Better Incentives for Wellness Programs

Despite the popularity of workplace wellness programs, little has been understood about how employees respond to incentives. Until now.

Workplace wellness programs that encourage and incent employees to adopt healthful habits are widely popular with hospitals and health systems. Upwards of 80% of large organizations offer some sort of wellness program.

But their effectiveness is up for debate.

The programs are notoriously difficult to incentivize. Many employees who respond well to incentives for goals such as smoking cessation, more physical activity, and weight loss are already motivated, says Mitesh Patel, MD, assistant professor of medicine at the Wharton School of Healthcare Management in Philadelphia.

Until recently there was little research on financial incentives to boost physical activity. But Patel recently published a study in the Annals of Internal Medicine, suggesting that greater accessibility and proper framing of incentives can lead to greater effectiveness.

"A lot of challenges around workplace wellness programs are around engaging employees who need it most," says Patel. "We wanted to learn how best to design an incentive to do that." Patel spoke with me about his findings. The transcript of our conversation has been lightly edited for clarity and length.

HLM: What can you tell me about why you chose to study workplace wellness program financial incentives?

Patel: Some of the reason we did this study is that workplace wellness programs are growing in popularity across the country. More than 80% of large employers offer financial incentives for health promotion to their employees to help them achieve health goals, which includes things like physical activity. But the best way to design these incentives to help improve outcomes hasn't really been consistent.

HLM: How did you design your study?

Patel: We conducted a study using 281 people, randomly assigning them to four groups. We asked them to achieve 7,000 steps daily, tracking their steps using an app on their smartphones. We gave everyone daily feedback for 26 weeks based on whether or not their daily goal was met. At 13 weeks, three of the groups got a financial incentive based on whether or not they achieved that 7,000 step goal.

A quarter of them were a part of the game arm, which utilized an approach similar to what most employers use when designing workplace wellness invectives. If they did the work to meet their goal, we would pay them $1.40 for each day they met their goal once the study was completed.

Then, there was a lottery arm, featuring a lottery where the subjects could win money for the days they met their goal.

There was also a loss-framing arm, in which on day one of every month for three months we told the participants that $42.00 had been placed in a virtual account for them, and for every day that they didn't meet their goals, we'd take $1.40 away from that account.

We told all three of these groups was that at the end of the study, we'd send them a check with all of their accumulated earnings. So, everyone was getting paid the same way, we were just framing the incentives differently.

There was also a control arm, in which people just got daily feedback with no financial incentive.

HLM: Which group performed best?

Patel: The loss arm achieved their goal about 45% of the time, which was 15% higher than the control group. It is statistically significant.

The control arm achieved their goal about 30% of the time.

The lottery arm achieved their goal 35 to 36% of the time, which is slightly higher, but statistically no different from not paying them at all, which was very interesting. We found that paying people $1.40 a day to achieve a fitness goal was really no different from not paying them at all.

HLM: What are some takeaways from your study that can help HR teams design better wellness program incentives?

Patel: There are a couple of key takeaways from our study. The first is that many people are interested in using incentives, but they often don't pay enough attention to how they design of these incentives. Our study found that design is critical to success.

More specifically, we can leverage insights from behavioral economics. From that area of study, we know more people are motivated by losses and engaged by variable rewards more than they are by constant rewards. Also, they want to be rewarded now, in the present; people want immediate gratification.

They're less motivated by rewards that are offered later, and less apt to do something that will benefit them far in the future. Incorporating these lessons from behavioral economics into wellness program design can lead to better outcomes.

HLM: How can a wellness program be designed to engage more employees?

Patel: A challenge for many workplace wellness programs is that they attract employees that are already very motivated and physically active as opposed to the people who are sedentary or sitting at their desk all day and could benefit the most.

We designed our study to try to attract those people who could benefit the most, enrolling only people who were overweight or obese. The mean BMI in our sample was 33; BMIs of 30 and above are considered obese. So, this was a very heavy sample, and more high-risk than an average workforce.

We've also found that many workplace programs use higher goals, like 10,000 steps, because it's a nice, round number. But there's no evidence that number is particularly good for anything other than attracting people who are already fairly physically active. So, we aimed for 7,000 steps, because that's supported by the American College of Sports Medicine as the minimum you need to start gaining benefits from physical activity, and because it's 40% higher than the national average, which is 5,000 steps.

It's a reasonable goal to engage people who are sedentary at a baseline. We found that 96% of people finished the entire six-month study. That's even after turning the incentives off at three months. That's far higher than you'll see in a typical workplace wellness program.

We think part of the reason why so many participants continued even after the incentives were turned off had to do with the design of the study. It was a reasonable goal, and we used smartphones to track their steps.

It's easy, because 70% of Americans have smartphones. They're already used to carrying them everywhere they go and charging them, and we can pull the data passively from their phones and give them feedback without them having to do any work. We think the smartphone approach might be scalable to larger populations, such as employers who are very large.

HLM: Does this study indicate that using "carrots" or "sticks" is more effective?

Patel: It's really important to note that our study did not use "sticks," in that we did not take any money away from the employees' pockets.

We framed a carrot in three different ways, the most successful of which was that we would give it to you up front for not doing anything, and then take the carrot back if you didn't meet your goals.

Some people might interpret this finding as "sticks" being more effective than "carrots," but I think it's more about framing the reward differently. It's about being more creative and thinking about ways we can leverage the irrational tendencies to achieve better success.