Health and Wellness Incentives

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Dortha Wheeler
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1 Motivating and Sustaining Wellness Program Participation to Improve Health Outcomes Mindy McGrath, Division Vice President, Healthcare Sector, Maritz An apple a day keeps the doctor away is a wise adage dating back to the 19th Century. Clearly, even hundreds of years ago our ancestors understood the concept of prevention as a prescription for a healthy body and mind. Fast forward 200 years and we re in a consumption-driven society. Americans have grown up believing more is better, and have spent over half a century acting as passive recipients of healthcare services, relying on the system providers, employers and insurers to make their healthcare decisions for them and foot the majority of the bill. As the end of the 21st Century s first decade approaches, healthcare costs have skyrocketed. Since 2000, health insurance premiums have increased 73 percent, at a rate more than three times the growth in workers earnings and twoand-a-half times the rate of inflation. According to the CDC, nearly three-quarters of all healthcare claims are attributable to an individual s lifestyle, with the leading health-damaging behaviors being tobacco use, lack of physical activity and poor eating habits. As these forces collide, Americans are at a turning point in our healthcare culture. Competing in the Era of Health Care Consumerism One of the ways health insurance companies have helped turn the tide of a reactionary healthcare mentality is by focusing on prevention. Since the 1990s, by promoting low co-pay well-baby and well-child checkups, annual women s health screenings and routine healthcare visits to primary care physicians, health insurance companies have acted as a primary educator on how Americans can prevent illness and manage their own health. In addition to other market factors, these efforts focusing on prevention have helped to gradually usher in the current era of consumer-driven health care, in which Americans are beginning to take on much more responsibility for both the cost and decisions surrounding their individual health care. However, this has had both positive and negative impacts on health insurance companies. On the positive side, health insurance companies have been able to remain profitable through greater risk sharing on the members part and the ability to continue managing costs through negotiated rates with in-network providers. However, on the negative side, as they become more knowledgeable, consumers have and continue to demand fewer restrictions in terms of access to both providers and the latest medical procedures and drugs despite the hefty price. As healthcare costs continue to rise, consumers are becoming much savvier regarding their healthcare options and are playing a much larger role in choosing their health insurance plans both of which have led to a commoditization perception and slimmer profit margins in the health insurance market. As consumers see themselves as managers of their own healthcare destiny, health insurers are considered merely an administrator and payer of health services at best, and, at worst, a gatekeeper limiting access to desired services. As a result, health insurance companies are reinventing themselves in an effort to differentiate their plans from competitors, better manage their risk of rising healthcare costs and improve their reputation as providers of services that help members become and stay healthy. One of the major initiatives health insurance companies are relying on to attract and drive loyalty among both employers and individual members is today s wellness program, which the industry has dubbed health & productivity. Why Wellness Isn t Working Despite their popularity among both health insurance companies and employers in the US, most health and productivity programs aren t living up to their potential, which according to the University of Michigan is $3 for every $1 spent on a program 1. The culprit? Low participation rates. In a 2004 study, conducted by The International Society of Certified

2 Employee Benefit Specialists, 42 percent of employers with wellness programs reported less than 25 percent employee participation and 39 percent reported between 25 percent and 50 percent participation 2. These findings corroborate recent studies from Maritz Research, which found frequency of participation virtually unchanged from 2006 to 2008, despite a seven percent increase (moving from 35 percent to 42 percent) in the prevalence of formal corporate programs. While wellness programs engender goodwill among employers and members, their true purpose to improve health outcomes is lost when people fail to participate. Frequency of Participation Once a week or more Once a month A few times a year Once a year Never percent 16 percent 21 percent 32 percent percent 25 percent 34 percent Maritz Research 2008 Employee Engagement Study Note: All percentage differences are within the expected range of sampling error As a result of low participation rates, both health insurance companies and employers have begun providing health and wellness incentives to encourage participation. Ranging from discounted premiums to gift cards, experiential events and merchandise, these incentives can result in a short-term boost in initial participation rates. However sustaining member engagement over the life of the program is critical to realizing a return on investment. While many companies have the right idea around using incentives in their wellness programs, the expected boost in participation rates has yet to occur. This is because most wellness programs are using incentives as a carrot approach to motivating healthy behaviors. The Health & Productivity Prescription: A Whole-Brained Approach In 2007, 75 percent of employers surveyed said they offered a corporate-sponsored wellness program 3. Many of these programs are in their infancy and involve employee or member health risk assessment participation in return for cash or a gift card. This simple do this, get that, approach works well for a basic type of wellness program. However, as the pressure increases to better manage healthcare costs, health insurance providers are launching the next generation of wellness programs. These programs include personalized health coaching, disease management, preventive care education and outcomes-based tracking. The programs are ongoing, require continuous engagement on the part of members and, when successful, have a significant impact on both healthcare costs and outcomes. As they roll out next-generation health & productivity programs, health insurance companies are discovering two important hindrances to the success of these more complex and sophisticated programs: 1) members aren t motivated by the promise of longer, higher-quality lives and, 2) prescriptive, one-size fits all incentives and rewards by themselves do not engage members long-term. But, why aren t people simply motivated by the knowledge that they will lead healthier more productive lives? And, why don t health and wellness incentives sweeten the deal? The answer is simple: because our brains don t work that way. Change is hard and doesn t happen overnight. According to the authors of The Neuroscience of Leadership, 4 the brain must work to remember a new behavior and must rewire itself to make a behavior become a habit.

