safeway: wellness incentives’ poster child or punching bag?

January 20, 2010

in wellness

a recent washington post article thrashed wellness incentives’ “poster child”—safeway. the article asserts safeway makes misleading claims about the connection between their wellness incentives—they offer lower premiums to employees who make strides on healthy behaviors—and their health expenditures, which are relatively the same as in 2005.

i spoke with jane sarasohn-kahn, a health economist, management consultant, and blogger at, about what the article means.

obviously, this involves a little political posturing. what’s your take, jane?

there isn’t a lot of evidence-based research in the area of employer-sponsored wellness programs. while most employers have offered them, and in 2010 more plan to do so, employers in one sense take a leap of faith in terms of hard roi expectations.

when you consider that 75% of the $2.2 trillion the u.s. spends on health care goes to chronic conditions, even if we move the needle one percentage point, we conserve $22 billion of costs in the health system that can be redeployed to, say, cover more uninsured people. so even if safeway’s ROI is $1.27 on $1, it’s still “real money.” employers must adopt a range of tactics to stem double-digit cost increases, and safeway’s healthy living programs have indeed been a case study that switched-on employers closely monitor.

buried deep within the article (page 4 in the online version) was this:

“according to company statistics, the proportion of employees classified as obese declined by five percentage points, while the proportion that were overweight declined by one percentage point. meanwhile, 40 percent of workers and spouses who failed the blood pressure test in 2008 passed in 2009, 30 percent of former smokers registered as tobacco-free, and 17 percent who failed the cholesterol test in 2008 passed in 2009.”

seems to me these figures show their efforts are working.

these are exactly the outcomes that i’m talking about. the proof is in the pudding. that’s real outcomes that add years to life, and quality to those years. whether the ROI is $3.27 (as found in this separate study we also discussed), who knows? the point is that a drop in obesity and smoking will lead to slower medical trend for safeway and other employers who adopt nudge-incorporating programs that help people make the important, even small, micro-decisions on a daily basis: what groceries to buy, what to cook for dinner, whether to buy a soda or candy bar out of a vending machine at 3 p.m., and how far to park the car from the workplace so as to get in a nice, long walk to the sedentary desk and computer setup at the office.

a major concern is that employers will incorporate the cost of the incentives into premiums, which means those employees who don’t participate eat the costs.

upping premiums for nonparticipants isn’t a widely spread practice—yet.

i don’t believe it’s immoral to charge different premiums for participants versus nonparticipants when the programs offered are appropriate for the employees. if an employee is morbidly obese, however, it may be that an exercise regime for that employee might not be available at, say, a typical health club but a more medicalized approach (disease management program) would be appropriate. so customization of programs and smart targeting of programs to employee segments is important. one size literally doesn’t fit all.

how should we be thinking about and measuring the effectiveness of wellness programs?

this is a key question: how are we to measure “real” ROI in wellness programs? when a program is set up, there should be, ex ante, metrics developed that employers, employees, and the program managers all comprehend and agree on. these metrics should be sensible, logical, and simple to measure. then initial benchmark data can be collected and tracked over time.

the incentives are important. it doesn’t have to be huge; it can be a gift card to amazon. small incentives can concentrate the mind. and that’s the art of it. you need to figure out what the nudge has to be.

full health engagement would be optimized through employee-patients being linked in to real-time health data telemetry through, for example, smartphones. if someone managing a chronic condition can track their real-time numbers and target goals, they can be empowered to make better decisions on a 24/7 basis.

full participatory health on behalf of the employee should be the goal. you can design a beautiful program, but without a complement of “nudges” and incentives, coupled with user-centric designed tools to use on-the-go, roi won’t be optimized.

More interesting reading on the topic:

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