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Employers, Wellness And The Value of Carrots

February 10, 2011
9:26 am

We’ve learned this week that employers are making greater use of carrots – no, not the vegetables that improve your eyesight, but rather financial incentives – to encourage employees to take part in corporate wellness programs.   In what they’re doing, there may be important lessons to be learned for governments and communities.

According to a study sponsored by Fidelity Investments and published in the Wall Street Journal Health Blog, the percentage of employers with at least 1000 employees offering wellness incentives jumped from 57% in 2009 to 62% last year and the average employee incentive rose 65 percent in just one year to $430.  It’s also clear that employers are favoring the carrot over the stick in their approach to workforce wellness, with just 12% of employers penalizing employees for not participating in wellness activities.

Is this investment yielding tangible benefits?  Available evidence says it is.  According to Johnson & Johnson, for example, the company saved $250 million on healthcare costs over the past decade with a return of more than $2.70 for every dollar spent.  And another company profiled in the Harvard Business Review reduced their healthcare costs more than $1,400 per person participating in wellness programs and saw a return of six dollars for every dollar spent in incentives.

In looking at our nation’s healthcare needs over the next few decades, wellness has to be our priority.  Preventable chronic disease is on the increase and is projected to escalate at an even more rapid rate.  No matter how we reform our healthcare system, we won’t be able to stem the tide of increasing costs if millions more Americans have diabetes, heart disease and other avoidable (and expensive) conditions.

Public officials need to take a hard look at the lessons being learned in corporate America about incentivizing individuals to take better care of their health.  Investments in wellness can generate a better, more affordable healthcare system in the long run.

Bringing Private Sector Innovation to Federal Health Reform Efforts

February 03, 2011
3:23 pm

There’s no question that, if we’re ever to have effective health reform in this country, improving our healthcare delivery system has to come through a public-private partnership.

One of the key elements of the Affordable Care Act is the creation of the Center for Medicare and Medicaid Innovation (CMMI), an entity that will be charged with evaluating concepts for healthcare delivery reform and then putting into action demonstration projects that have the potential to improve healthcare quality and increase cost-efficiency.

Fortunately, much of this ground is already being broken in the private sector.  Throughout the country, hospitals, pharmaceutical companies, medical device manufacturers, group purchasing organizations, insurers, distributors and other health sectors are succeeding in developing new practices and technologies to improve patient care, control costs and promote value.

At the Healthcare Leadership Council, we’ve compiled a number of these examples, with supporting metrics, and provided them to Center for Medicare and Medicaid Services administrator Dr. Don Berwick.  We call the document the HLC Value Compendium.

The purpose of the publication is spelled out in the forward that McKesson Chairman and CEO John Hammergren and I wrote.  It says, “This compilation has a definite and important purpose.  The promising work being performed by private sector healthcare organizations can serve as models for policymakers seeking to inject innovation into public programs and thereby moving our nation’s healthcare system to one more strongly defined by quality and cost-effectiveness.”