Wellness
Programs
Keys to Success
Eric Samaniego
VP Wellness Strategy
CONFIDENTIAL
Agenda
Wellness Programs
- Keys to Success 
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
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Justifying the Cost of Wellness
Comprehensive Program Strategy
Incentive Research
Alere Incentive Strategy
Alere Incentive Data Analysis
Questions
Wellness Programs
2
Wellness Programs
JUSTIFYING THE COST
OF Wellness
3
Justifying the Cost of Wellness:
The Full Cost of Employee Illness
Personal Health Costs
25%
Medical &
Pharmacy Costs
$3,376 PEPY
Medical Care
Pharmacy
Productivity Costs
Total PEPY
= $13,504
Overtime
Turnover
Turnover
75%
Health-Related
Productivity Costs
$10,128 PEPY
Absenteeism
Presenteeism
Temporary Staffing
Administrative Costs
Replacement Training
Off-Site Travel for Care
Customer Dissatisfaction
Variable Product Quality
Sources: Edington DW, Burton WN. Health and Productivity. In McCunney RJ, Editor. A Practical Approach to Occupational and
Environmental Medicine. 3rd edition. Philadelphia, PA. Lippincott, Williams and Wilkens; 2003: 40-152. Loeppke, et.al., JOEM, 2003;
45:349-359 and Brady, et.al., JOEM, 1997; 39:224-231
4
Justifying the Cost of Incentives:
Incremental Cost for Every Risk Factor
$14,000
$11,917
$12,000
$10,524
$9,086
$10,000
$7,741
$8,000
$6,000
$4,000
Excessive Costs
$6,324
$5,097
$3,932
$2,807
Baseline Costs
$2,000
$0
0
1
2
3
4
5
6
7+
Number of Risks
Source: Dee Edington, PhD, Health Management Research Center, University of Michigan
5
Justifying the Cost of Wellness:
Physiology of Behaviors
Research shows a positive correlation between consistent
exercise and proper nutrition with improving many illnesses.
Hypertension
Diabetes
Coronary Artery Disease
Obesity
Pulmonary Disease & Asthma
Many causes of morbidity & mortality
Significance:
Change your behaviors, and improve your health.
Wellness Programs
6
Comprehensive Program Strategy
Comprehensive
Program Design
Optimal
Participation
Effective Marketing
& Communication
Outcomes
Meaningful Incentives
CORPORATE CULTURE
7
Corporate Culture
Policies
Benefits
&
Design
Procedures
Leadership
Support
Vision
Environment
&
Mission
8
Program Design
Types of activities – focus on needs & interests
Variety of activities – something for everyone
Focus on participation
Low barrier to entry
Simplicity
Dedicated onsite wellness staff
Vendor integration
Wellness Programs
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Program Design
Influencing Behavior Change
Stages of Change
Influencers
Precontemplation
Awareness
Contemplation
Education
Preparation
Practice Healthy
Behaviors
Action
Lifestyle /
Culture
Maintenance
Permanence
Wellness Programs
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Program Design
Health
Assessment
Health
Improvement
Condition
Management
Health
Coaching
Variety
of
Activities
Local &
Community
Screenings
Awareness
Campaigns
Seminars
Challenges
Wellness Programs
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Marketing & Communication
Communication audit
Brand identity
Simple to understand
Variety of methods
Saturate appropriately
Timely & consistent
Management support
Wellness Champions
Wellness Programs
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Marketing & Communication
What
• Program launch
• Purpose of program
• Eligibility
• Incentives
• Activities
• Challenges
• Health improvement
• Screenings
• Local & Community
How
• Brochures
• Flyers
• Posters
• Postcards
• Letters from management
• Displays
• Paycheck stuffers
• Electronic media
• Newsletters
• Staff Meetings
• Wellness Champions
• Benefits materials
• Company training sessions
Presentation name_081408
13
Incentives
INCENTIVE RESEARCH
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Integrated Benefits Institute Study
Employer Incentives for Workforce Health and Productivity
Published 2008
Survey of more than 500 employers
Approximately 5 million employees
Employers using Incentives & Disincentives
Incentives
73%
Disincentives
19%
15
IBI Study – Employer Demographics
Employers’ Primary Industry
Manufacturing
28.8%
Workforce Size
Health care & social assistance
18.4%
Finance & Insurance
< 50
2.0%
10.6%
50 – 199
6.3%
Professional, scientific, technical
services, information
7.1%
200 – 499
8.1%
Public administration
6.1%
500 – 999
8.3%
Utilities
4.3%
1,000 – 4,999
25.8%
Wholesale & retail trade
3.3%
5,000 – 9.999
12.4%
Educational services
3.3%
10,000 – 14,999
9.6%
Arts, entertainment, recreation,
accommodation, food & other services
3.0%
15,000 – 24,999
7.3%
Transportation & warehousing
2.5%
Other
12.6%
Total
100%
25,000+
20.2%
Total
100%
16
IBI Study
Number of Incentives Offered
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IBI Study – Types of Incentives
18
IBI Study – Subjective Effectiveness
19
IBI Study – Types of Disincentives
20
IBI Study – Program Goals
21
IBI Study – Value of Incentive
HOW MUCH INVESTMENT/PENALTY?
