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Employees Are Health Investors, Too

by Scott MacStravic

Businesses are taking diverse positions on the subject of investing in employee health.  Many are dropping health insurance coverage or cutting benefits, since these directly and immediately cut their labor costs.  But many think of health benefits as investments, with measurable and significant payoff in terms of employee productivity and performance, and thereby improved balanced scorecard performance for the firm.

The challenge for business is often one of timing.  Will the investments they make this year pay off in this year?  Will it take years for proactive health initiatives to affect workers’ health, and thereby productivity and performance?  Will the employees still be working for the same employer by the time investments pay off?  Will the return on investment (ROI) ratios and overall economic impact be great enough to make the decisions (and deciders) look good to boards and shareholders?

While workers, themselves, don’t worry too much about their “profitability”, they are also investors when health maintenance or improvement efforts are made.  They always have to invest their time and effort in any proactive health initiative.  They may also have to invest their cash, to pay for medications that control risks or diseases, to join health/fitness centers, to eat healthy food, for example.  And they are likely to have a similar attitude to that of employers when deciding whether to make and continue investing in such initiatives.

Proactive health may pay off almost immediately.  Getting a flu shot should prevent being smitten by influenza in the same flu season as the shot is given, though the payoff amounts to something that does not happen, so is harder to detect and realize its value.  Taking the medications that help control an existing chronic disease can save patients their own money and time getting care, to say nothing of the intrusiveness into their daily lives that many diseases impose – and these benefits can occur in the same year as patients “invest” in improving their compliance with medications regimens.

But when it comes to managing risk conditions — such as overweight/obesity, high levels of blood sugar, pressure and cholesterol, low bone density, etc. – it is unusual for any significant reduction in illness to occur in the same year that the investments are made.  It may take years, even decades for measurable results, which are also things that don’t happen, so are not very noticeable.

Risk behaviors, when ended, modified, or replaced by healthy alternatives, can produce immediate and noticeable benefits in some cases.  Quitting smoking, for example, can make it easier to get work done, thanks to not having to take smoking breaks all day.  It can save hundreds, even thousands of dollars a year in “discretionary income”, and make it possible to enjoy another use of the money.  Of course, it can also produce “withdrawal” symptoms, increase stress, lead to weight gain, or have other significant “costs” as well.

Most risk behaviors, however, have a long-term payoff, and since by definition “risk” is a statistical probability rather than a certainty, it is difficult for any individual to be certain a given behavior change has had any effect at all.  Some, fortunately, pay off in weight loss, energy gains, feeling better about oneself, or other benefits that may be considered well worth it by individuals, even if they are not certain about the health benefits.

Many employers and policy gurus may feel that the intrinsic benefits of reforming one’s health behaviors — whether to manage a chronic disease, reduce an existing risk condition, or reduce general risk of disease or injury – should be enough to motivate individuals.  But since the benefits thereof often take a while to occur and be noticed, and many may never be recognized, while the investments will always be noticed, the use of extrinsic incentives and rewards may be necessary to achieve a high enough level of motivation to make a difference.

There is also an issue of fairness involved.  If employers and insurers gain measurable financial benefits from changes in behavior made by employees, dependents, or health plan members – is it not fair that those who invest their time and effort to achieve such benefits should share in the results thereof?  The practice of “gainsharing” is already well-established in employee suggestion programs, for example, as well as in capitation and other risk/reward arrangements between payers and providers.

When and because employees or health plan members have to make their personal investments upfront, it is logical for payers to entice them to do so via incentives and rewards, to make the investment both significantly and immediately rewarding.  The intrinsic benefits of changing behavior may be too uncertain or take too long to make them effective justifications or rewards for such change.

On the other hand, extrinsic benefits notoriously lose their impact with time.  Continuous rewards for the same behavior become perceived as “entitlements” after a while, and may have little effect as a result.  Fortunately, at the point where extrinsic rewards lose their luster, it is that much more likely that the intrinsic rewards will be perceived and appreciated by individuals who change to healthier behaviors.  It may turn out that by enabling such people to monitor the improvements in health and quality of life they gain,  by reminding them periodically and encouraging their peers, family and friends to do the same, sponsors of proactive health initiatives can supplement or supplant their extrinsic rewards without reducing individual’s commitments and investments.


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