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15 Oct. 2015 | Comments (0)

Evidence that wellness programs lose money has been accumulating. This evidence has come not just from critics such as ourselves, but even from members of the wellness industry. In total, the evidence is compelling enough that companies planning or currently running their own programs may want to reconsider their commitment to these programs, or at a minimum, recalculate savings using the available calculator. This is especially true for companies where these programs are proving unpopular enough that significant savings would be required to justify the negative morale impact that these programs often involve.

One piece of evidence is a report compiled by the two industry trade associations: the Population Health Alliance (PHA) and the Health Enhancement Research Organization (HERO). The report acknowledges that it may not be possible to save money in wellness, at least over the two-year period their example program covered. (We previously wrote a detailed critique of the report.)

The HERO report is a self-described “consensus” document, representing “countless hours of research and discussions by more than 60 members of both organizations and many outside experts.” Its signatories include United Health Care’s Optum subsidiary, Aetna, virtually all the major wellness companies, and Mercer, the largest benefits consulting firm.

HERO calculates gross savings as $0.99 per member (employee) per month (PMPM) in “potentially preventable hospitalizations,” (PPHs). HERO is quite clear that PPHs are the only source of reduced health care spending, going so far as to say that wellness “should increase the use of certain services… medications and outpatient visits. It is even possible to see a rise in ER and urgent care services.”

The report estimates wellness program costs at $1.50 PMPM, although that excludes incentives, consulting fees, internal staff costs, extra medical expenses, and several other items. Some of these listed elements of cost can’t even be quantified, like what HERO describes as the “tangential” cost of employee morale and company reputations, as Penn State or Honeywell would attest. Even with these omissions, subtracting just the stated vendor $1.50 fees from the savings yields a net lossexceeding $0.50 PMPM.

In all fairness, it should be pointed out that this loss was not an intentional finding in this document. (The two pages whose figures are compared were not intended to be read side by side.) Further, the loss, if any, would not be the same in all organizations. Others might be spending more or less on wellness than $1.50 PMPM, or saving more or less than $0.99 PMPM on PPHs. (You can use this free tool we created to replicate this analysis in your own organization.)

Here’s some more evidence. The wellness industry has a trade journal that has in the past always found savings (in articles in which savings were estimated). So it was no surprise that the American Journal of Health Promotion published a meta-analysis by people at the University of Tasmania who concluded that wellness has saved money. However, a careful reading of it reveals the following:

  • Studies they describe as “low-quality” showed savings, while “high-quality” studies did not. The authors arrived at their conclusion that “mean weighted ROI” is positive by weight-averaging (based on the number of studies) the results of high-quality studies with low-quality ones. The validity of averaging studies of widely different quality is open to question. For example, “averaging” Copernicus and Ptolemy could lead to the erroneous conclusion that the earth revolves halfway around the sun;
  • The highest-quality studies are randomized controlled trials. Those “exhibited negative ROI” according to the study.

Once again, the intended conclusion was that wellness saves money — something explained in detail in a subsequent issue of AJHP. However, case studies conducted to tight specifications in other journals, such as one on PepsiCo or another on Barnes Hospital in Health Affairs, have confirmed losses as well.

 Other recent data points are consistent with these case studies. Our research has shown that short-term corporate weight-loss initiatives, such as “lose 10 pounds in 8 weeks” programs, usually fail or even backfire by incentivizing people to binge before the first weigh-in and crash-diet before the follow-ups. Likewise, check-ups don’t save money. Worse, as Choosing Wisely says, they can do more harm than good to your employees. Annual biometric screening of healthy adults, the standard in wellness programs, is not recommended by the United States Preventive Services Task Force, while many wellness vendors offer screens that are specifically not supposed to be done at all. Others have noted age and class  discrimination from wellness. The Wellness Syndrome examines whether demanding that workers demonstrate their commitment to health is even a good idea in the first place.

Meanwhile, the nonprofit RAND Corporation, other health economists, the mainstream press, the left-leaning media and the right-leaning media have largely reached the same conclusion. It is no surprise, then, that only one wellness vendor out of some 1,000, U.S. Preventive Medicine, has achieved recognition from the Validation Institute (part of the Intel-GE joint venture called Care innovations) for reducing PPHs considerably faster than they would have fallen on their own.

Given their losses, impact on morale, and possible hazards, it is time to move on from corporate wellness programs. We are admittedly biased given that our firm offers employee-education programs, but we believe that vendors specializing in price transparency, care coordination, and employee health care education all provide much more transparent and valuable services at lower prices.

 

This blog first appeared on Harvard Business Review on 10/15/2015.

View our complete listing of Compensation and Benefits blogs.

  • About the Author:Al Lewis

    Al Lewis

    Al Lewis is the author of Why Nobody Believes the Numbers: Separating Fact from Fiction in Population Health Management. He is president of the Disease Management Purchasing Consortium International, …

    Full Bio | More from Al Lewis

  • About the Author:Vik Khanna

    Vik Khanna

    Vik Khanna is a St. Louis-based health consultant with extensive experience in managed care and wellness. He writes the Khanna On Health Blog, is wellness editor at large forThe Health Care Blog,…

    Full Bio | More from Vik Khanna

     

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