Is an Outcomes-Based Wellness Program Right for Your Organization?

Outcomes-based wellness programs do not just outline health targets for employees. They address a much larger problem. According to several studies, well-designed employee wellness programs alleviate the healthcare burden on employers, which is already at a tipping point. According to a recent Centers for Medicare & Medicaid Services report, health care costs are expected to increase from 18.3% of the GDP in 2021 to 19.6% in 2031.

In other words, they will reach unsustainable levels.

The chronic disease burden

“90% of the nation’s annual healthcare expenditures are for people with chronic and mental health conditions,” reports the Centers for Disease Control and Prevention (CDC). Driving this are 4 modifiable risk factors: tobacco use, poor nutrition, lack of physical activity, and excessive alcohol consumption.

To lower health care costs and reduce those risk factors, many employers have turned toward outcome-based wellness programs.

But do these programs really improve employee health? Also, do they align with your organization’s needs? To address these questions, let’s explore the concept, its benefits, and potential drawbacks.

Understanding Outcomes-Based Wellness Programs

What is an Outcomes-Based Wellness Program?

In their simplest form, outcome-based wellness programs are incentive-based employee behavior and lifestyle change programs sponsored by their employer. They stand at the intersection of health management and behavioral economics, with the main objective of motivating employees to take active steps in improving their health. The incentives can be negative (penalties) or positive (rewards) based on specific metrics.

Examples of Metrics:

1. Weight Management

Many programs use Body Mass Index (BMI) or waist circumference as markers of success. With medical costs for adults with obesity being $1,861 higher than those for people with healthy weight, solving this problem is an urgent need. Achieving and maintaining a healthy weight reduces the risk of chronic diseases like heart disease, type 2 diabetes, stroke, and certain types of cancer.

2. Blood Pressure

Commonly known as the silent killer, high blood pressure is just as deadly as obesity. Uncontrolled blood pressure can lead to an increased risk of strokes and heart attacks. Some outcome-based programs might set targets for systolic and diastolic pressure readings.

3. Cholesterol Levels

The National Institutes of Health recommends a cholesterol test every 4-6 years for adults. The higher the cholesterol, especially LDL (bad cholesterol), the higher the risk of cardiovascular problems like stroke. Some wellness programs have targets based on LDL, HDL, and total cholesterol readings.

4. Smoking Cessation

According to the World Health Organization, over 8 million people die from tobacco every year. Of these, an estimated 1.3 million are non-smokers exposed to second-hand smoke. Given these and other elevated health risks of smoking, some programs reward individuals who quit smoking or maintain a non-smoking status.

5. Blood Sugar Control

For individuals with diabetes or those at risk, maintaining blood glucose levels within a healthy range is important. The American Diabetes Association recommends maintaining A1C targets of <7% (70 to 130 mg/dL before meals and less than 180 mg/dL after meals) for both type 1 and 2 diabetes patients.

6. Physical Activity

While harder to quantify, some employee programs use wearable devices to monitor steps taken, active minutes, or other markers of physical activity. Meeting the recommended physical activity levels improves both physical and mental health.

What is the Philosophy behind Outcome-Based Wellness Programs?

Many of us have the best intentions for our health. We actually want to be healthy, sleep better, and concentrate more at work. However, there’s often a gap between our intent and the actions we take. The philosophy behind outcomes-based wellness programs is about bridging this gap. It’s about turning vague intentions like “I want to be healthier” into actionable, measurable goals like “I will reduce my cholesterol levels.”

There are two main ideas behind these programs:

The satisfaction of achieving set targets
The power of incentives

The first idea is simple: humans are inherently goal-oriented creatures. We find purpose, motivation, and satisfaction when we set our sights on a target and make strides towards it. Be it the joy of filling a piggy bank as a child or the satisfaction of finally fitting in your favorite pair of jeans, it’s all about setting goals and seeing/feeling the progress.

Outcomes-based wellness programs tap into this intrinsic human nature. Instead of just saying, “try to be healthier,” they provide specific goals like “aim for a blood pressure reading below 120/80,” or “work on shedding those 10 pounds over the next six months.”