3 The authors findings support Maritz long-held view about effective incentives, rewards and recognition, and employee engagement programs: One-time incentives or punishment, or single instance communications and training are not enough to establish brain wiring for a behavioral habit. Initial Participation vs Ongoing Engagement: Using Incentives for Participation Only In other words, incentives and rewards must be not only meaningful and memorable to each program participant, they must work in concert with appropriately timed education, communication and recognition to truly be effective. That is why, as a wellness incentives provider with 75 years in the motivation business, Maritz takes a whole-brained approach to health and productivity incentives programs. Human Truths: People s behavior is shaped by consequences A Whole-brained Approach: Use positive and meaningful consequences for changing behavior and achieving results Participants Initial Awareness, Recruitment & Rewards No Reinforcement Using incentives to drive initial participation is a good start, but does not go far enough. Healthy Program Duration Even when people want to change, it s hard to learn new behaviors and habits People always have the power to choose People base actions on emotions as well as rational thought Focus, repetition and feedback are necessary to rewire the brain and create new behaviors and habits Include communications, education and leadership to help people understand the goals and strategies and make their own connections about the importance of achieving common goals Make sure program design is both fair and fun to engage both the left and right brain. Offer rewards that stir the imagination, encourage goal-setting, allow social reinforcement and create lasting goodwill and memories Initial Participation vs Ongoing Engagement: Using Incentives for Long-Term Behavior Change Developing an engagement strategy that helps participants set long-term goals and sustain healthy behaviors. Focus, Repetition and Positive Reinforcement Maritz whole-brained approach to wellness programs focuses on rewiring the brain to activate new behaviors and sustain them long term. We apply the focus, repetition and positive reinforcement model to ensure the program s success. Focus: the act of paying attention, which creates chemical and physical changes in the brain. Participants Initial Awareness, Recruitment & Rewards Program Excitement Program is top-of-mind with Viral Marketing taking place Continuous Feedback & Recognition Repetition: repeated, purposeful and focused attention, which leads to long-lasting personal evolution or change. Positive reinforcement: people receive positive feedback; it creates a synapse in the brain, encouraging the behavior to continue. Program Duration

4 The whole-brained approach of focus, repetition and positive reinforcement is successfully applied to a health and productivity incentives program when organizations provide their members with answers and activities around following questions: What do you want me to do? Role Clarity: The first step is the call to action communicating to me, the member, the four basic activities within the health and productivity program: 1) enrolling in the program, 2) participating in the activities, 3) reporting my progress and 4) sustaining my participation. Why is it important? Strategy & Vision: Demonstrating to me that a healthy lifestyle will have short and long-term rewards related to quality of life, work and family. How do I do it? Competence & Capability: Connecting me to the right tools, integrating the program into my daily routine and effectively communicating how I can achieve my goals. What s in it for me? Rewards & Recognition: Provide meaningful, motivating and memorable rewards that truly drive my behavior. This is probably the most important and least implemented component of a wellness program. How am I doing? Measurement & Feedback: To sustain my behaviors, I need frequent feedback and recognition for my participation and milestone achievements. What is in it for me? Rewards & Recognition What do you want me to do? Role Clarity Human Performance Vision & Strategy Why is it important When companies take a whole-brained approach to health and wellness incentives and answer these five integral questions, successful health & productivity programs becomes a continuous cycle resulting in optimum member participation and, more importantly, healthier members. Maritz recommends each of these critical wellness program elements to achieve success: Assess understanding your participants, what motivates them and how they want to be communicated with, as well as the current realities of your health & productivity program. Design the program must be both fair and fun, taking into consideration your unique member population, what is realistically achievable and the ability to measure results along the way. Communications ongoing and timely reminders, feedback and recognition, using multiple media based on member preferences, help members understand the importance of achieving goals and keep participants engaged. Measurement helping members understand how they are doing individually as well as understanding the success of the overall program will help both members and program managers make the necessary tweaks to stay on track. Management ensuring one person and/or partner is managing all aspects of the program is vital to its success. In addition, it is important to leverage a technology platform that can integrate, streamline and manage all aspects of the program. Rewards providing personally meaningful, memorable and motivating rewards are the crux of all successful motivation programs, especially wellness programs because the required behaviors are new, challenging and difficult to sustain. Measurement & Feedback How well am I doing? Competence & Capability How do you want me to do it?

5 Conclusion Health insurance providers are banking on the promise of health and productivity incentive programs to help improve the health outcomes of their members and combat rising healthcare costs. While their popularity increases, participation rates remain stagnant. Using incentives and rewards to stimulate member engagement in wellness programs can be highly effective, but only when the program uses the right combination of tools throughout the program s continuous lifecycle. Maritz whole-brained approach taps into the areas of the brain that help people engage in and sustain the behaviors they want and need to keep them healthy. And, healthy members are the ultimate goal. END NOTES: 1. Health Management Resource Center, University of Michigan. Cost Benefit Analysis and Report ( ). July 5, International Society of Certified Employee Benefit Specialists, December Employers Increase Wellness Push with New Programs, incentives. Employee Benefit News, July 1, David Rock and Jeffrey Schwartz, The Neuroscience of Leadership, strategy+business magazine, issue 43, Summer 2006, pages MM-72987

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