Cost-Benefit Analysis of Substance Abuse Treatment for Businesses

Comparing Costs of Employee Retention vs. Replacement

Learn how focusing on retention can improve an employee’s quality of life and an employer’s bottom line.

cost-benefit-analysis
cost-benefit-analysis

Cost-Benefit Analysis of Substance Abuse Treatment for Businesses

Comparing Costs of Employee Retention vs. Replacement

Learn how focusing on retention can improve an employee’s quality of life and an employer’s bottom line.

The information presented on this page is a general overview and is offered here as a comprehensive resource. At Ampelis Recovery, our programs are customized and tailored to the individual’s needs. Specific details below that cover treatment protocols may not reflect the protocols used for our clients.

If you would like to learn more about Ampelis Recovery and our customized programs for professional men, please do not hesitate to reach out.

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The National Cost of Substance Abuse

Alcohol

The United States spends $191.6 billion annually to combat alcohol abuse and alcohol-related accidents. As recent as 2010, 77% of the cost is due to binge drinking.1 Binge drinking is prevalent in young adults and college towns.2 Binge drinking constitutes five or more drinks in a short amount of time.

Contrary to popular belief, binge drinking is not necessarily a sign of alcoholism but does qualify as alcohol abuse. The distinction being that an alcoholic suffers from a long-lasting addiction, whereas binge drinking can be an isolated event. Alcoholism comes with separate costs such as loss of gainful employment, prone to hospital visits, rehabilitation, or jail.

Some of the factors contributing to alcoholism or binge drinking include:

  • Emotional or physical trauma
  • Environment
  • The ease of obtaining alcohol

Tobacco

Tobacco products cost the U.S. $167.8 billion annually.1 Tobacco, much like alcohol, is easily accessible. However, binge drinking has a more immediate risk, and as such, a higher rate of death. Tobacco-related deaths tend to happen gradually and over time.

Tobacco users average a life expectancy approximately ten years shorter than non-smokers.3 This factor contributes to tobacco addiction’s cost due to shortened working years, less lifetime income, and hospital treatment. Studies have shown that former smokers who quit tobacco at age 35 or younger suffer none of the long-term effects of smoking.3

Drug Abuse

The United States spends $151.4 billion each year to cover the costs of drug abuse. This number is on the rise due to the opioid epidemic.4 Drug abuse, also known as substance use disorder, affects more than 23 million Americans. This includes prescription drugs and controlled substances. Drug addiction is known to cause numerous health issues, negatively impact cognitive function, and make it difficult to maintain steady work. Substance use disorder can develop at an early age. Those who experiment with drugs during adolescence are more likely to experience addiction later in life.5

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Costs Associated with Employee Substance Abuse

The actual cost of addiction is that of quality of life, time, and relationships. But, employers’ direct costs add up and create a substantial impact on the country’s economic stability. The costs split into two categories:

Cost of Missed Workdays

The exact cost of missed workdays varies by industry. Agriculture, on the low end, costs $187 per capita annually. On the high end, information and communication industries cost more than $27,000 per capita annually. The total number of missed days comprises addiction-related illness, injury, or lack of desire to show up.6

Cost of Replacing an Employee

Recruitment and training for new employees make up 21% of an employer’s annual expenses. The individual cost scales with the level of education and training required for more advanced positions. Substance use disorder can also lead to excessive mistakes at work. Those mistakes add additional costs to employers.6 Costs for replacing an employee varies based on industry. Agriculture fields cost an average of $1,535 to train, whereas replacing administration jobs can cost employers approximately $15,000 annually.

Savings When Employees Receive Treatment

An employee in treatment can save an employer a lot of money in the long run. Jobs in information and communication have the most potential for saving at $8,466 per year. Comparatively, agriculture industries save $1,155.

Not only do workers in rehabilitation impose a less economic burden on a company, but they also miss fewer workdays than co-workers who have never experienced addiction.6

How Much Worker Retention Saves a Business?

It is an inarguable fact that it costs a business more on average to train a new employee than retain an existing employee. The added expense is because of costly mistakes a new employee is probable to make. Other expenses include: 7

  • The initial training costs
  • The time required for a new employee to achieve efficient work strides
  • The overall risk of hiring a new employee

On average, replacing an employee costs $15,000.7 These costs add up to over $600 billion annually. Keep in mind that most employees quit willingly to pursue better opportunities for quality of life issues. Despite these staggering numbers, 75% of employees state they would’ve stayed in their jobs had certain needs been met. Additionally, the number of workers that quit is increasing.7

The statistics show employers the exact value of a good employee and how much a company stands to lose in their absence. Workers who seek rehabilitation for drug addiction and substance abuse are the main area for improved retention.

The Importance of Worker Retention to Millennials

The importance of retention will continue to compound in the coming years. Many millennials lean towards the gig economy, passive income, and self-employment.8 This shift can cause a rapidly dwindling talent pool in which the older generation ages out of work and the younger generation seeks non-traditional employment. Comparatively, employees who work towards overcoming addiction are less likely to miss work than their substance-free counterparts.

Studies show that 77% of the reasons employees leave a company can be directly changed by an attentive employer. These numbers and others suggest it comes down to the employers to work towards employee retention. These can be mean supporting an employee’s work/life balance, providing routes for career advancement, and bettering the over-all work environment. Employers with a revolving door of employees contribute heavily to the over $600 billion spent each year replacing the average employee.7

Examples of Costs and Savings

Here are the hard numbers for specific businesses.

California Business with 250 Employees

California offers opportunities for many financial and real estate businesses.8 Companies with 250 employees increase their annual expenses by $354,736 thanks to the costs of replacing an employee. Here is the breakdown.

  • $111,942 in lost time
  • $161,730 for training
  • $81,064 for health care

Alternatively, an employee in recovery saves a company in excess of $8,500 per year.9

California Business with 500 Employees

Businesses in California with 500 employees spend $697,871 per year replacing employees. Here is the itemized count.

  • $219,738 in lost time
  • $317,470 for training
  • $160,663 for medical costs

Comparatively, employees undergoing recovery miss fewer workdays, gaining almost 2 extra weeks of productivity over their counterparts.10

California Business with 1,000 Employees

A business with 1,000 employees in California stands to lose $1,406,004 annually to replacement costs. Here are the exact financial factors.11

 

  • $443,622 in lost time
  • $640,930 for training
  • $321,452 for health costs

Addiction Treatment Works

Successful Treatment and Retention Save Businesses Money

Thousands of employees join the workforce every day, but the numbers show that the costs of retaining a good worker are a far greater benefit than replacing them. People in recovery are perhaps the greatest testament to this fact. They are proven to be harder workers, more cost-effective than new employees, and possess the potential for upward mobility. It is on employers to make retention a priority, if only from a financial standpoint. As quitting becomes more prevalent and as the job market changes, retention will only continue to grow in value.

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