In moving from healthcare to health, consumers and patients must be enabled to make healthier, more cost-effective choices.
A large part of success may be determined by how we develop incentives to bring attention and pull to those choices. One of the leaders in this area, who’s been driving successful consumer engagement through incentives for over a decade, is Michael Dermer, Chief Innovation Officer at Welltok. I had the pleasure of sitting down with Michael a few weeks ago to talk about what we can do to help people make the right choices for health.
Here is part one of my Interview with Michael Dermer, the Chief Incentive Officer at Welltok, developer of CafeWell, a leading health optimization platform, that rewards participants for leading healthier lives.. In Part II will discuss a bit more about Apple and how to get different populations engaged.
LK: As we move from health care to health (projections are that half of payments will be value-based by 2022, according to Leavitt Partners), tell us how you got into the health incentive business, a little of the IncentOne story (Michael Dermer’s previous company that was acquired by Welltok just over a year ago), and why it’s so important to this Copernican moment, where patients move to the center of the universe of health care.
Michael Dermer
MD: If you go back 10 or 15 years ago, I was a corporate lawyer in New York and just randomly stumbled upon the incentive business and ultimately the health care business. I had seen statistics that said for women who follow their prenatal care, their costs are (generally) the costs of the tests and the delivery claims. But for those who don’t follow their prenatal care, the risk to themselves and the increased risk to infants can cost the healthcare system literally millions of dollars.
That just really struck me that the medical profession knew what behaviors they wanted consumers/patients and even providers to take, but weren’t very good at getting people to do what are often simple, proven things (to reduce health risks) even in situations where the intrinsic motivations are seemingly very high.
In every other industry other than healthcare, incentives and rewards were and are a foundational way to accomplish that. So, in the mid 2000’s with IncentOne, we said, if it all comes down to consumer and provider behavior, then incentives aren’t just a one-off, $25 reward for a health risk assessment, for example, they’re a foundational asset that should be a cornerstone to your consumer and provider engagement strategy.
Back then incentives were kind of like witchcraft and people would say we’re never going to pay people to do things they should be doing already. So it’s been a really interesting ride to see how things have evolved to where incentives have become a cornerstone tool (to health) and the success we’ve achieved with IncentOne and now with Welltok.
LK: So tell us about some of the incentives you’ve used, how things have changed in the incentive business, and what’s coming in the near future.
MD: If you go back, consumer-based incentives, delivered via self-insured employers and some health plans, were really basic: complete a health risk assessment, sign on to a portal, maybe go see your PCP, biometric screening, etc. As more and more wellness programs became prevalent in both employer and health plan communities, they started to do more around smoking cessation and online coaching. So if you look at it holistically, as the different health assets were being deployed by anyone who bore the risk, more and more of those behaviors started to be rewarded.
Fast forward today, think of telemedicine to transparency tools, to wrapping them around digital devices and apps in addition to all the traditional things around biometrics and outcomes. We have a real extension to providers with things like e-prescribing and the ACO infrastructure. What do we get from changing the behavior of providers?
So it’s been a constant evolution. Once people say “we know what the behaviors are, we know what impacts the system” then it becomes an evolution from the basic things like screenings and primary care to how to redirect people from the ER if they have the sniffles to a more appropriate care center (and much more specific decisions points). I think we now have over 6,000 behaviors we’ve rewarded over the years.
LK: So with things like telemedicine, you’re saying, “Hey, call in instead of going to the clinic and we’ll reward you for that?”
MD: Yes.
LK: What kinds of rewards do you offer for those kinds of things?
MD: Our view of the world is that different players in the healthcare continuum would want to use different dollar values and offer different types of rewards. So we always look at those two things differently.
Our first part is, how much do you actually give someone? If you give someone $50 to do a screening, you’ll get a lot more participation than if you offer $50 to run a marathon. So our first part, was what’s the dollar value? And the second part, what are all the different rewards? So from an administration perspective, that means everything from cash to HSA and HRA contributions, premium credits, gift cards, debit cards, that whole continuum of rewards that’s used in the most prevalent way. In our view of the world, the rewards that approach cash have the best results, and it’s the amount that you’re giving someone relative to the value of the behavior that is the true art and science behind all of this.
LK: Do we always get those lines to cross, between the behavior and the reward? Does it always make sense?
MD: That’s really the rub at the end of the day. So if you take things, a simple example, like you sprain your ankle and you need an MRI, and you need to decide where to have it done. At one place it’s $600 and one is $1,800, that’s simple and it’s easy to create appropriate incentives to steer people to a different service center in that instance. When you get a little deeper into long-term behavior change, that’s more complicated.
