Stronger, healthier ... cheaper?

Wellness programmes are proliferating in the global workplace. Stewart Farr weighs up their impact and assesses their cost-saving value

The Ebola virus and other serious contagions notwithstanding, it can be argued that, generally, we no longer live in a world of communicable disease where treating sickness is the first priority. The major challenge for today’s healthcare providers is instead one of addressing and controlling non-communicable diseases, which to a large extent are lifestyle-related, and are thus preventable. Hence the concept of wellness, and the increasing impact of wellness programmes on the global health insurance industry. Such programmes are now offered widely as part of domestic health insurance in developed markets, and corporate international private medical insurance policies in economies around the world. Their aim is two-fold – to empower the employees to take an active interest in their health, thereby potentially reducing their premium, and to contain costs for the insurer later down the line, when the medical claims it receives are reduced in both severity and number.

An old idea in a new suit

“In its broadest sense, the wellness programme has been around for some 200 years,” maintains Bradley Cooper, CFO of US Corporate Wellness, which focuses its attention on working with employees to change their health behaviour. “It’s not just illness prevention; broader issues such as lifestyle, stress levels, and financial control are all part of the wellness concept. The wellness programme (WP), as we know it, got going in the late 1970s/early 1980s. Employers gradually became more aware of their existence, and by the 1990s, the WP had become more biomedically and data-driven. Now we are into a third stage, with a heavy emphasis on two aspects – the technology side and the coaching side.”

you can't manage something you can't measure, so you must understand the current state of health of your members

US governmental research suggests that between 50 and 70 per cent of deaths in the country can be directly attributed to poor lifestyle behaviours; research that is backed up by findings from other associations and providers. One such organisation is the Oxford Health Alliance, a UK-based charitable institution with participants around the world seeking to reduce the impact of preventable chronic diseases. Neville Koopowitz, CEO of UK-based PruHealth with Vitality, commented:  “The Oxford Health Alliance’s 3-4-50 model clearly shows the impact of an unhealthy lifestyle. It highlights the three risk factors – tobacco use, poor diet (including harmful use of alcohol) and lack of physical activity – that contribute to four chronic diseases (heart disease, type two diabetes, lung disease and some cancers), which contribute to more than 50 per cent of preventable deaths. There is evidence that these negative chronic disease health trends can be reversed by motivating [people] and rewarding healthy behaviours.”

He believes the impetus behind WPs is gaining momentum on a global basis, but there are nuances on the focus areas; for example, in Asia smoking is still one of the biggest health risks, whereas for other areas obesity is the primary focus. Plan design is a complex business, and some policies are still not achieving what they are supposed to do, according to Koopowitz: “Many solutions of PMI products with wellness bolt-ons do not improve the economics of the healthcare market because they do not incentivise behaviour change and improve health.”

A 2010 Health Affairs review by Baicker, Cutler & Song (Workplace Wellness Programs Can Generate Savings) analysed 36 studies carried out in the past three decades and concluded that employer medical costs fall by about US$3.27 for every dollar spent on WPs. Over 90 per cent of the WPs reviewed had been implemented by large employers (more than 1,000 employees); industries represented included financial services, manufacturing, municipalities and universities. The most frequently used method of WP delivery was found to be the health risk assessment, used in 80 per cent of the studies reviewed. Around 40 per cent of studies include the use of self-help materials, the same percentage offered individual counselling, and 35 per cent featured on-site group activities. The most common risk foci were obesity and smoking – the two leading causes of preventable death in the US. Other risk factors included stress management, back care, nutrition, alcohol consumption, blood pressure and preventive care. The review concluded that large employers adopting WPs can see substantial positive investment returns, even in the early years, along with the other benefits of improved employee health – fewer sickness absences, reduced staff turnover and lower costs for disability insurance and Medicare.

Five years ago, The Actuary reported on studies concerning WPs and private medical insurance; data came from the programmes used by insurers in South Africa and the UK, and the risk-adjusted studies showed reduced healthcare expenditure for both the well and the chronically ill. The South African study, which used data from over 900,000 members of that country’s Vitality Wellness Programme, revealed that fitter people had 9.6-per-cent fewer hospital admissions, and stayed in hospital roughly half a day less than inactive patients. Medical costs once hospitalised were R5,052 (£391) lower for the fitter category, indicating that WPs have a positive impact on health costs even during treatment. Similar results were highlighted by the UK study of 200,000 members of the PruHealth Vitality Wellness Programme – in-hospital private medical insurance costs came in at between 30 and 45 per cent lower than if the programme had not been in place and, depending on employee engagement, out-of-hospital costs were lowered by between two and 40 per cent.