Per participant per year
22
IBI Study – Key Findings
1. IBI Finding #1: Employers appear to use a shotgun
approach in developing incentives programs.
2. IBI Finding #2: Employers target participation as
their most frequent incentives goal, outcomes much
less so.
3. IBI Finding #3: Corporate culture is critical to a
successful incentives program.
4. IBI Finding #4: Employers often don’t view the
incentives and the disincentives they offer as the most
effective.
5. IBI Finding #5: Employers invest substantial sums in
incentives and disincentives programs.
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Incent One Survey
Employee Health & Productivity Management Programs:
The Use of Incentives
•
Survey conducted April-May 2008 to member employers of
National Association of Manufacturers and the ERISA industry
Council
•
Representing 225 employers with 7.6 million employees
•
From 2007 to 2008 there was an increase from 62% percent
to 71% of employers offering incentives
•
Average incentive was $192 PPPY
•
Most common incentives:
1. gift cards
2. premium reduction
3. cash
•
Rewards for participation; completion (38%); outcomes
(16%)
24
Book: Influencer
The Power To Change Anything
Chapter 8:
Design Rewards and Demand Accountability
Structural Motivation
Choose Extrinsic Rewards Third
1.
Connect behaviors to intrinsic satisfaction
2.
Provide social support
3.
Choose extrinsic rewards
25
Book: Influencer
The Power To Change Anything
Use Incentives Wisely
Don’t use incentives to compensate for failure to engage
personal and social motivation.
Take care to ensure that rewards:
1.
Come soon after the desired behavior
2.
Are gratifying
3.
Are clearly tied to vital behaviors
26
Book: Influencer
The Power To Change Anything
Principles of Extrinsic Rewards
1.
If you’re doing it right, less is more.
•
2.
Reward vital behaviors, not just results.
•
3.
Set clear goals and ensure appropriate behaviors
Reward vital behaviors alone.
•
5.
Reward small improvements in behavior along the way
Reward right results and right behaviors.
•
4.
Symbolic significance and social forces carry a lot of weight
Reward behaviors that support valued processes
Watch for divisive incentives.
•
Align your message with your rewards
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Incentives
ALERE INCENTIVE STRATEGY
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Meaningful Incentives
• Focus on an incentive that best meets the company goals,
culture, and resources.




Merchandise (tax consequences; fulfillment)
Cash / Cash equivalent (tax consequences)
Benefits related (premiums, deductibles, coinsurance)
Health Savings Accounts (FSA, HSA, HRA)
• Awarded to everyone who reaches the program goal.
• Reward participation – Not changes in biometric values
• A meaningful incentive has a perceived value that is
significant enough to initiate and maintain behavior change
over time.
29
How much do incentives cost?
First consider Cost vs. Perceived Value
Cost Neutral  Perceived Value High
•
company may increase the deductible amount from $250 to $500, and
then offer an incentive of $250 reduction in deductible
Cost = Value
•
$250 contribution in FSA; becomes an expense when employee
withdraws from FSA
Cost > Value
•
$250 Cash

•
the real cost becomes almost $270 (with FICA and Medicare), and
the employee receives around $185 if in a 20% tax bracket.
$250 in merchandise, add the fulfillment fee to the company’s $270
expense, and it is taxable income to the employee.
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Alere Incentive Structure
1. Provide a variety of activities and assign “weighted”
credits
2. Establish credit requirements for the Program Cycle
3. Track credits earned through completion of activities
4. Award incentives to those who met the goal
Competitive Model
Level
Credits
Incentive
Bronze
15
$200
Silver
20
$250
Gold
25
$300
Significant increase in reward for achieving more.
