The EHM Market  

The biggest trend relates to the scope of “employee health”, including the number of employees, types of health challenges, and measures of impact that are being addressed.  From original modest “worksite wellness” efforts by employers, and disease management efforts by insurers, the scope is moving to “total population health management”, with virtually all employees targeted for some kind of health maintenance, risk condition or behavior correction, or disease management, together with productivity and performance impairment factor reduction.  The economic impact for employers is moving toward both “direct” effects: health care, workers compensation and disability expense; and “indirect” effects: workforce productivity, performance, technical and service quality, with overall labor costs as well as revenue effects being discovered.

Together with the broadening of EHM’s scope and success measures is emerging the coordination or integration of EHM strategies and initiatives with overall employee benefits and other management efforts to improve workforce productivity and performance, including pay for performance, training and development, as well as employer internal investments in EHM, as contrasted with outsourcing total responsibility.  Where worksite wellness may have been the responsibility of a special wellness director, or Human Resources, the integrated approach that includes “value-based” EHM is more likely to be directed by senior executives and business owners.

Overall, the employer market is bifurcating — between those that are getting out of the employee health benefit business entirely or almost so — and those that are gradually realizing the full extent of economic benefit that is possible through a comprehensive/integrated approach to employee health, productivity and performance.  There is still plenty of room within the EHM market for growth, though the competition for it this market is also growing.

Competition

Both the numbers and types of competitors in EHM are growing, as specialized suppliers are being joined by healthcare organizations, by employers that are not simply managing their own EHM programs, but offering them to their peers, by insurers that are offering them to their clients and non-client employers alike.  Mergers among all of these keep the sheer number of specialty suppliers in check, but they are getting bigger and moving from limited to broader services and scope in the process.

As many employers look to reduce the number of EHM providers they deal with, the market is shifting to preference for “one-stop shopping” suppliers that can deliver a comprehensive range of interventions, addressing all but the rarest of conditions.  Suppliers once limited to insurer markets and disease management, for example, are generally adding in employers and wellness, health risk behaviors and conditions, as well.  They are also moving to reduce their overall costs, since traditional DM interventions have tended to be too costly (e.g. Medicare demonstration project failures) for even chronic conditions, and far too costly for wellness and risk management efforts.

Guarantees

In the early years of disease management, specialty suppliers often guaranteed results.  They were able to succeed in many cases because they used claims analysis to identify DM targets, and counted after vs. before health care costs as due to their DM interventions, ignoring the effects of regression to the mean among high-cost participants.  This practice died out as insurers and employers became more sophisticated about evaluations, but it has returned among at least some EHM suppliers.  They tend to guarantee results not in the first year, but more likely in two or three years, however.  Thanks to counting productivity and performance effects, this is a lot safer practice than was the case with DM.

Assessment 

EHM begins with an assessment of the workforce health and productivity performance situation.  There have generally been three basic approaches to this task, involving: 1) claims analysis; 2) biometric screening; or 3) workforce survey questionnaires.  Claims analysis is limited to health care, workers compensation and disability claims, and tends to be more reactive than proactive.  Biometric screening is more likely to be accurate than survey results, but does not supply productivity/performance impairment data, nor indications of employees’ attitudes and readiness/likelihood of changing their health behaviors.  Surveys tend to yield incomplete data, when less than all employees participate, and self-reporting is notoriously unreliable with respect to a lot of conditions and behaviors.  The trend is toward combining biometrics and surveys, even including monthly or quarterly claims analysis in order to update targeting.  Such combinations can make the assessment more expensive, though more complete.

Assessments are moving in the direction of addressing more of the current gaps between individual and workforce health, productivity, and performance and what could be achieved in optimal circumstances.  This means far more use of predictive modeling to identify the risk/reward potential of each individual, or at least of particular segments based on their level and type of risks and problems.  This potential is what determines the limits of a reasonable investment.

Engagement

Getting employees to participate continues to be the major challenge, particularly as EHM moves toward including the entire workforce as potential sources of economic gain across the full spectrum of health challenges and productivity/performance benefits.  Incentives are largely believed to be essential in achieving early engagement, though critics question their long-term effects, and note they significantly reduce employers’ ROI ratio by adding to costs.

Some suppliers claim that individualized recruitment communications based on HRA surveys can yield high levels of participation at significantly lower costs than is true with incentive-based recruitment.  Incentives for making specific behavior changes or achieving specific health status improvements are problematic, given the combination of HIPAA, ERISA, and ADA regulations.  Included among them are requirements that if employees are offered incentives for changing unhealthy behaviors, those who already avoid such behaviors must be eligible for similar incentives.  The same applies to unhealthy conditions, making the potential costs of incentives that much greater.

Coaching and Monitoring

The technologies used in ongoing coaching of EHM participants and in monitoring/responding to their progress of lack thereof are moving toward lower costs, in order to identify and use methods and costs that are matched to the risk/reward potential of either population segments (e.g. low, medium, high risks, or specific conditions and behaviors) or customized to individuals based on their overall personal risk/reward potential.  This requires careful analysis of survey data on individuals or segments, and tends to promote outsourcing of EHM in order to avoid risks and handicaps associated with employee concerns about their employer knowing about their health and impairment.

There is a general belief that some EHM challenges, or at least some of the people who have them, require different types and intensity levels of interventions in order to succeed. Coupled with the widely varying degree of risk and impairment levels across the workforce, this normally means a serious challenge to any one-size-fits-all method for coaching and monitoring.  The biggest challenge to both optimizing EHM results and competing with other EHM providers is the need to match interventions with risk/reward potential as much as is feasible and affordable, in order to achieve optimal results for clients.

Monitoring can also be an essential element of incentive authentication = making sure participants qualify for rewards, particularly those that continue as long as participants maintain an improved health behavior, such as tobacco abstinence, or condition, such as weight loss.  Employers want to be sure that employees do not “game the system” by claiming eligibility they do not deserve.

Evaluation

As strategy, competition, assessment and coaching move toward more comprehensive involvement of all economic impacts of EHM, to say nothing of other value-based investments aimed at similar results, it is natural that evaluation move in the same way.  Evaluation is getting both more sophisticated and complex in methodology, as well as in types of impacts to be measured.  This necessarily adds to EHM costs, and requires agreements between employers and suppliers regarding which will do what in the way of evaluation, since employers, themselves, often have the best access to many of the impact measures.  It also adds to the complication that employers incur significant costs that must be added to the denominator when calculating ROI ratios and net gains