Total Benefits:Pay for (Patient) Performance

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Illustration By Olaf Hajek

Behavioral economics plays a big role in the success of wellness programs

"People are constantly making trade-­offs between immediate gratification and delayed benefits," says Kevin Volpp, Associate Professor of Medicine and Health Care Management at the University of Pennsylvania's Wharton School. Employers could get better results in their wellness programs if they focused more on the immediate gratification, say Volpp and a team of academics currently researching the role of behavioral economics in these programs.

Volpp and Wharton School Professor of Health Care Management Mark Pauly call this approach "P4P4P": pay for performance for patients. Too often, they say, employers' wellness programs have had major incentive-related design flaws that hampered results. … Rather, people's psychological motivations should become a key part of wellness-program design, Pauly, Volpp, and their collabor­ators say, "Our human nature is a combination of rationality and irrationality. It is best to design a program that uses both approaches," Pauly says. "The rational thing is to be conscious of your mortality and doing something about it, … In some ways, life is too short to be rational all the time."

… "We have 25 years of research on the use of behavioral economics on the retirement-planning side, and we are now starting on the health side," says Paul Fronstin, Director of the Health Research and Education Program at the Employee Benefit Research Institute (EBRI) based in Washington. "What employers have learned is that they have not provided the right incentive" in wellness programs. …

What works differs based on the desired behavior change and the particular employees involved. "The whole challenge of the psychology is, what is the trigger point?" says Chris Mathews, a Vice President at The Segal Co. in Washington. Employers know their populations' trigger points better than wellness providers, he says….

Sources point to these ideas for employers to consider when designing a program:

 Money often motivates people to participate. … While the Wharton research has not yet determined if it is the best motivator for wellness adherence, Pauly says, "Our visceral feeling is that cash is preferred to income-in-kind." Offer employees $250 off their annual health-insurance premiums for participating, and "many people will not even notice that" … Volpp says. "But if they get a check for $250, that will be very noticeable," he says. …

A reward should materialize soon. … A reward has to be paid close to the behavior an employer wants to encourage, Pauly says. … As [Barry Hall, a Boston-based Principal at Buck Consultants, LLC] says, "There is what we call a 'present bias': People put more value on things that are right in front of them today than things that are off in the future."

 Consider making it competitive. Create some type of competitive atmosphere to get people engaged, Robbins suggests. So, a company with multiple sites might have a weight-loss or exercise competition amongst them, he says. …

 Ultimately, motivation has to become internal. Incentives do help drive near-term participation "but, when you take them away, most people rebound to their old behavior," says Kathy Harte, East Region Leader of the Hewitt Associates, LLC's Health & Clinical Consulting practice. … For something to become a long-term lifestyle change, the motivation has to shift from an external factor, such as a material reward, to an intrinsic motivation, [Hall] says. Employers can help by creating a "culture of health" in their organizations, he says.

"What has worked is a multiprong approach," Harte says. That means things like senior management leading a lunchtime walking program, middle management supporting employees who need to take a wellness day to get preventive care, and peer-level wellness "champions" who talk informally with co-workers about their success, she says. It also includes subtle messages such as whether staff meetings feature cookies or fruit as a snack, Hall says. "A lot of social things are going on [in those ­meetings]," he adds. "Is it cool to eat fruit?"

Judy Ward
editors@plansponsor.com