They also leverage another aspect of human behavior: our love for rewards (and aversion to penalties). Even if you’d still get there at your own pace, a tangible reward entices you to reach the finish line faster. On the flip side, penalties nudge and remind us of the importance of our health targets, motivating us to do better next time.

What are the Characteristics of an Outcomes-Based Wellness Program?

An outcomes-based wellness program is all about the nitty-gritty. It goes down to issues like “How much weight should you shed in six months?” or “By when should you achieve this BMI?” Metrics are front and center, defining the core of everything the program stands for.

But a program isn’t just its numbers; it’s also about how we track those numbers, wellness incentives for hitting your targets, the advice and interventions tailored for you, and the recommendations to keep you on track. Here are the key characteristics of an effective outcomes-based wellness program:

1. Comprehensive Health Assessments

The first step in an outcomes-based wellness program is understanding where an employee’s health stands. You can use an HRA (Health Risk Assessment) for that. This tool provides a comprehensive summary of an individual’s current health status, potential health risks, and areas of improvement.

Methods of compiling that data include:

Questionnaires about an employee’s lifestyle, habits, and family health history
Biometric screenings for things like blood pressure, cholesterol, and blood sugar levels
Regular health check-ups

2. Personalized Interventions

Once we identify where an employee’s health is, the next logical step is helping them develop and maintain healthy behaviors and choices. This requires personalization and customization. Just as the name suggests, personalized interventions are tailored strategies designed specifically for an individual.

Using the data gathered from HRAs, experts can identify the areas that need the most attention. If someone’s battling stress, their intervention might include relaxation techniques, counseling, or mindfulness exercises. On the other hand, someone struggling with physical fitness might receive a tailored workout routine and diet suggestions.

3. Incentives and Rewards

When you associate positive actions with positive outcomes, you’re more likely to repeat those actions. Outcomes-based wellness programs tap into that power to increase engagement and participation. The incentives and rewards can take many forms. Here are a few ideas:

Bonus for individuals who complete a smoking cessation program
Discount on health insurance premiums for those who maintain a healthy BMI
Extra vacation days to those who consistently engage with the wellness program
Gym or fitness class reimbursements
Gift cards to health-focused stores or online platforms
Healthy meal vouchers or coupons
Entries into raffles or sweepstakes with wellness-themed prizes, from fitness trackers to wellness retreats

4. Data Tracking and Monitoring

We need a consistent data tracking and monitoring tool to ensure there’s fairness in the reward system. The data collected allows all stakeholders to see progress, identify challenges, and adjust interventions accordingly. Some tools include:

Wearable devices like fitness trackers and smartwatches to monitor steps taken, heart rate, sleep patterns, and more.
Digital health apps to log daily meals, track workouts, or monitor mental well-being. If it needs monitoring, there is probably an app for it.
Online portals where participants can view their progress, set goals, and get feedback.
Periodic biometric screenings to check metrics like cholesterol, blood pressure, and blood sugar.

5. Integration with Healthcare Providers

Outcomes-based wellness programs emphasize strong ties with healthcare providers or third-party wellness companies. This makes it easier to access professional insights, advice, and treatments. From general practitioners and nutritionists to mental health practitioners and physiotherapists, experts help bridge the gap between proactive health initiatives and professional medical care.

The integration can take several forms:

Referrals: If an employee’s Health Risk Assessment indicates a specific concern – say, a risk of cardiovascular disease – the program can facilitate a prompt referral to a cardiologist.
Workshops and Seminars: Healthcare professionals can be invited to conduct workshops, offer health checks, or give talks on various health topics, providing participants with up-to-date information and advice.
Collaborative Treatment Plans: For employees with chronic conditions or specific health challenges. Healthcare providers collaborate with the wellness coordinator to design a holistic treatment and management plan.

6. Long-Term Sustainability

The true measure of any successful worksite wellness program is the long-term impact it has on the employees. Although timelines are important, the goal is more than just hitting a few health targets; it’s about instilling enduring lifestyle and behavior changes.

That’s important because people have a tendency to revert to old habits. While short-term gains should be celebrated, they should be viewed as a trial run. Sustainable wellness programs are designed for long-term impact, encouraging sustained healthy behaviors rather than short-term fixes.

