Industry studies confirm the strong connection between healthcare costs and the ingrained behavior of consumers and providers. Ironically, consumers and providers have access to more health information, tools, programs and support than ever before; yet healthcare costs continue to increase and chronic diseases continue to affect a larger portion of the population.
The healthcare industry is at an inflection point where payers, employers, providers and consumers must all be directly involved in the effort to manage the cost of care and to improve health outcomes. A critical aspect of this effort involves the motivation and behavior of all healthcare market participants, but primarily applies to the healthcare consumer and provider at the point of care delivery.
To drive engagement in programs designed to improve health, organizations have applied both incentives and disincentives, with varying degrees of success, as part of an overall engagement strategy. Generally, the presence of an incentive leads to improved results, but most incentive designs have fallen short of their potential. But some valuable lessons have been learned.
The healthcare industry has learned, for example, that incentives can drive behavior change, and can help establish a new baseline for consumer expectations, consumption patterns and health awareness. In turn, this newfound awareness has the potential to address the root causes of the nation’s healthcare crisis, leading to a more rational care model and slower rate of health cost increases.
More importantly, the well-intentioned but haphazard evolution of the application of incentives to various healthcare initiatives has yielded a robust volume of actual performance and cost-related information that can finally provide reliable links between program participation, behavior change, health outcomes and cost savings; and all of the necessary data to determine return on investment.
When properly designed, incentives can serve as the cornerstone of an engagement engine that creates alignment with earned and available incentives, and supports related protocols such as social media, behavioral economics, shared communities and mobile interactions.
This emergence of Incentive-Driven Healthcare (IDH) – a new era of heightened awareness and application of strategies to change behavior – has the potential to engage consumers and providers through intelligently designed incentive strategies that are based on population health issues, organizational culture, change readiness and behavioral theory.
In addition to its quantitative foundation, Incentive-Driven Healthcare also embodies what is already known at an intuitive level: that incentives such as financial remuneration, group recognition and personal fulfillment motivate people to change their behaviors. More simply put, people are driven by a “What’s in it for me?” mentality, and respond accordingly.
Success in IDH will not be based on an exploration of whether incentives can actually change behavior. Instead, the focus will be on how incentives can be designed, applied and monitored in order to achieve measurable results. This scientific approach to health incentives, driven by actual performance data, monitored user experience and detailed cost analysis – rather than surveys, incidental reporting or actuarial projections – delivers the insights that can help employers, health service organizations and health plans to accurately gauge the underlying value of incentive strategies, and ultimately to reduce the cost of healthcare.
The potential cost savings associated with increased consumer and provider engagement is significant. Deloitte has estimated that the combination of factors such as personal health records (PHRs), increased transparency, incentives and technology could achieve savings as high as $440 billion over 10 years.
Most organizations are well positioned to benefit from this trend, based largely on the underlying characteristics of incentives.
- Incentives possess a “built-in” return on investment. Unlike many other tools in healthcare, no one pays for an incentive until an action is taken. This means that return can be generated as incentives are issued if the proper actions and behaviors are incented.
- Incentives are simple and easily understood. In a healthcare world full of confusing jargon and complex formulas, people understand simple messages such as “be healthy and be rewarded.” This fundamental concept resonates with consumers and providers alike.
- Incentives are viewed positively. In a world of cost-shifting and reduced benefits, incentives positively engage consumers and providers, and put them in control.
More broadly, these inherent characteristics combined with support from both sides of the political aisle, points to broader application of incentives. According to Lockton Benefit Group, healthcare constituents viewed the incentive components of recent healthcare legislation as the “most beneficial element” of the health reform law. This national sense of urgency, strongly suggests that consumer and provider engagement may be the most promising approach to address the cost and effectiveness of healthcare.
However, to realize the full potential of incentives that will drive engagement, the healthcare community needs a standardized and effective framework for their design and application that:
- Is based on actual performance data
- Is measured in an objective and consistent manner
- Delivers immediate, near-term and long-term cost savings
- Reflects the need to engage and change behaviors of consumer and providers
The good news is that in the era of Incentive-Driven Healthcare we are well prepared to address this challenge. We now have reliable data and the analytic tools to develop a rational, integrated approach to the design, implementation and evaluation of incentives, and they can be applied to increase engagement, improve outcomes and reduce the cost of healthcare.
From where we sit, Incentive-Driven Healthcare has the potential to drive engagement and change behavior in a meaningful manner. The resulting health and cost-related benefits should be significant.
We expect IDH to be an exciting journey.
Michael Dermer is CEO, President and Co-founder of IncentOne, a leading provider of incentive solutions to the healthcare industry. Mr. Dermer has authored numerous articles and has been a frequent speaker at health industry conferences and events including World Congress, AHIP, Blue Cross Blue Shield Association, and others.