Three trends are driving the growth and importance of the wellness economy:
Increased Consumer Demand: Polls by Kaiser, Pew, Gallup, and others show consumers are dissatisfied with the status quo, worried about costs and affordability and receptive to new models of care. Millennials want solutions that emphasize simplicity, minimalism, and personalization.
Boomers want predictable costs and better service from providers. Seniors want access to physicians they like and local hospitals that are nearby. Each sees wellness differently and all consider it more than physical health. And in growing numbers, antipathy toward the medical industry is feeding consumer receptivity to wellness and self-care alternatives.
Employer Wellness Programs Expansion: Wellness programs are a staple for employers. More than 90% offer employees a wellness benefit usually consisting of education, risk assessment, smoking cessation, and other features. The ROI for these programs exceeds 3:1 if designed to improve employee lifestyle and avoidance of risky behaviors.
Since unemployment is at a 50-year low (3.7%) and costs associated with chronic disease are increasing employer costs at 6% annually, employers are increasingly using their wellness programs to lower turnover, improve productivity and reduce costs associated with presenteeism (workers who come to work ill or unable to work effectively).
Employer-sponsored wellness programs are expanding to target chronic conditions and reduce employee stress and anxiety. In tandem, employers are doubling-down on relationships with local primary care practices that embrace holistic treatments and active engagement of individuals in their care.
Managed Care: At year-end, 2017, 80% of Medicaid enrollees are enrolled in managed care plans: that’s 65 million. A third of Medicare enrollees (32%) are enrolled in one of 2734 Medicare Advantage plans: that’s 19 million. 100% of the military, 4.6 million, access healthcare through a managed care model.
And 99% of the commercially insured are covered by plans that employ managed care practices that limit consumer choices and reward medical cost savings. (National Center for Health Statistics) Managed care is a bull market. Each plan is focused on reducing unnecessary tests, visits, and procedures and improving the health status of its members.
The integration of wellness is central to their medical management strategies. It’s good business for payers to prevent hospital admissions and avoidable complications by expanding their primary and preventive health efforts. Equipping these providers with tools to gauge the status of the physical, emotional and social needs of individuals is central to these efforts. And payer efforts to manage the tsunami of chronic diseases, which account for 70% of total health costs, center on the integration of wellness with ongoing primary care.
The mainstreaming of the wellness economy with the conventional system of care is underway. These three trends point to its increased importance.
My take:
The race to capture the wellness economy on a broad-scale is underway. The opportunity is bigger and more complex than gyms and diets and there’s plenty of activity. Some signals from the market:
Notable industry mega-deals reflect a growing recognition that consumers will play a more direct role in their care and wellness will play a key role in their value propositions to employers and their employees. Some recent examples: Walgreens & Humana, CVS & Aetna, Amazon, Walmart, and others.
The diet and fitness industry’s mainstays are re-calibrating their strategies to align with the wellness economy. Tivity’s $1.3 billion acquisition of Nutrisystem is positioned as a strategy to manage “calories in, calories out,” WeightWatchers recently changed its name to WW International to associate itself as “Wellness that Works”.
Entrepreneurs and private investors are bringing novel solutions to bridge the chasm between traditional delivery and wellness. TAVHealth, for instance, provides a platform for assessing data about the social determinants of a person’s health and integrating it with their medical records and insurance plans.
Prominent health systems are integrating social determinants and wellness diagnostics in their community outreach and care coordination protocols. Lee Health Coconut Point (Estero, FL) is a state-of-the-art facility that serves as the hub for its wellness strategy which extends to 50,000 local households. The 163,000-square-foot, $140 million facility opened its doors last month featuring a Healthy Life Center, teaching garden and more.
And physicians are taking notice. Case in point: the American College of Lifestyle Medicine is advancing wellness as a multi-disciplinary specialty among physicians, medical professionals, allied health professionals and others committed to similar aims. (www.lifestylemedicine.org)
The convergence of the wellness economy with the traditional system is timely: forecasts are that the economy will slow (3.0% growth in 2018 vs. 2.6% in 2019 per Wolters Kluwer Blue Chip Economic Indicators) and 50% of economists think a recession is likely in the foreseeable future (National Association of Business).
Interest rate hikes will make borrowing more expensive for businesses and individuals: 2 are scheduled by the Federal Reserve in 2019. The political environment and impending Campaign 2020 will intensify anxiety at a time when the public is experiencing unprecedented stress about the future (Gallup).
Addressing wellness is foundational to the health of our society, the success of our companies and the stability of our households. It’s not an afterthought or miscellaneous expense; it’s a strategic imperative.
The wellness economy is strong and growing. It is a grassroots movement reflecting growing discontent with the traditional system of care, its aversion to transparency and its profits.
So, while New Year’s Resolutions to eat healthier and exercise more are appropriate and timely for most of us, a more noble pursuit is wellness. But managing stress, reducing anxiety and loneliness don’t come to mind around New Year’s Day. Maybe they should.
Bio:
Paul H. Keckley is Managing Editor of The Keckley Report, a healthcare policy analyst and widely known industry expert. He is a frequent speaker and advisor to healthcare organizations focused on long-term growth, sustainability, and advocacy strategies.
In addition to weekly Keckley Report, he has published three books and 250 articles. During the period preceding the passage of the Affordable Care Act, he facilitated sessions between the White House Office of Health Reform and major health industry trade groups as private sector input was sought in the legislation.
This article appeared on The Keckley Report, December 31, 2018.
