RAND’s Workplace Wellness Programs Study — Grade: Incomplete
By: Henry Albrecht, Limeade CEO
The 4 Best & Worst Things about the Research and How the Broken Wellness Industry Can Be Fixed
The RAND Corporation® recently released a 137-page report, funded by the U.S. Government, to document:
The prevalence and characteristics of workplace wellness programs
The evidence for program impact
The role of incentives
The key facilitators of successful wellness programs
After reading the entire (did I mention 137-page?) report, I believe the study is full of potential, but is both conceptually and functionally flawed. So here’s my take on the best and worst aspects of the report, along with suggestions that health and wellness professionals can use to mine its hidden gems.
The great data debate. The report draws attention with its data. At a minimum, RAND’s bibliography puts dozens of prior studies in the hands of researchers nationwide, and that’s a good thing.
Unbiased and unafraid. The report calls out several failures of the wellness industry. It reveals a reality known to behavioral science (and economics) for decades: financial incentives alone are not enough to drive the types of lasting behavior change that improve health and enrich workplaces. The four first-generation programs the report studied delivered only about 2% health insurance cost savings due to specific assessments and lifestyle, disease, or condition management interventions.
Identifies important measurement challenges. Among participants in wellness programs, the report shows an increase in the percentage of “normal weight” people (from 21% to 33%) versus a decrease (21% to 19%) for non-participants. Seems like a big deal. Additionally, 80% of employers report achieving productivity benefits, 78% report absenteeism benefits, and 61% report health cost benefits in their own wellness programs. But the study also reports that fewer than 5% of companies can accurately measure these impacts. These companies are not incompetent – when they see a flat or declining trend, they know it may be due to multiple factors. Matching outcomes to programs is hard, and even harder when multiple factors are involved.
Includes great recommendations. The author identifies five best practices needed to upgrade, revolutionize, and prove the value of workplace engagement, performance, and well-being (AKA “wellness”) programs. If you’re not up for the 137-page read, here’s a summary:
Clearly communicate through multiple channels – and include all of the real reasons for the wellness program(s) in candid terms.
Create engagement opportunities. Make programs and resources easy and accessible, paying special heed to employee populations where you predict the biggest savings opportunities.
Get leadership involved at all levels.
Use existing resources and relationships. Integrate health plan programs, EAP, facilities, cafeterias, and technologies.
Continuous evaluation. Look at employee needs, feedback, and outcomes iteratively.
Wellness starts with efficient pricing. The biggest flaw in the report is that it omits the elephant in the wellness room: the slightly-more-rational pricing of healthcare. There is – in economic terms – “price discrimination” fundamental to the Affordable Care Act that essentially rewards participants (or goal-achievers) and penalizes non-participants (or goal non-achievers) in evidence-based wellness programs. Compensation changes – like bonuses for perfect attendance or fines for safety violations – connect the goals of the “health and productivity manager” (the insurance buyer or employer) to the desired activities or outcomes (e.g., health, productivity, attendance, teamwork, etc.). This “merit-based pay” approach is the fastest way to massive return on investment for a company. Society doesn’t seem to find it unfair for teenagers with lots of speeding tickets and fender-benders to pay more for insurance than middle-aged moms and dads who’ve never had an accident. So why do we find it odd to increase healthcare costs for chain smokers who refuse to quit? A whole industry has sprung up just to make pricing transparent in healthcare (see companies like Castlight Health, Healthcare Blue Book and Change:Healthcare) precisely because the medical industry is built around price obfuscation. So my advice: be transparent about the pros and cons of being healthy and engaged, and go boldly into a future of transparently priced programs.
Looking at the wrong outcomes. Just as some of the smartest people in the health and insurance industries are turning their back on the word “wellness,” HR and human capital executives are embracing it. And for good reason. As it turns out, paying less than $100 per year for a wellness program (versus around $10,000 for insurance) is not a silver bullet for cost reduction. In fact, a myopic focus on healthcare costs misses the much bigger outcomes – talent acquisition, retention, productivity, and performance – that are possible (and measurable) with modern wellness programs. According to the Integrated Benefits Institute’s survey, “Making Health the CFO’s Business,” CFO’s will always look to their OWN data as the most trustworthy. And the outcomes they look at as most important to productivity are 1) maintaining a skilled workforce, 2) controlling staff size, 3) increasing employee satisfaction, 4) reducing turnover, 5) providing employee training, 6) making capital investments, and 7) improving employee health. Here’s the deal: modern wellness accomplishes 1, 3, 4, 5, and 7 – and are potentially the cheapest way to engage your human capital in all of these ways. So yes, health costs matter. But so do resilience, teamwork, stress management, energy level, and commitment. And in fact, these factors are not only measurable but also ten times better at predicting productivity.
Looking at the wrong programs. The RAND study focuses on high-cost programs where participation is defined as “at least one phone or mail contact.” These are old-school programs – not the fun, social, interactive stuff of today’s best offerings. While RAND acknowledges that interactive and social works better, research reveals that people are impacted most by people they know and work with. Because of this, workplaces are the ideal place to offer wellness programs. Also, not one program in RAND included an outcomes-based model – I look forward to future research on that approach. Painting such a diverse industry with a broad brush misses the fact that large global employers are saving tens to hundreds of millions with the right combination of strategy, leadership support, incentive design, benefits strategy and communications. These companies demand wellness tools, programs and technologies tailored to their strategies and cultures.
Bad science. By looking at how participants improve versus non-participants, RAND ignores self-selection bias. Self-improvers are likely to be drawn to self-improvement programs, and self-improvers are more likely to improve. So even the small and statistically insignificant good that RAND touts may well be based on selection bias.
All in all, I’d like to say “thank you” to RAND. We’re in the early days of a booming industry that is redefining the employer-employee contract, so RAND’s work – while flawed – is still pioneering. The healthcare industry needs more accountability, reform, rational pricing, and good data on a broad set of outcomes. We need to apply RAND’s four best practices (and more) everywhere. And we need more research, iteration and debate – which can always be found on our blog.
The challenge is great, but the evidence still shows how important it is to focus on the holistic well-being of your employees.
About the author
Henry founded Limeade in 2006 and has led the company from an idea in his basement to a high-growth, industry-leading SaaS employee well-being company that serves some of the smartest companies in the world.