Employers are moving from participation-oriented to outcomes-oriented wellness programs because they want to see immediate changes, according to Dr. Dee Edington, CEO and founder of Edington Associates. However, he considers this to be the wrong move for the wrong reasons.

"They are in a panic that employees are not changing fast enough, that they aren't losing weight fast enough," says Edington. He explains that "employers are moving toward [outcomes-oriented wellness programs] in some cases more rapidly than we thought because they are driven by their need or perceived need to make a business case to their CFO."

Gina Payne, national director of wellness at CBIZ Employee Services, agrees, adding: "We have seen employers feeling obligated to go to outcomes-based measures. Often because of health care reform, they feel like they are being driven there financially and need to quickly change their health outcomes, which can be fraught with issues."

Encouraged by the Affordable Care Act's increase in the allowed maximum of wellness incentives - from 20% to 30% of the cost of health coverage - Payne and Edington believe many employers may transition too quickly to outcomes-based wellness programs, before their program has sufficient engagement and maturity.

"ACA gave employers a new tool, which can be used effectively, responsibly and in a way that is fair to all employees, but it must be done very thoughtfully to improve group health in a population," explains David Anderson, executive vice president and chief health officer at StayWell.

Other experts argue that focusing only on participation-based wellness programs can produce faulty data. They "give the company or individual a vision or a goal of the healthy behavior and metrics you're looking for," says Cortney Rowan of Altitude, a design and innovation consultancy in Boston. While employers don't always need incentives in either wellness setup, Rowan says they help drum up initial engagement. She encourages employers to design their wellness initiative with the intent of outcomes-based measurements so that they develop baselines up front, from which they can measure progress in following years.

 

Where's the danger?

Employees at Pennsylvania State University have protested the school's new wellness program, which requires that they undergo a health risk appraisal or pay a $1,200 penalty - a move that drew negative media coverage nationwide. Faculty felt the new incentive was coercive and a violation of their privacy.

"Employers that rush into outcomes are going to receive resistance from their workforce and bad press," explains Anderson. He reminds employers that incentives are compliance, not engagement, tactics, and employers "need to build strategy around [incentives] so over time [employees] internalize that motivation."

Another caution when implementing an outcomes-based strategy is avoiding discrimination, which is not a real worry for participation-based programs. Employees must have easy access to the program and requirements, meaning information is published in their first language and available in various modules - other than online - for populations that don't have access to a computer or smartphone. And if the rewards or penalty are too high, employers could face income discrimination if lower-wage workers believe they are forced to participate for financial sustenance.

"There's no quick fix for this. We're doing [wellness] because it's the right thing to do," says Edington. "In wellness, we focus so much on the workforce that we don't focus on the workplace and the organization. [Employers] need to remind their people how important this is to the organization - for people to be healthy and not miss work."

For example, encouraging biometric screenings is far more important than simply identifying population risk; it shows employees that leadership cares about their well-being. Using people as levers to engage others in the program, through testimonials and team recognition or competition, also works well. Leadership can also demonstrate their message by actually exercising alongside employees and showing their own personal commitment to healthy living.

 

When to consider an outcomes-based program

Edington insists that participation levels must be strong, at least 70%, before employers consider shifting to outcomes-based programs. After two to three years in a participation program, if employers still don't have the results they need, Edington says they should consider a change. He reminds them that rewards should always be secondary, and that cultural and environmental factors are more important.

For example, a financial firm that stresses accountability in all aspects of its culture and business could instate a tough incentive structure for their outcomes-based wellness program, which fits their culture, according to Anderson. He advises that employers "never let your incentive strategy get out ahead of your culture."

Still, Edington insists there are other ways to promote wellness outside of dollars. "I don't necessarily like outcomes-based programs because they are just bribing people," he says. "People believe that you can buy health in America, but I'm not sure you can. ... Employers have been hoodwinked by benefit consultants."

He suggests instead that employers could post participation rates and health improvement metrics alongside their safety records to transparently encourage workers to improve their collective health.

"You need to focus on getting the culture and environment right, making it a good place to work and getting health into expectations in the same way we expect people to be safe and do quality work," he says.