7. Compliance with Regulations

Given the personalized nature and use of health data, outcomes-based wellness programs need to comply with privacy regulations and ensure the security of employees’ health information. Regulations such as the General Data Protection Regulation (GDPR) in the EU or the Health Insurance Portability and Accountability Act (HIPAA) in the US are a good starting point. The Affordable Care Act has an exhaustive guide on both participation-based and outcomes-based wellness programs too.

8. Continuous Evaluations and Adjustments

Regular evaluation is essential to determine the effectiveness of any employee wellness program and ensure it has achieved the desired results. Periodic evaluation helps identify what’s working, what’s not, and where there’s room for improvement.

Key evaluation metrics include:

Participation Rates: Are employees actively engaging with the program?
Health Outcomes: Is there a noticeable improvement in the targeted health metrics?
Feedback Surveys: What do participants think of the program? Where do they see room for enhancement?
ROI: From an organizational perspective, is there a tangible return on investment, such as reduced healthcare costs or increased productivity?

Data is only as good as the actions it informs. Ensure you make necessary data-driven adjustments to incentives, barriers to participation, or guidance and support.

What is the Difference Between an Outcomes-Based Wellness Program and a Traditional One?

At a glance, outcomes-based and traditional wellness programs look similar. After all, they both aim to improve employee health and well-being. However, there are notable differences in how they approach and measure success. Below is a table with the main differences:

outcomes based wellness programs vs traditional ones

When is an Outcomes-Based Wellness Program the Right Fit for Your Company?

While relatively new, the concept of outcomes-based wellness has become more popular in recent years. Here are notable stats from the 2023 Employer Health Benefits Survey by the Kaiser Family Foundation:

46% of large firms offering a workplace wellness program offer an incentive for workers to participate
59% of large firms that offer a health risk assessment use incentives or penalties to encourage workers to complete the assessment.
67% of firms with a biometric screening program use incentives or penalties to encourage workers to complete the assessment.
20% of firms with a biometric program have incentives or penalties tied to whether workers meet specified biometric outcomes
29% of firms using incentives in a wellness program consider them “very effective” in achieving employee participation

So, when should you consider implementing an outcomes-based wellness program?

The answer to this question depends on several factors:

Company’s health objectives – An outcomes-based wellness program is a good fit if the company’s health objectives are tied to measurable health outcomes. For example, reducing the prevalence of obesity or type 2 diabetes.
Financial resources – Outcomes-based programs can be more costly than traditional programs. From the incentives themselves to tracking tools to personalized interventions, you need to ensure the company can sustainably fund the program.
Existing health infrastructure – If the company already has health screenings, biometric assessments, or health risk assessments in place, transitioning to an outcomes-based approach might be more seamless.
Company culture – Employee buy-in is essential for any wellness program’s success. A company with a strong culture of health, wellness, and mutual support might find it easier to implement and gain engagement than one without.
Long-term commitment – As discussed, behavior change is a core pillar of a successful outcomes-based wellness program. There’s no quick fix for that, though. Ensure the company is ready to invest time and resources into refining and improving the program over the years.

Other Key Considerations

The Health Enhancement Research Organization (HERO) recommends the following incentive design:

The outcomes-based program shouldn’t be overly burdensome or unattainable. The principle of SMART goals (specific, measurable, attainable, realistic, and timely) applies here.
The program shouldn’t be a subterfuge for discrimination.
Should focus on the most common health metrics – weight management, tobacco use, blood pressure, and cholesterol.
Only health status factors that are modifiable for many individuals through changes in health behaviors should be considered.
Employers should factor in potential time and financial barriers.
Ensure penalties, if used, do not place a greater economic burden on one race/ethnic group or income level than another.

Final Thoughts

No matter how meticulous you are, no corporate wellness program can fix employee health and well-being instantly. As numerous studies have established, people need both intrinsic and extrinsic motivation for significant behavior change. Put differently, your employees do not just need wellness incentives; they need a supportive environment. Unless the company builds a culture of wellness, your worksite wellness program will change nothing.

To guarantee success, ensure you do not just implement an outcomes-based wellness program. Include behavior change intervention components and health-promoting activities to encourage employees to take ownership of their health outcomes. Most importantly, ensure they know the company will support them until they achieve their target.

Workplace Wellness