Market Commentary - 4th Quarter 2020
Markets continued their advance over the quarter as accomodative monetary policy and multiple COVID-19 vaccine approvals bolstered the economic recovery.
May 23, 2008
Wellness is often mentioned as a key component of healthcare reform yet the success of these programs is mixed.
We asked Kate Fitch for perspective based on lessons learned from the private sector.
Q: What wellness programs are most effective? Do some programs work better than others?
A: Program effectiveness goes beyond whether or not it "works." Wellness programs should be evaluated in terms of both efficacy and value. Providing everyone with a personal trainer, personal nutritionist, and exercise equipment in the home might result in a few great outcomes. But if the cost becomes astronomical, or if the population affected by the program is insignificant, the value of the program comes into question.
What wellness programs make the most sense to invest in? Those that have interventions with an evidence base and bring value in terms of cost, health, and the number of lives targeted. Having an "evidence base" refers to interventions that have empirical support.
While medical management can be most effective by concentrating on a small number of high-cost and sick people, wellness is aimed at large numbers of basically healthy individuals. The programs that make most sense to offer are smoking cessation and weight loss. In a working-age population, 24% smoke and 35% are obese. Due to some overlap in these two groups, 50% of the working-age population engage in one or both of these higher-risk behaviors. Employers should get better value from wellness by targeting this 50% of the population. And the evidence base for smoking cessation and weight loss programs is fairly well established. For smoking cessation, studies report a 30% efficacy rate when a program combines intensive behavioral counseling, nicotine replacement therapy, and pharmaceutical therapy. Weight-loss studies report better efficacy when nutritional counseling, intensive behavioral therapy, and pharmaceutical therapy are combined.
Are these programs guaranteed to succeed? Of course not. Long-term maintenance of weight loss outcomes has been disappointing. Note that in both cases, a combination of treatments results in the best outcome. The evidence shows that these combinations of treatments are more effective than any single treatment.
Even if a program has an evidence base and brings value, the weakest link in the equation is how to get individuals to engage in a valuable, evidence-based program—and, if they engage, to get them to actually change their behavior. So the value and evidence base are an essential part of the equation but the wild card is how to tailor a program to get a particular population to engage. Many employers provide participation incentives for employees with gifts, time off, and reduced deductibles and premiums. Do these incentives, which come at a price, actually get individuals to change behavior? Programs employ a patchwork of behavior-change theories, though proof remains limited on which behavior-change theories work for particular programs with particular populations.
To return to the original question, we know a little bit about which wellness programs have an evidence base and bring value, but we know a lot less about how wellness programs engage individuals and get them to change their risk behaviors.
Q: How much do wellness programs cost?
A: The true cost of a wellness program may not be apparent. There is usually more to a wellness program than paying a vendor or buying a WebMD license. Employers often underestimate the costs associated with purchasing, building, and administering wellness programs. And if a financial incentive is offered, such as $200 for filling out a health risk assessment, the cost can become quite significant if the participation rate is high. The costs associated with benefit uptake must be considered if benefits are added for smoking cessation and weight-loss drug therapy as well as behavioral and nutritional counseling. Employers may experience increased utilization of medical services if promotion of cancer screenings, annual physicals, and flu shots are part of a wellness program. Employers are often already paying for some wellness components through their health benefits or employee assistance programs (EAPs). Recently I estimated a cost of approximately $14 per member per month (PMPM) for an employer that had a robust wellness program implemented. It can be more expensive than people think.
Q: How do you measure a return on your wellness investment?
A: Looking for a financial ROI from medical claims savings is the wrong approach. Theoretically, a successful wellness program will prevent a portion of those with the targeted risk behaviors from developing chronic disease associated with the risk behaviors and will increase the utilization of screening and preventive services by those not accessing these services. That is the theory. The actuality? There will be increased utilization of services by those not currently accessing these services, in particular for the 47% of adults in a commercial population who currently spend less than $1,000 annually. These lower-cost, healthy individuals are targeted by wellness programs and medical spending will increase as they go for their annual physicals, get put on lipid-lowering agents, get their flu shots, and go for cancer screenings. What we don’t know is whether fewer people will become chronically ill. Isn’t this the point of a wellness program? It is, but the experience data is still inconclusive and the outcomes have been disappointing when it comes to engaging people and getting them to change their behavior, particularly with weight loss and smoking cessation.
The Disease Management Association of America (DMAA) recommends measuring and reporting behavior-change outcomes. What percentage of individuals that engaged in an obesity program lost 5 kilograms or more? What portion of those accessing a smoking-cessation program were smoke-free after one year? In addition to behavior-change outcomes, other meaningful outcomes can include effects on absenteeism, disability, and workers' compensation claims.
Some employers are reluctant to invest in wellness programs, believing that with employee turnover, they will not reap the rewards. Even so, for some employers, the positive impact on employee morale and retention is enough of a return. Many employees report a sense of good will from employers that maintain on-site gyms, subsidize health club memberships, or provide healthy cafeteria food offerings.
Q: What is the biggest challenge facing wellness?
A: Establishing the economic and clinical case for investing in wellness programs. Wellness is still in its infancy; it has not had the pressure from payers or the time to establish its cost and clinical effectiveness. Cost savings claims for disease management were taken for granted on an intuitive basis for years but are now being aggressively challenged by purchasers as studies fail to provide empirical evidence of cost reduction. Payers (including employers) are becoming more savvy purchasers of care management programs and are demanding a return on investment. The wellness movement needs to be cautious in claiming cost savings and would be better served by taking the high road and focusing on the outcomes that are most important—success at changing risk behaviors.
Kate Fitch is a principal and healthcare management consultant who specializes in medical management, especially wellness and disease management.
Wellness lessons learned from the private sector
THIS INTERVIEW May 23, 2008 Wellness is often mentioned as a key component of healthcare reform yet the success of these programs is mixed. We asked Kate Fitch for perspective based on lessons learned from the private sector. Q What