You know stopping smoking and managing nutrition and weight have longer-term benefits, but are harder [to change]. So it’s a matter of managing the benefit and the value of the behavior. It’s hard to get someone in Medicaid to stop smoking, but it’s not so hard to get them to go to a primary care doc for $50.
So, one part is how much you give them and the second part is how much it’s worth. There are lots of behaviors that have near-term benefit, the hope is that then leads to some intrinsic motivations and longer-term behavior change, but it ultimately comes down to how much you’re saving.
LK: Is the goal that these extrinsic rewards eventually become intrinsic rewards?
MD: They work hand in hand, neither will get the job done by themselves. I don’t think we’ll ever see a day where we don’t need extrinsic rewards. With all the changes in health care, you see them everywhere. If you work for a large, self-insured employer, they’re becoming commonplace. But extrinsic rewards don’t work on their own either, so what you want to do is use extrinsic for one-and-done kinds of activities, like choosing a place to have an MRI done, and then unlock more intrinsic motivations.
You’ll hear lot of stories like someone says, “Yeah, I never really exercised and never really thought about it, but I did a 10,000 step program, in response to an incentive, and something clicked.” Or a family member got them to join a competition and something clicked because they were part of a competition together. All of these things become arrows in your incentive quiver.
I’ll also say, when you look at the numbers, there’s no starker example than prenatal care. The idea of not following prenatal care may seem pretty foreign, but it’s commonplace even with so much intrinsic motivation, so we need to deploy extrinsic with intrinsic to optimize where you end up.
LK: So, let’s look at how much it takes to drive these incentives. You’ve collected a lot of data for more than a decade. Do have a good idea where to start? If you look at, say, airline miles, they’re worth maybe somewhere between a penny or a nickel. How do you know what it will take to drive a specific behavior?
MD: The reason I mentioned before that things need to be closer to cash is that you don’t want people to have to do those kinds of conversions. It’s just dollars. You’re getting real dollars. What we can do now that we have been doing this for over a decade, is we know what dollar value it takes to motivate around a certain behavior.
Our methodology is, we look at behavior in five different categories from simple things, like doing a health risk assessment, all the way up to changing lifestyle on the other end of the spectrum. And with all our data, we know how much reward will get you how much behavior change.
LK: How do you get people started on these programs? How do you get them in front of those that need to hear about them?
MD: If you think about the major sponsors, health plans, employers, now even more government agencies, reward and incentive messages are integrated into those offerings. So, if an employer is going to spend $1,000 on rewards, it becomes part of their health and wellness brand and communications, and the same goes for health plans. While health plans have been a little more tactical up until now, we’re not too far away from every health plan having a reward program just like credit cards, airlines and hotels. In the near future, we’ll see reward programs become a pretty core part of why consumers engage (with health plans), and it’s already becoming a core part of the communications strategy.
LK: In this new model that we’re heading toward, moving from healthcare to health, it seems like the core pieces are in three buckets: 1) there’s big data and analytics; 2) there’s measurement, health, sensors and home monitoring; and 3) then there’s incentives. It really seems like what Welltok and you are doing is really pulling all these components together on a common technology platform. How do all these pieces fit together, are we headed toward a behavioral health currency of some sort?
MD: It’s really interesting the way you describe it, because people used to say it’s preventative, or now it’s transparency, but we look at as all of the above. We say it’s a universe of behaviors, and they each might have immediate, intermediate, or long-term incentive applications.
One of the analogies from outside health care is Citibank. Citibank for years, like many large financial institutions, used to have these disjointed incentive programs. You’d get, say, a $200 television for opening an account, $50 for sitting down with a small business manager, and 1% back for using your credit card. Now that’s all rolled into a program called Citi ThankYou Rewards where everything you do with Citibank is rolled into one rewards program.
Another example is children with asthma. Parents might take their kids to the ER four times a year, but if they just had a fast-acting inhaler prescribed, they’d be safer and better off and it would save the system thousands and thousands of dollars.
So, with the list of different examples and risk factors, different associated behaviors, and all the assets that the health plan and employers are delivering is endless. So, I think we’ll soon see a continuum where it all comes together and starts to look a lot like ThankYou rewards, but for healthcare.
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Thanks to Michael Dermer! Stay tuned for Part II on how to approach different patient populations and what the Apple Watch may mean for health care incentives and payments.