Nationwide Better Health, part of Nationwide Mutual Insurance Company, closed its doors Sept. 1 after five years in the wellness and productivity business. The company announced on May 25 that Nationwide would sell its productivity services to Sedgwick Claims Management Services Inc. and wind down disease management and wellness programs.
Although the closure came as a surprise to industry leaders, to president of the subsidiary, Terri Hill, it made sense to close.
"The biggest external factor that affected our business was the economic downturn; we were building up this company in 2007 and 2008 when employers were faced with difficult choices: Do they fund the 401(k) program or offer wellness?" Hill says. In 2007, they had 250 customers, and in 2008, 350, but by May 25, the client list was smaller than 100. "It was always an interesting stretch for the property casualty company to enter into this business. No matter what we would have done, it could not have changed the course based on the external factors."
Better Health was formed from joining two legacy Nationwide companies in 2006 and acquired three companies and made partnerships with at least two other wellness-related companies.
One of those companies, INTERxVENT, a lifestyle management and cardiovascular risk reduction program that began a beta version in 1998, partnered with Nationwide Better Health in 2007.
Tom LaFontaine and Dr. Neil Gordon were colleagues when Gordon started INTERxVENT. LaFontaine works at Optimus: The Center for Health as a clinical exercise physiologist, which also entered a partnership with Nationwide Better Health in 2007 when INTERxVENT was acquired.
He initially was impressed by INTERxVENT's highly evidence-based approach, with over 75 to 80 published papers and abstracts supporting the potential outcomes, but when Nationwide took over his services, things changed, LaFontaine says.
"It became much more difficult to get technical and other support; it became more costly, and communication was 'scrambled;' personally, I never was clear [about] how requests for products or other services were to be processed," LaFontaine says. He thinks Better Health was much more interested in "bigger fish" and his small business was of little interest. Indeed, Nationwide had many big fish, including Fortune 500 companies Halliburton, Compass Group, Newell Rubbermaid and Chevron. Chevron spokesman Brent Tippen declined to comment if they would be replacing Better Health's services or about the quality of services they received. Nationwide also declined to provide an outline of the wellness programming they provided or outcomes for this story.
However, Missy Jarrot, human resources administrator for Chatham Steel, which has 287 employees across six states, says Chatham used INTERxVENT for its reporting and mentoring services for its in-house health and wellness program. After a few years with INTERxVENT, Nationwide took over.
"Let's just say that the customer service wasn't as good - you'd have to go through a lot of people to get answers," she says, though she also was sure to mention that her experience with INTERxVENT as a program didn't falter; it was still a top-notch program. "We were a small blip on their radar, I imagine, so I don't think we were a priority, which is sad."
What went wrong?
So, during a time when employers are maintaining, if not increasing, their wellness investments - according to the National Association of Manufacturers, 77% of America's leading employers offer formal health and wellness programs - why would Better Health opt to displace the 100 or so clients it still had on its roster?
"They grew too quickly, too fast, with too many acquisitions," says Renée-Marie Stephano, president of the Corporate Health & Wellness Association, speculating on the possible causes of Better Health's closing. "They grew too quickly to allow themselves a financial cushion to weigh the outcomes of their programs."
She adds that she presumes "the issue with Nationwide was a lack of engagement - you need to set up the programs appropriately to begin with. If it was a financial issue, it was because they didn't have a good engagement program, which is the most challenging thing for any employer - to compliment a wellness program with an employee engagement program. You can bring them to water, but you can't make them drink."
Filling the vacuum
Better Health's clients were notified when the decision went public, but employers were not given guidance beyond RFPs, so a few wellness providers stepped up with limited-offer discounts, such as Limeade, a second-generation wellness provider that is offering a 25% discount to previous Better Health clients through Sept. 30.
Kyle Rolfing, CEO of RedBrick Health, another health management company, says his firm also has reached out to displaced Better Health clients and won a few.
"Some of their clients were taken by surprise and had a short time to find a home; normally it's a long process, when you consider finding a consultant, getting a request for proposal, decision-making time, and implementation process," Rolfing says, but he also mentioned that RedBrick had streamlined their process to get companies acquainted in 60 days.
Sign of larger trend?
LaFontaine's experience with Better Health, combined with disheartening national health statistics, has given him a pessimistic view of the wellness market and its chances for success.
"The health of this nation has only worsened - more obesity, poor rankings on nearly all markers of health in the world and at a cost that is generally twice the costs in other developed nations," he says, adding that "this country is too arrogant to learn from others and too habituated to the present systems to change. It's sad and tragic to me."
Granted, during the past 20 years, there has been a dramatic increase in obesity in the United States, and rates remain high. In 2010, no state had a prevalence of obesity less than 20%. Thirty-six states had a prevalence of 25% or more; 12 of these states had a prevalence of 30% or more. LaFontaine thinks it's indicative of the demise the wellness market.
"More and more companies will decide to trash their, for the most part, ineffective programs as the financial crunch continues to worsen," he says.
LuAnn Heinen, vice president of the National Business Group on Health, a nonprofit association of large U.S. employers, doesn't agree, saying that Better Health's closing "is an unusual situation. Part of the business was sold, and the part that was left hadn't established enough presence. It doesn't reflect an industry trend."
Though Stephano acknowledges that the United States is behind in terms of wellness, she agrees with Heinen.
"With increased health care costs and health care reform, there will be a greater focus on the part of the employer to engage their employees in prevention and wellness. I don't see this as a trend," Stephano says, adding that the piece Nationwide may have been missing - engagement, - must be present for wellness companies to exist. "Comprehensive programs that take into consideration the engagement of employees and their families will prove good outcomes and results, those, you'll see an availability of those programs."
