Several years ago, we transitioned one of our clients to an outcomes-based wellness program, where employees were asked to meet specified health goals. In the first five years, cost per employee per month (PEPM) decreased by nearly 10% cumulatively, and a total plan cost savings of over $1 million was achieved.
This savings resulted from a combination of rewards for employees who engaged, financial increases for those who chose not to participate and an appeal process for non-compliance.
Prior to this wellness transformation, our client was doing what many companies — perhaps even yours — are doing: implementing awareness campaigns (think literature) and incentivized activities (like discounted gym memberships).
Today we find many companies have progressed, asking employees to measure blood pressure, cholesterol level, glucose, body mass index (BMI) or tobacco usage to encourage healthier lifestyles as part of wellness programming.
While this is a good practice, such programs often stop short — measuring conditions without implementing employee accountability.
In this all-too-common scenario, employees have little to no skin in the game. Subsequently, measurable change is disappointing when compared to plans in which employees are encouraged to alter their health behavior.
Trust us, the formula works.
Implementation may take longer or go faster based on the company’s appetite, but on average we find that an outcomes-based wellness program takes between three and six years to execute in full, and that a $500 premium differential is the key to behavioral change.
For example, one of our healthcare clients is in their second year of shifting to a results-oriented approach. We set a combination assessment score that, if not met, offers employees individual health coaching at no cost. Eventually, if employees choose not to participate, they may miss out on financial rewards.
If you desire to transition to an outcomes-based model, here’s how you can get started:
- Buy-in — Senior-level support is a must to build a successful program. While you likely have an employee benefits consulting partner to help guide your program design, administration and monitoring, internally you will want a wellness team with executive sponsorship to see the initiative through.
- No Cookie Cutter Wellness Plan — Every employee benefits plan is unique, and that includes your wellness program. Your employee culture, size, population health, and financial goals will all play a part in determining the best program incentives and initiatives. For every client we work with, each wellness plan is different. Do not accept an off-the-shelf program. Require your benefits partner to customize a program that fits you.
- Monitor VOI — Of course you’ll be monitoring your financial return on investment based on outcomes like monetized claims savings. But don’t forget to measure Value on Investment (VOI) as well. This includes such things like presenteeism, engagement, moral and beyond. The impact of an effective wellness program goes beyond financial savings.
We believe healthy employees are good for business. With the cost of healthcare continuously on the rise, creating a healthy workforce is one solution to consider as part of your overall business strategy.
Hawkins Tatum is senior vice president and Cindy McCain, RN is senior wellness consultant for Valent Group, the risk management and insurance division of EBSCO Industries. Contact us for more information.
This article was originally published by the Alabama Hospital Association (AlaHA).