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This is Part 2 of the $895 IBISWorld Wellness Industry Report review. Here is Part 1.
What do you get for your $895? To begin with, some of the most creative facts we’ve ever seen, delivered in some of the most creative sentence structures we’ve ever seen, Yet, tempting as it may be, we’re going to completely ignore head-scratchers like:
Wellness firms may offer employers stress management courses and sessions that offer music therapy, aromatherapy, Tai Chi, and post disaster stress reduction through coaching.
Government-funded initiatives that promote wellness to cut costs related to chronic ailments (e.g., obesity and diabetes) has further exacerbated many businesses movement toward purchasing corporate wellness services.
And my favorite:
The industry provides wellness programs to businesses across the United States, including small, medium and large businesses in the private sector and businesses in the public sector.
“Businesses in the public sector”? I knew that many of our legislators are for sale but I didn’t realize they had incorporated.
I’ve read this next one several times and still can’t figure out what they are saying, other than they don’t realize (1) that health screenings and biometric tests are basically the same thing; (2) that it is impossible to take someone’s blood pressure without including both the systolic and diastolic readings; (3) and that prior to publication they should have had this material reviewed by a smart person:
Ok, we’re done completely ignoring these head-scratchers now.
Instead we will focus on the fact that most of what they report is simply wrong, like: “There is increasing acceptance of the value of programs offered by this industry.” For example, they claim that the ROI for corporate wellness, according to RAND, is $3.80 per dollar invested. I would have to exhaust America’s entire strategic reserve of electrons in order to point out everything wrong with that figure. Besides its general ludicrousness, there is the slight problem that RAND itself says exactly the opposite:
How could they be so clueless, even by the standards of wellness? Even though this is a wellness industry report, and most wellness companies don’t touch disease management, they mistook the RAND ROI for disease management as the ROI for wellness. Despite RAND being cited more than 100 times, nowhere did they bother to mention that RAND says wellness loses money. Hello? What did you expect for a measly $895? (In all fairness, if you look hard enough, at one point they say RAND says that “lifestyle management” saves a “mere $6.0 [sic]” per employee per month.)
So basically the fact that wellness loses money–which at this point even the Health Enhancement Research Organization itself acknowledges–is completely missing.
There are also a huge number of statements that make no sense when placed side by side. So “wages comprise 3-4% of industry revenue,” making wellness possibly the least labor-intensive industry in the country. Yet, several pages later, IBISWorld decides that “the industry is labor-intensive.”
The Largest Wellness Companies?
You’d think for $895 they could at least identify the largest independent wellness companies. No such luck. They anoint ComPsych as the largest. I personally had never even heard of them, and what employee is going to give personal health information to a company named ComPsych? IBISWorld got one thing right — ComPsych does at least offer wellness — if you squint hard enough:
The other two they name are ValueOptions, now Beacon Health Options, and Ceridian. Not sure where they came up with the idea that those are the largest. Neither is even in the wellness screening business. They might as well have named Dunder Mifflin or Vandelay Industries.
Answer: Everyone who touches wellness turns to stupid.
Speaking of which, we are going to do a two-part review of the IBISWorld report Corporate Wellness Services in the US. The difference between the worthless information in this report and all the other worthless information on wellness economics is that this worthless information will set you back maybe $895.
The first statistic you learn — and you don’t even have to buy the report to “learn” this statistic because it’s right on their home page — is IBISWorld says this $7-billion industry employees a whopping 3,120 people.
To give you an idea of how wildly low that jobs figure is, I myself have more than 3,120 Linkedin friends in the wellness industry. And that’s despite the fact that no one in wellness likes me.
Just Healthways alone, a company that is deemed too trivial to even mention in this report (they’re in good company — I am ignored as well), employs 2700 people. I guess the consulting firm’s Young Turks (including Sarah Turk) lack access to a calculator. Otherwise they might have wondered how wellness could be one of the most profitable industries in the world: sales per employee are roughly $2.3-million, more than twice that of Goldman Sachs.
And that misinformation is featured right on their website. If anyone sues to get their purchase price back, IBISWorld’s best defense could be: “You knew it was wrong before you bought it.”
We know employees aren’t getting paid seven figures to poke us with needles. Likewise, there is no significant capital involved in wellness, so with $2.3-million/employee in sales, these companies must be insanely profitable, right? Maybe that home page display is a tease to get potential industry entrants to buy the entire report in order to learn how they can get a piece of this action.
After you buy the report, you learn the whole thing was a setup — profits are precisely $434.6-million, or only 6% of sales. (Precise or not, this figure is made up, since no wellness company is going to disclose its profits.) So where is all the employer’s money going, if not to wages, profit or depreciation (0.6% of revenues, they say)? Apparently, IBISWorld has a plug category for “purchases.” I guess their computer program uses this category for whatever is left over after fabricating the other figures:
What is in the category “purchases”? Mostly software and lab equipment, they say. I guess with only 0.6% of revenues going to depreciation, somehow these massive capital expenditures don’t get depreciated, perhaps because what most HRA/screening vendors do is worthless to begin with.
They are also confusing capital expenditures, which are never listed in a bar chart of “expenses” because they aren’t an expense, with purchased services, which are. It’s understandable that these people don’t understand wellness economics — most wellness vendors and consultants don’t understand wellness economics. However, for $895, a customer purchasing a financial report should be able to assume the report-writer understands financial reporting. (Several pages later, by the way, they put capital expenditures themselves at 0.6% of revenues.)
Here is the list of what they classify as “purchases”:
Notice anything else about this paragraph, besides making no accounting sense? It makes no wellness sense. They seem to have somehow confused biometric screening with health risk assessments (HRAs): “To provide health risk assessments, corporate wellness service companies may need equipment that helps extract biometric data.”
Leaving no stone unturned, the biometric data include not just “blood pressure” but also “systolic and diastolic blood pressure.” IBIS, hate to tell you this but even the dumbest wellness vendor knows you need both those values to create a reading. Otherwise it would be like the George Carlin sportscaster routine: “And here’s a partial score from a game in progress: New York Knicks 46.”
Perhaps IBISWorld assumes that the $895 price tag itself convinces buyers that they must know what they’re talking about. And yet, as we’ll see in the next installment, in addition to confusing screening and capital expenditures with operating expenses, they also don’t understand the difference between wellness and disease management.