budget
will possibly bring more scrutiny on all components of the budget. Choice
of initiatives is critical. The budget justification section will provide
some advice on how to make these decisions.
using the bottom-up budgeting process must also be prepared to answer
the question why these initiatives are proposed-is it popularity, senior
management preference, risk prevalence, projected cost return, or some
other reason. Careful consideration needs to be placed on the reasons
behind the program proposals.
Both of these budgeting
formats can be classified according to two other categorical breakdowns.
Both the top-down and bottom-up approaches can be further divided into
functional and intervention areas. O'Donnell and Ainsworth (1994) provide
more detail on these breakdowns. In short, functional area expenses include
grouped expenses for facilities, personnel, and programming. An intervention-area
budget separates out costs related to topical areas such as risk factor
or chronic health condition.
The final categorical breakdown to be mentioned in this section is the
difference between fixed and variable expenses. Fixed expenses are known,
consistent costs incurred by your department. Examples of fixed expenses
include fixed maintenance costs or leasing payments.
are those items in your budget that do not stay the same every month.
For example, providing materials on-demand will generate a variable cost
for replenishment as well as other program support supplies or mailing
costs. Determine your organization's budgeting requirements, then seek
out internal and external assistance prior to preparation of this critical
annual project of budget preparation. Practitioners with budgeting responsibilities
are encouraged to review other sources for additional knowledge or to
begin gaining a general understanding of budget principles. More information
on these budget types and other budget principles can be found in health
promotion or business resource books.
Knowing and following
stated budgeted principles is important. However, to health promotion
practitioners the reality is that your budget responsibilities are only
one-third completed. After the first year, budget justification becomes
an ongoing commitment requiring skills and effort.
Every program is
bound to face the question or situation of budget justification. Questions
like: Why should your budget be renewed? Can you justify last year's budget?
Why should your department be given more money? These are all questions
that, when asked, practitioners should be prepared to answer. There are
three strategies practitioners should be familiar with that may help with
is related to budget justification. Ensuring your program can provide
some short-term and long-term results is the first strategy. Planning
programs that produce results at different intervals will allow practitioners
to always have some data to present to management. For example, medical
self-care, pre-natal programs, and flu vaccines are just some examples
known to produce relatively short-term results, whereas cost outcome savings
from risk factor reduction and exercise programs are more likely to produce
long-term outcomes. Rotating these programs or the level of emphasis and
resources will avoid the situation where no data is presented for three
plus years. Providing interval results requires proper planning, but can
be an effective budget justification strategy.
The second strategy
consists of securing an agreement from management concerning when cost
justification data will be presented. If using this strategy, it will
need to be presented during the program planning proposal phase. This
decision needs to be well documented and periodic reminders may be necessary.
Using the third strategy, along with this second strategy, may be useful.
In fact, combining strategies may be needed in many organizations.
The third strategy
for budget justification involves the sharing of data on a frequent basis,
perhaps monthly or quarterly. The expectation from this approach needs
to be clear from the onset. Compelling cost justification data will not
be part of every monthly or quarterly report, however meaningful process
evaluation data, along with forecasted results and projections, could
be components of these reports. Consideration should also be given as
to when the high quality cost savings data will be presented. In other
words, the practitioner would either want to highlight these significant
findings or announce them ahead of time so ample attention is given to
them. Practitioners may also want to consider the timing of presenting
the high quality cost savings data. For example, highlighting this data
before the annual budget approval process may be a smart strategic decision.
The final area to
discuss concerning budgeting aligns with budget justification, but takes
an offensive position-we will call it budget sustainability. The term
implies keeping your budget. While this is important, the focus of this
section will be on strategies you can use for possibly increasing your
budget. Let's look at three strategies that may help a program practitioner
expand their budget.
have "hot" issues come up. In talking to seasoned veterans in
some industries, they will tell you that certain issues cycle through
at periodic intervals. A typical scenario may go like this: A "hot"
issue surfaces, resources are dedicated to it, the issue is reduced in
magnitude and/or severity, resources are dedicated elsewhere, the problem
re-surfaces due to lack of attention and resources again are rallied.
Most, if not all,
of these "hot" issues have health implication associated with
them. Using your public health and program planning knowledge, health
promotion practitioners may be able to make a case for taking a "hot"
cyclical issue under their domain. Working on having resources consistently
dedicated on an annual basis, once the problem has been reduced, requires
that a sufficient case and historical examples be used. Like any strategy,
it may not always work, but at times and with certain issues it may be
A second strategy
for budget sustainability or increasing your budget is to target inefficient
programs that are decentralized or have shared or unclear reporting authorities.
For example, flu shot vaccines in a multi-site company in which every
site manages their own vaccines, may be a program worth formally centralizing.
By using purchasing power and looking for other cost efficiencies, a health
promotion practitioner may be able to use the savings to provide other
The third strategy
for sustaining or increasing your budget may be viewed as the opposite
of the second strategy. Integrating the health promotion program with
another department or major company initiative, while possibly decreasing
your overall control, may increase resources dedicated to the program
and enhance the overall exposure or credibility of the program. For example,
becoming part of or more aligned with benefits, operations/manufacturing,
or safety, may accomplish this strategy of budget sustainability and possibly
It is critically
important for practitioners to be intimately familiar with their organization's
corporate culture, especially concerning budget planning. Knowing the
culture will help the practitioner select a strategy or a hybrid that
will prove successful within their company.
We encourage practitioners
to also be familiar with the various aspects of budgeting, realizing that
some of these aspects involve more than just balanced columns and program
intervention costs. While budget preparation is a crucial aspect of budgeting,
taking budget justification and sustainability into account will likely
help practitioners grow and evolve their current programs.
Joseph A. Leutzinger, Ph.D.
Dr. Joseph Leutzinger
is the director of health promotion at Union Pacific Railroad (UPRR).
As one of the nation's leading minds in worksite wellness, Dr. Leutzinger
has helped to build a world-class wellness program at UPRR. During his
tenure at union Pacific, Dr. Leutzinger has demonstrated his ability to
both improve employee health and reduce health care costs. For his efforts,
Dr. Leutzinger has received national recognition and the program at UPRR
has received the prestigious WELCOA Gold Well Workplace Award as well
as the C. Everett Koop Award.
An accomplished author
and lecturer, Dr Leutzinger travels widely throughout North America. Most
recently, he has focused his attention on such topics as alertness management,
targeting at-risk employees, and linking health promotion objectives to
Dr. Leutzinger holds
a Ph.D. from the University of Nebraska-Lincoln.