Wellness has key role in consumer-directed healthcare solutions

March 1, 2006

Putting consumers in charge is both the good and the bad of consumer-directed healthcare (CDHC). For those who know how to make good choices, CDHC is great.

Putting consumers in charge is both the good and the bad of consumer-directed healthcare (CDHC). For those who know how to make good choices, CDHC is great. But these individuals typically maintain a healthy lifestyle and already know how to seek out health-related information-it's those who don't who ring up the bulk of a company's healthcare costs and to whom the individual responsibility offered by CDHC is a downside.

A general rule is that 80% of a company's healthcare costs can be attributed to 20% of the employees, who often have preventable chronic conditions. According to Harris Interactive, direct medical costs for chronic conditions accounted for $510 billion in 2000; this is expected to increase to $1.07 trillion by 2020 and does not include indirect costs of employee absences, diminished productivity and other considerations. And, according to the Centers of Disease Control and Prevention, a full 75% of U.S. healthcare spending pays for preventable chronic illnesses.

To combat these problems, some companies have established wellness programs to encourage employees to adopt healthier lives, take preventive measures, and make informed healthcare decisions. Even as more companies are offering wellness programs, encouraging participation remains a challenge. In a June 2005 survey of 365 national companies by Deloitte Center for Health Solutions, companies with wellness programs reported that fewer than 25% of employees were participating, even though 47% of the companies said they were offering incentives to boost participation. So what can be done to motivate the 75% who don't take part to participate?

"Giving cash rewards is one of the least-effective means of motivating employees," says Bob Nelson, author of1001 Ways to Reward Employees. "While money may induce short-term involvement, it does not create motivation for the long term. Merchandise has a residual value over cash because the objects serve as reminders."

A study by the Incentive Federation echoes Nelson's opinion. In Federation Study 2005: Incentive Federation Survey of Motivation and Incentive Applications, almost two-thirds of respondents feel that cash awards are remembered the shortest.

Non-cash awards may be a more effective motivator by sparking excitement around the program, and prizes can be highly effective at driving behavioral change.

Choosing the perfect prize

In designing the reward structure, conduct research to determine what will motivate employees. Create recognition and community-building programs that will elevate awareness, improve employee participation, and sustain healthier workforces.

Health-related incentives such as a pedometer, body composition monitor or heart rate monitor can be incorporated as rewards. Talk with employees about other possible incentives or have them complete a survey. The more you know about your employees, the better you will be able to motivate them.

We compare employee ideas with trends in the consumer marketplace. By looking at the latest products, you can find what's going to inspire your employees to reach their goals. Symbols such as the Lance Armstrong "Live Strong" bracelets can spread your health- and wellness-related message in and out of the workplace.

The keys are to understand the motivational context for the incentives, find the right mix of marketing to achieve the desired change in behavior, and then measure the impact of this change on the organization.

"It is important to show the linkage between programs and the business contribution they provide for a company. Executives are reluctant to fund initiatives if they are uncertain about payback", says Ron Stone, senior vice president of the ROI Institute, a consulting and research firm in Birmingham, Ala.

If organizations can use powerful marketing principles to encourage participation in wellness programs and change employee behavior, then both employer and employee will have longer and healthier lives physically and financially.

Phil Rogers is vice president of The Robbins Company, which creates and implements cutting-edge recognition programs designed to drive employee engagement.