How Wellness Initiatives Can Lead to Financial Fitness
It's not surprising that the number of wellness incentive programs in America is increasing in businesses of all sizes, given the widespread recognition by executives that driving down the skyrocketing costs of healthcare is critical to their organizations' financial fitness.
There is no longer any question of how or if wellness affects the workplace: Chronic diseases such as depression and hypertension, according to the Centers for Disease Control and Prevention, can lead to a decline in the overall health of employees in a workplace, contribute to an increase in health-related expenses for employers and employees, and lead to lower productivity and more days of work missed. As a result, many businesses have realized the benefits of health promotion, and to curb the costs of rising health care, offer workplace health programs to their employees.
"Unfortunately," noted Mike Ryan, senior vice president of client strategy, Madison Performance Group, New York City, "while these programs have been constructed to contain runaway health-care premiums, and also to foster a more productive workforce by attending to not only the employee's physical well-being, but also their emotional well-being, the result of it all has been that many programs have failed to deliver results on both of those fronts."
The primary issue is participation and awareness, Ryan suggested. There are some wellness programs that have generated millions in returns, he said, but success really is rare. "Employees just don't have a higher sense of awareness about where these programs are, in terms of finding them, what they are offering, and what they are all about."
Some progressive companies, Ryan explained, have consolidated all of their recognition programs—including wellness—onto a single portal. An employee with access to that portal will find it is personalized, and shows all the programs they are eligible for. The companies that have put those types of programs into that kind of environment have ratcheted up participation rates and are on the pathway for those programs to be more successful.
Organizations are also not using positive reinforcement to engage employees in wellness initiatives, he continued. "Many wellness programs still rely on dis-incentives such as charging people a higher premium for smoking, or not having a Body Mass Index (BMI) that is at or above certain acceptable levels. We know from our basic studies of human nature that negative tactics never work, and the punishments and penalties some of those programs introduce cause confusion. They erode trust, they create resentment, and they are really bad for the employer-employee relationship."
What's good for those relationships, suggested Cord Himelstein, vice president of marketing and communications, Michael C. Fina Recognition, Long Island City, N.Y., are initiatives "related not only to physical health, but other arenas in employees' lives such as financial planning and mental health counseling." As a trend, he said, these initiatives are proving most effective.
There is no longer any question of how or if wellness affects the workplace.
"The other positive trend in the last few years is a general increase in employer compassion and sincerity," he said. "Today, young people are spoiled for choice and don't stay at jobs very long. Many organizations woke up to the fact that they needed to make a greater effort to engage and retain every employee, not just the high performers."
Workplace cultures are becoming more social, more transparent, and initiatives that get employees together under a common goal are more prized, Himelstein said. "These programs can improve engagement, but not directly. Good health and wellness improves pretty much every aspect of a person's life. The idea is to encourage employees to make positive health choices and have a positive outlook. That improves their overall productivity by consequence. So in that regard, they are still quite effective engagement tools."
Another wellness incentive trend Himelstein mentioned is the establishment of Health Savings Accounts (HSAs). Due to those rising healthcare deductibles, many employers are offering HSAs as a way to help defray out-of-pocket costs, he said.
What Incentives Work Best?
The use of incentives varies depending on the organization, but cash is more common than the use of tangible merchandise and gift cards, which tend to be used more as promotional elements of the campaign, explained Ira Ozer, founder and president, Engagement Partners, Chappaqua, N.Y. "For example," he said, "a wellness program launch often includes giving employees shirts or other apparel, water bottles and related fitness items and sometimes gift cards for health and wellness-related merchants for taking basic engagement actions, such as enrolling in the program and attending educational or fitness sessions. But the bigger incentives are given as health insurance premium reductions or actual cash either in the paychecks or on stored-value cards."
Everybody knows there are different types of incentives, said Mark Hall, agreeing with Ozer. Hall, CEO of G8Way, an end-to-end payment solution provider for health care, based in Princeton, N.J., said, "A few years ago there was a trend toward using contributions in benefits design to house savings accounts as an incentive. Basically, giving the employee money that they can then use just to pay for health services as an incentive. In the broader health population, I don't believe that is an optimal incentive. Certainly, the use of a gift or aspiring to getting a gadget or a bike can be effective, but at the end of the day, we believe the best incentive is either cash or a representation of money, such as a gift card."
