The Business Case for Integrated Wellness

Health plans typically treat wellness programs as a transactional service designed to meet the demands of employers and with little hope of generating incremental value. As a result, few health plans are satisfied with what wellness contributes to either bottom line or business strategy.

A more successful approach: treat wellness as a way of creating a relationship between members and the health plan. That relationship is vital to create differentiated customer experience in an increasingly consumer-oriented insurance market. And a correctly designed wellness strategy also offers the opportunity to improve data collection, identify members who need more attention, and guide them toward timely, appropriate care.

Case Study: What is Wellness Worth?

Wellness programs are frequently treated as add-ons to the group business or even as stand-alone P&Ls. Our research indicates that wellness can be much more valuable than its current treatment would imply. Below, take a closer look at one recent client's experience with an uncompetitive wellness offering:

The client's problematic offering had known performance issues, had generated serious customer complaints, and was consistently losing market share. Yet, despite all these problems, and a general lack of belief in the value of the service to members, the company was having a hard time justifying investments in operations and IT for the program.

In support of creating a long-term strategy and investment plan, we worked with the insurer to take a broader look at value and also consider ROI in terms of member engagement, improved risk adjustment, and more current and accurate member data, for example.

We estimated that the improved wellness program could transform from break-even performance to an additional $30M in revenue and two to three times that in the value of retained wellness group clients.

Moreover, we further identified NOI improvements of $6 million to $8 million in potential savings in wellness operations and IT costs—mostly attributable to excessive manual labor, rework, and costs of integrating with third-party wellness vendors.

More difficult to quantify, but potentially quite significant over the long run, were secondary benefits to the organization including the value of increased member scores, reductions in medical spend, and the value of an expanded member data set resulting from more frequent interactions.

The total: A wellness business that was considered a “bad business” that salespeople avoided selling could be producing value to the enterprise in excess of $100 million annually.

1What’s wrong with most wellness programs?

Too often, insurers treat wellness as a way to add bells and whistles to a benefit package. But they haven’t thought about how wellness can create value for them. If you think about it, one of the most important things health plans need today is to create a strong, positive relationship with members—and to treat that relationship strategically. Wellness is an ideal platform for building that relationship, but almost no one takes advantage of it.
2Why is the relationship so important?

Consumers today have an unprecedented amount of control over their health benefits, and that trend is likely to continue. Health plans need to differentiate themselves—especially through customer experience, an area where most insurance companies fall down pretty badly. In a wellness program, you can have positive, ongoing contact not just with your sicker members, but with the 80 percent who are relatively well—and least tied to you. You can prove that you contribute to their health and wellbeing.
3Are there other benefits for the health plan?

The most important in the short run is probably data. As we move more and more into a risk-adjusted, value-based marketplace, health plans need to identify high-risk members as early as possible. A wellness program, especially one actively supported by the employer, can be a powerful tool for getting everyone properly coded. But to reap the full benefits, a health plan needs to think hard about data architecture and getting all of its systems to talk to each other. It’s worth the effort.