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Take Your Wellness Program to the Next Level

Michael Kelly

A man in a suit looking through a pair of binoculars into the future.

Applying incentives, biometrics, & data integration for to reach the next level

Employers are looking for more innovative solutions to control costs and interject accountability into their employee benefit plans. Wellness programs have traditionally been seen as “niceties” or “value-adds” to health plans. Today, they should be seen as the vehicle that allows employer groups to target specific cost drivers more effectively and integrate existing programs for better impact.

Michael Kelly, Director of HealthCheck360

02/01/2011

The concept of employee wellness has been around for over 30 years. However, its evolution in the last five has been by far the most impactful. Necessity is the mother of all invention and health care expenses have steadily risen in the face of flattening corporate revenues. Consequently, employers are looking for more innovative solutions to control costs and interject accountability into their employee benefit plans. Wellness programs have traditionally been seen as “niceties” or “value-adds” to health plans. Today, they should be seen as the vehicle that allows employer groups to target specific cost drivers more effectively and integrate existing programs for better impact. But how do you take it to the next level?

According to the Towers Watson 2010 Employer Survey on Purchasing Value in Health Care Report, employer groups identified three concerns as the top challenges in maintaining affordable benefit coverage:

  1. Employees’ poor health habits
  2. Underuse of preventative services
  3. High cost catastrophic cases

All of these issues can be addressed through properly designed wellness initiatives and effective incentive models. In order to do so effectively, employer groups need to focus on three essential components to wellness program and employee benefit design: comprehensive biometrics, outcome-based incentive models, and data integration.

Historically, wellness initiatives have relied upon self-reported information. This theory has largely failed because the assumption that our employees are aware of their health risk is false. In a study of 12,000 participants in an employee sponsored assessment program, 74 percent could not accurately report their cholesterol, blood pressure, or body fat.  In addition to not knowing, participants will not respond honestly when incentives are based on the outcomes of the assessment. Our research demonstrates that 10-20 percent of tobacco users do not self report that they smoke.

This demonstrates the need for a venipuncture blood draw and comprehensive screen. A blood draw (versus traditional finger stick methods) provides more accurate data, a far more expansive panel that includes nicotine, kidney and liver function, and the ability to customize additional testing for groups. These components are essential in impacting the three primary cost drivers identified above. Finally, a comprehensive screening with a blood draw provides the base for tracking the impact of the program over time, and allows the next two key components to happen.

Incentives remain a hot topic of discussion, but the design that is most effective is clearly differentiating itself. The historical wellness belief is that “if you build it, they will come.” Unlike the movie, reality suggests that employees will not participate unless they have skin in the game. The significant transition that is occurring today is the shift from incentives rewarding participation to incentive models that require participation and reward outcomes. This is a relatively new concept, but our research is demonstrating that basing rewards on achieving health goals demonstrates outcomes 3-4 times greater than rewarding participation only.  The uptake of this concept is also significant. In the same 2010 Towers Watson survey, 6 percent of employers said they were currently rewarding outcomes other than nicotine. However, 25 percent replied that they plan on implementing this in 2011.

Safeway, and its CEO Steve Burd, were an early adopter. They have demonstrated the success of this model by implementing an outcome-based incentive program in 2005.  Since that implementation, Safeway has maintained a flat per capita healthcare cost (that includes both the employee and the employer portion) during a period of time that typical group costs increased 38 percent. Remember that in order to do this effectively, you have to have an assessment and biometric tool that can provide a comprehensive data set and a scoring model that is objective (meaning the participants can’t change or self-report their data).

Finally, now that you have successful motivated your employees to participate and change their health… What do you need to do with the results? Most companies and consultants fail to realize the value and opportunity that the data from health risk assessments and biometric screenings hold. Employers and their benefit consultants need to bring their wellness vendors, carriers/TPA, and health management providers together to share and capitalize on data more effectively. There are two primary outcomes from integration: 1. It provides the capacity to make specific interventions for participants to support healthy behavior and compliance, 2. It enables employers to track the efficacy of the program.

Proper integration of vendors ensures that employees receive interventions based on their specific risks.  HRA and biometric data can stratify employees to be contacted through risk specific communications, health coaching, and disease or condition management. Most groups believe that this is already occurring from claims scrubbing, but this falls significantly short. In a study of 1750 employees in a manufacturing environment, a biometric HRA identified 2.5 times the number of high-risk diabetics than claims information.  The same HRA identified 10 times that number at risk for developing diabetes. This is result of employees not seeking preventative care, non-compliance with known conditions, and the failure of our medical community to manage risk prior to developing into disease. This employer was already paying for Disease/Condition management through their carrier, so the wellness initiative multiplied the value of a program they already had through integrating the two vendors.

Historically, wellness providers have simply provided a snapshot of the results through annual aggregate reports. Integration also allows us to track the impact of the program by combining various resources and analyzing the connection. Four main metrics should be examined when reviewing outcomes: Participation, Program Engagement, Risk Reduction, and Claims Impact. In order to review the impact of your wellness initiative, your carrier, consultants, and wellness providers need to provide their respective data to a central repository for analysis (most often the wellness vendor). In this manner, the employer can track the incentive impact (consultant), reduction of health risks (HRA/biometrics), impact on claims (carrier), correlation of risks to claims (wellness vendor), and the intervention activity (health management/ health coaching provider). Only in this manner can employer groups determine a true return on investment.

Historically, wellness programs have not been effective. According to a Price Waterhouse Coopers survey, 71 percent of employers are offering wellness programs, but few said they are very effective at lowering costs.  However, those employers committed to implementing data driven biometric programs based on the tenants discussed here are showing positive returns, lower costs, and more productive employees. And most importantly, these employers are able to track the impact and demonstrate the return of their wellness initiatives.


  1. Towers Watson, http://www.towerswatson.com/, 2010.
  2. American Healthways, http://www.americanhealthways.com/, 2010.
  3. HealthCheck360°, http://www.healthcheck360.com/home.asp, 2010.
  4. Ibid.
  5. http://online.wsj.com/article/SB124476804026308603.html, 2010
  6.  HealthCheck360°, http://www.healthcheck360.com/home.asp, 2010.
  7. http://www.pwc.com/us/en/health-industries/health-research-institute, 2010.

About The Speaker

As Director of HealthCheck360°, Michael works with clients to develop and implement wellness and health management programs to meet their specific needs, culture, and to enhance their existing benefit structure. Part of Michael’s role is to help analyze population health on the client and total population level to communicate return on investment, reductions in health risks, and program design.

 

 

 

Michael Kelly

Director of HealthCheck360°

ph: 563.587.5186

ph: 866.511.0360

c: 563.845.8085

fax: 563.587.5836

michael.kelly@healthcheck360.com

HealthCheck360°

800 Main Street  |  PO Box 1475

Dubuque, IA 52004-1475

www.healthcheck360.com

http://www.healthcheck360blog.com/

Performance Based Wellness Solutions

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