Investment first

Meanwhile, the cost of providing employee medical benefits continued to escalate at double-digit levels according to a 2012 survey from Towers Watson. For its Global Medical Trends study, Towers Watson surveyed 237 leading medical insurers in 48 countries, finding that the global cost of employee medical benefits was expected to increase by 9.6 per cent that year. This forecast was slightly lower than 2011’s 9.8-per-cent increase and the 10.2-per-cent increase from 2009, but the survey was confident of future double-digit increases in four of the five global regions (it was forecast that Europe should expect a single-figure hike).
The three most common cost drivers cited for this situation were new medical technology causing overuse of care (52 per cent of survey respondents), practitioners recommending too many services (50 per cent) and providers’ profit motives (31 per cent). The most popular methods of medical cost management for insurers, as identified by the survey, continued to be contracted provider networks and pre-approval for inpatient services (57 per cent of respondents), although 29 per cent of the insurance companies surveyed were also using wellness programmes. The most common prevention feature in policies remained the second medical opinion service, but the survey certainly demonstrated that insurers were increasing wellness services, such as health risk assessments and chronic condition/disease management programmes, whether in-house or through the use of outside partners.

One insurer developing a wellness offering for larger companies that post employees (and their families) to work and live abroad is AXA PPP International. While the programme is still in a formative stage with, as yet, no hard data to evidence the return on investment, the approach it is adopting is based on the one developed for large employer workforces in the UK by Dr Chris Tomkins, head of proactive health. A risk profile is drawn up for each employee, who is then made aware of key wellbeing and personal health risk management issues. “A lot of WPs are based on a customised angle, using logic trees, whereas a true personalised system works out what each individual needs,” says Tomkins. “My role is defined by better health outcomes; there is the potential for an insurance benefit, but our data is not yet ready for use by actuaries. Yet we can be sure that £600 is the saving on the average UK salary for removing one health risk.” He believes that a problem with WP development over the past 10 to 15 years is the impression given that it’s more of an entertainment or marketing issue (much like team bonding activities) rather than a health issue. The emphasis should always be on the health risk angle, and there is a lack of international coherence where wellness schemes are involved. In this respect, Tomkins believes that the WP has been a local agenda with varying degrees of priority. “Senior management are realising the benefit to their organisations, but it is unusual that they will have wellbeing expertise throughout their organisations at the corporate and local levels. Early adopter companies saw dozens of programmes implemented locally, not joined up, with no evidence of value.” He maintains that to drive health and wellbeing effectively in a multinational environment, there is a need for company-wide platforms with flexibility for local markets to have a measure of control within a shared framework.

There is evidence that these negative chronic disease health trends can be reversed by motivating [people] and rewarding healthy behaviours

It is undeniable that WPs help individuals and insurers to learn, at an early stage, of possible medical conditions before they become very expensive to treat. “This is a benefit that can really help in ensuring that anyone with limited access to treatment facilities or advice can then work with their provider in finding a solution,” notes Sarah Dennis, head of international at The Health Insurance Group, based in the UK. “Wellness benefits have, in general, been built into IPMI for quite some time, as it was deemed important to offer a basic cover for procedures such as PAP and smear tests to anyone away from their home country. [For the policyholder, such benefits offer] peace of mind if you want access to tests, screening or annual health checks that are normally accessible at home.”

Prevention better than cure

Until recently, WPs were viewed as an underutilised benefit, as many expatriates would never really engage with it, or would seek the opportunity to obtain care or undergo tests when they returned to their home country. “However, with the expatriate population on the increase and with individuals relocating to remote locations where medical treatment access can be limited, or travelling with pre-existing conditions, there has been a trend towards ensuring access to preventative treatment,” says Dennis.

A key benefit to policyholders is that a wellness programme is very likely to instigate a behaviour change to better health and thus decrease the likelihood of being admitted to hospital. “They get immediate value from their health insurance from day one, rather than having to wait until they make a claim,” argues Koopowitz. “Traditional private medical insurance benefit design only provides value to one extreme of the population – the sickest 20 per cent. This leaves a significant under-served population that sees little value from such products.” Healthier customers are obviously good news to insurers, because of the sustainable and significant cost savings realised through reduced incidence, faster recovery and ultimately lower claims costs over time.

What about the expense and complexity of establishing and integrating a WP? Is it worth the insurer’s investment? As an example, Vitality has been continually developed and refined since 1997 in conjunction with a number of the world’s leading academic institutions, and is based on the science of behavioural economics. Such investment and development means that it has grown to be the world’s largest incentive-led wellness programme, being used by over six million people in the US, South Africa, China, Singapore and the UK.

A number of providers have started to introduce some form of wellness and member discount programmes alongside their health insurance but, according to Koopowitz, they are missing the point. These tend to be unco-ordinated, standalone programmes that are disconnected from their core health insurance policies. “They do nothing to drive healthy behaviour, don’t improve health outcomes over the long term and therefore don’t improve the economics of the healthcare market. People respond to different behavioural motivators and an effective WP needs broad appeal, as well as being financially sustainable so that it can be continued over the long term. You also need to be able to measure any impact; you can’t manage something you can’t measure, so you must understand the current state of health of your members.”

Power to the people

The more insurers can evolve their propositions to help existing customers reduce their own health risks, as well as attracting healthier customers back into the market, the more the industry can dilute the impact of claims made by a few on premiums as a whole. Allied to the risk assessment focus of wellness programmes, more proactive insurance providers can implement adjustments to patient care and co-ordinate its management, creating bespoke benefit programmes, monitoring treatment plans and seeking second opinions where necessary. Together with careful analysis of claims to detect inappropriate levels of treatment, overcharging, or fraud, all such endeavours should result in significant cost containment for health insurance providers in the international marketplace.