Financial Wellness

Best Practices: How Efficient Use of Health Incentive Dollars Increase ROI, Drive Wellness Program Engagement, and Encourage Long-Term Behavior Changes

According to Todd Park, Chief Technology Officer (CTO) of the United States (US), the two biggest healthcare trends in 2012 are data liberation and incentive reform.  In addition, the Third Annual (2011) National Business Group on Health, Fidelity Investments Benefits Consulting conducted a survey that found that the total amount spent per employee on health and wellness incentives in 2009 was $368.  

In 2011 this number more than doubled to $629 - a 70 percent increase in two years. Employers are becoming increasingly aware of the importance of employee wellness.  However, there are many programs that on the surface seem successful, but in actuality are wasting money due to an incentive delivery system based on a fragmented combination of cash, gift cards, and prepaid cards.

These currency vehicles often fail to engage employees long term, are difficult if not impossible to track, and cannot be tied back to behavioral analytics. In the case of gift cards and prepaid cash cards, over $8 billion annually goes unspent - which is money thrown way.  Until now there really hasn't been a way to understand precisely what members are purchasing with their incentive dollars, and how the actual spend is influencing healthy behaviors and long-term lifestyle changes that improve overall health.

The fact is, cash incentives - even incentives delivered in the form of premium reductions -- and gift cards can be spent on anything (including unhealthy items like candy bars, cigarettes, and junk food).  The point of a wellness incentive program is not to give people what they say they want; it is to inspire changed behavior, engagement, and desired results.  

There is no question that direct cash can be a strong motivator, but choosing this type of incentive has too much potential to be incongruent with the incentive's purpose.  Re-thinking an incentive that aligns with wellness program participation is a progressive step. Wellness incentives that create this bond require a skillful translation of health behavior theory to application.

Need For Emotional Engagement

Wellness incentives need to provide more than a mere carrot to drive long-term lifestyle change; they need to focus on an emotional affinity felt by participants toward earned rewards.  It is this emotional affinity that motivates an initial embrace of health behavior change which is necessary to make it a perpetual part of life.

We know that behavior change is derived from passion. Passion comes from a combination of physical, social, emotional and intellectual dimensions. Earned rewards carry more meaning to the participant when they have a connotation tied to the health behavior they are trying to galvanize.  

In other words, incentives that can only be used to purchase a coveted consumer electronic device, athletic equipment, or even a great book have consistently shown to be more impactful than cash rewards - which get mixed in with regular income and used to pay bills or purchase cleaning supplies.  

Delivering tailored and emotion-centric wellness incentives that drive engagement are significantly more impactful used within wellness programs.

Critical Role Of Behavioral Analytics

Utilizing behavior analytics is a core emphasis in all areas of healthcare right now. US CTO Todd Park believes that data liberation and evolving incentives are key components to the new reimbursement model based on patient outcomes, which he calls the biggest game changer in healthcare.  

This holds particularly true for employers, as the Third Annual (2011) National Business Group on Health, Fidelity Investments Benefits Consulting Survey also revealed that a staggering 76 percent of companies do not know how much of an impact their wellness programs are having on employee health or their healthcare costs.

For this reason, there is a critical market need for incentives that can be tailored and used solely for the consumption of health related items, products, and services that can motivate healthy behaviors.  Tailored incentives place a veritable stake in the sand, communicating that at minimum we start here -- rejecting cash, gift cards, and network branded prepaid cards, which often interrupt and break the pattern of pursuing health.

But, it is the ability to draw statistics around exactly what products and services are purchased with incentive dollars - and what those products and services cost - that generates critical data-driven outcome measures. These key measures enable employers to better understand employee engagement in wellness programs, their impact on long-term lifestyle changes, and ultimately return on investment (ROI).

Preventative Health Paradox And How To Solve It with Best Practices

70 percent of health problems that plague Americans are preventative. A paradox exists in viewing present day health expenditures for treating illness. While people are more knowledgeable of the consequences of negative health behaviors than ever before, 87.5 percent of healthcare claims costs are due to maladaptive health behaviors.

Costs continue to rise progressively as they envelope a larger portion of the GDP with each passing year. The total annual health care expenditure in 2009 was two and half trillion dollars.  75 percent of this amount went toward treating preventable conditions. Unfortunately, less than five percent of the total expenditure went to endeavors aimed at disease prevention.

It is time to provide incentives that can only be used to purchase health and wellness items like healthy foods and supplements conducive to a healthy lifestyle; or items that influence and drive healthy behaviors. Employers need the capability to track what wellness incentive dollars are being spent on, and be able to understand how incentive dollars are influencing member engagement in preventative health programs and healthy behaviors to reduce spiraling healthcare costs.

About the Author

Pamela Hall is Chief Operating Officer of United Preference. United Preference is transforming healthcare and wellness incentives through a new currency, Tailored Spend.

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