But if an employer is going to implement outcomes-based incentives, he advises they put money into a health savings or retiree health care account. This saves the employee money on personal income taxes and saves the employer on payroll taxes.

When he managed the wellness program for San Mateo County in California, Paul Hackleman installed wellness initiatives for the county's entire population but targeted their limited financial resources on the individuals who accounted for the bulk of the health costs.

"I don't think developing a culture of health is a product of one or the other strategy," says Hackleman, the health care analyst for IFEBP. He believes employers create a culture of health by making business decisions that reflect ways to help the workforce.

He recently introduced a program called Backwise, which focused on four county departments with long-term histories of back issues. They selected back pain and injury because it gave them the quickest savings and turnaround on the overall wellness program. The program had significant impact on health and productivity, while lowering costs from workers compensation and disability. In time, it transformed the department with the largest number of back injuries and chronic back problems into the smallest utilizer of back injury claims.

Hackleman says it is important to know where to focus capital in a wellness initiative. "We're aiming at people for whom participation will represent a change for their lives and in their habits," he explains. "Let your information tell you where to begin and that generally should be where you get the biggest bang for your buck."

No matter whether the employer chooses a participation-based or outcomes-based program (or forgoes incentives altogether), wellness must be a strategic initiative for the organization, not simply an add-on program. If employers approach health improvement in this manner, Edington says they will reap the many benefits.

"If we do wellness right, we can add more shareholder value than what we save in health care costs. I think wellness is a much more strategic value for the organization than just focusing on health care costs, which I think diminishes the value of wellness," Edington says. When one includes the profit generated from increased employee energy, loyalty and enthusiasm, it adds up to much more than health cost savings.

As global companies continue to look for ways to improve performance, more of them "will see wellness as a performance differentiator and a way to get a competitive edge," says Anderson.

 


Wellness case study: Smooth transitions in Fond du Lac County, Wisconsin

It was crucial to have a wellness base with a focus on participation first, according to Erin Gerred, the director of administration at Fond du Lac County, Wisconsin. The county began its wellness program in 2003 as a participation-based formula with no incentives, then switched to an incentive-driven HRA in 2007 and, five years later, transitioned to an outcomes-based program.

"It was important for us to have several years under our belts having health risk assessments so that employees were very familiar with what an HRA is," she explains.

Participants received a scorecard identifying where their health status was today and were given a goal to attain the following year. While they were not held to those goals for several years, employees became familiar with what their goals were before incentives were introduced.

The program had great participation success, with 76% of HRA participants meeting their goals without having to change their lifestyles before incentives were even introduced. This was a huge selling point to the employees to encourage the rest of the population to meet their goals with an extra nudge.

"It's not about offering maximum incentives, it's about making sure that your employees have all of the tools and resources available to them to be successful as they pursue improved health," says Gerred. In the county's case, they had an onsite clinic with a nurse practitioner who works closely with employees, a smoking cessation program in place with free counseling and discounts on prescriptions, and a disease management program all in place before they introduced premium reductions as incentives.

In order to make changes with a painless transition, the county offered discounts for those who participated, and in 2012 employees could receive a further discount in their premiums if they met their health goal.

The only pushback they received from employees came from smokers after the county added nicotine testing to the biometric screenings, which made smokers ineligible for the additional premium discount if they tested positive.

Gerred responded by challenging the disgruntled smokers to offer scientific proof that this behavior had health benefits or did not hurt them, which they could not. She encouraged them to "let us help you quit" by providing resources but also holding employees accountable with stick incentives. They had about a 5% decrease in smoking during the first year the incentive was in place.

To keep employees motivated to change their lifestyle, the county's vendor, Interactive Health, offered free a biometrics check to gauge their progress after six months. Gerred also promotes healthy programming throughout the year, including a holiday weight challenge, team activities and sneaker days to encourage people to walk during their lunch breaks.

She advises fellow HR leaders that "there shouldn't be a real rush to make this drastic, huge change. ... The overall goal is to help them be successful." Employers should have a support system in place and phase the program into the culture over several years, giving employees plenty of heads up when introducing them to biometric screenings or HRAs, and communicating when these goals will merit incentive achievements.

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