Points are nice, Hall said, "They get us excited. They can keep us engaged. But it is incremental cash incentives administered in a lot of ways that is most effective, in my view. And so at the end of the day we suggest a prepaid card solution administered in an incremental manner. It is not good enough to say, 'OK, if you do all these things in six months, or at the end of the year, we are going to give you this.' Incremental incentives, even smaller dollar values, at $25 to $50 can really be motivating."
Hall suggested varying the dollar amount based on what behavior you are trying to drive. If you are giving an incentive for someone to just sign up for a program, maybe that is a $25 incentive. But if you want someone to get diabetic screenings, which could reduce your overall cost of care, you need to increase that incrementally so that a greater component of people are complying and participating in that activity. "As we look at the landscape, particularly in terms of incentive design, where your contribution to your health plan is based on participation and wellness," he said, "we believe motivational rewards that are incremental in value, rewards that feel like cash and can be used in that manner, and are tied to the brand of the sponsoring organization, is most effective in driving engagement."
Meanwhile, Ryan, of Madison Performance, has data showing "the participation rates we've seen in wellness increases anywhere from 26 all the way up to 90 percent when non-cash incentives are offered. Conversely, when a program uses just cash, generally, the results disappoint. And by cash, that can be a premium rebate or some other type of financial inducement. Human beings just don't calculate that as being a benefit. So they tend to underperform. That's a big part of whether people are going to be motivated by them or not."
Here to Stay
The best practices, Ozer said, "are to make sure wellness programs are focused on engaging people in a positive way—to be perceived as helping them achieve their goals as opposed to being judgmental and punitive—and provide incentives and rewards for achieving small steps, such as enrolling and participating in day-to-day activities, which are 'leading indicators' of success, versus just outcomes such as weight loss, which are lagging indicators. Wellness programs also need to be designed as long-term initiatives that become institutionalized and constantly reinforced to change behaviors, not just short-term promotions."
Wellness programs are still a hot topic and will continue to be in the future, Ozer said. "But they remain elusive in their ability to prove engagement and ROI. Health and wellness experts and corporate practitioners are continuously working on linking participation in wellness programs with overall engagement, but few formal studies have been done. Continuing measurement and research studies will prove the effectiveness, benefits and ROI of wellness programs and when this is conclusive, they will really take off."
It is important that a company sponsoring wellness programs finds a partner who really understands it, Ryan added. "Rewards are a critical component of a successful wellness program, but there are other pillars such as biometric assessments, there is communication, and education. All are equally important and if you can deliver all of those things in a cohesive manner, then your program is going to be successful. Otherwise, what you are doing is just throwing a reward at wellness. You are calling it wellness and talking about specific behaviors, but you are not taking that holistic approach that I think is so important to making sure that it works."
"As we move forward, incentives will be at the core of everything done in health care," Hall said. "And it will be people in all situations, those that are pre-diabetic, or those with weight control issues, and specific ailments." If you can somehow manage the risk around those patients, and engage them in incentive program protocols, you should be able to reduce cost of care. Incentives is one of the leading ways to do that, and the health care system is starting to recognize it."
But wellness incentive data analysis has a ways to go. "I do think the future is that they are administered and managed in a consolidated environment where they become a bigger part of the employee-employer relationship. And I see analytics being attached to them," Ryan said.
When you consider any type of incentive program, make sure you can look at the impact on a very diagnostic level, to understand where the opportunities for improvement might be; to monitor some of the basic measures you are going to get about whether or not people are participating, people are understanding, or dropping out of the program. Is there some type of correlation between the drop-off and their location, and is that consistent with all employees in that location?
"The ability to pinpoint activity, to understand its root causes and take it down to a very granular level and to do all that through analytics is really something that the wellness initiatives are going to catch up to," Ryan predicted. "Right now they are not there because a lot of organizations aren't taking that kind of approach. They are in the infancy stages, when it comes to managing wellness, and I think if they were to take the same type of deliberate, strategic process bolstered by analytical insights, I think they'd be much more effective."
Hall agreed with Ryan. "We are moving into the world of big data," he said. "And if you are not starting now getting at that type of data, you need to start thinking about it. Begin by finding ways to capture and understand trends and then leverage it into your program. We need to be smarter not only about how we are administrating it, incrementally, but also track the disbursement of how those funds are used to improve health."