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Incentive Structure Options
Inverted Model
Level
Credits
Incentive
Bronze
15
$250
Silver
20
$250 + certificate
Gold
25
$250 + certificate + gift
Key incentive paid at lowest level, “recognition” rewards for
achieving more.
Single Level Model (one credit criteria  one incentive value)
Level
Met criteria
Credits
20
Incentive
$250
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Incentive Structure Options
Activity Model
Incentive is earned as each selected activity is completed
Activity Completed
Wellness Assessment
Biometric Screening
Health Coaching
Disease Management
Healthy Living Program
Challenge
Incentive Earned
$50
$50
$50
$50
$50
$50
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Incentive Structure
Considerations in Selecting an Incentive Structure
•
Corporate culture
•
Perceived difficulty of obtaining the “highest” award
•
Simplicity of communication
•
Ease/cost of fulfillment
•
Value of incentive
•
Short-term vs. long-term incentive strategy
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How long should it take to earn an
incentive?
Annual Program Completion
•
Participate in a variety of activities over a long-enough period
of time that a behavior change is likely to take place
Single Activity Completion
•
Provided immediately after activity – low cost items to drive
participation in selected activities
Which one to use? What are your Goals & Objectives?
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Recommended Incentives
Research & Alere Experience
1.
Program Incentive (full 12-month program cycle)
•
Earn the required wellness credits by (month 12) to
receive program incentive.
•
Optimal value = $300 range
2.
Activity Incentive (i.e. Wellness Assessment)
•
Complete the assessment by (month 2) to receive the
incentive.
•
Optimal value = $50 range
Combine activity and program incentive strategy
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Incentives
ALERE INCENTIVE DATA ANALYSIS
37
Alere Incentive Data Analysis
Number of Clients = 62
Eligible Population N = 524,862
Client Population Size Range N = 325 – 63,000
Types of Incentives
Benefits related incentives = 26
Cash / cash equivalent = 28
Merchandise = 2
No Incentive = 6
Other program variables: culture; communication;
program design; # required engagements; program year
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Alere Incentive Data Analysis
Top 10 clients in percent participation
•
•
•
•
N Eligible = 42,433
N Participation = 37,990 (89.5%)
N Participation Range: 76.2% - 99.6%
Program Incentive Value
o
$301 - $350 = 1
o
$201 - $250 = 4
o
$151 - $200 = 2
o
$101 - $150 = 2
o
$ 51 - $100 = 1
• Incentive Type
o
Benefits Related = 6
o
Cash = 4
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Alere Incentive Data Analysis
Top 10 clients for percent program completion
•
•
•
•
N Eligible = 92,058
N Met Goal= 56,833 (61.7%)
N Met Goal Range: 45.6% - 93.7%
Program Incentive Value
o
$301 - $350 = 3
o
$201 - $250 = 2
o
$151 - $200 = 2
o
$101 - $150 = 3
•Incentive Type
o
Benefits Related = 8
o
Cash = 2
• Average Number of “Touches”: 3.7
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Outcomes – key metrics
Participation – per activity; overall program
Completion – per activity; overall program
Risk movement (population; cohorts) – T1; T2; etc.
Individual feedback – HRA; health improvement
Goal attainment
Satisfaction
Value On Investment
Wellness Programs
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Wellness Programs
Keys to Success
QUESTIONS
If you have questions after the presentation, please contact
your local UBA Member Firm for assistance.
Thanks!
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References
References
•
2008 Integrated Benefits Institute. Employer Incentives for
Workforce Health and Productivity. (Survey of over 500 employers
representing approx. 5 million employees.)
•
Edington DW, Burton WN. Health and Productivity. In McCunney
RJ, Editor. A Practical Approach to Occupational and
Environmental Medicine. 3rd edition. Philadelphia, PA. Lippincott,
Williams and Wilkens; 2003: 40-152. Loeppke, et.al., JOEM,
2003; 45:349-359 and Brady, et.al., JOEM, 1997; 39:224-231
•
Dee Edington, PhD, Health Management Research Center,
University of Michigan
•
Patterson K, Grenny J, Maxfield D, McMillan R, Switzler A.
Influencer – The Power To Change Anything. VitalSmarts, LLC.
McGraw-Hill 2008.
•
IncentOne. Employee Health and Productivity Management
Programs: The Use of Incentives. June 2008.
43