Get Healthier or Pay Up

By Rebecca Vesely

Oct. 24, 2012

In the field of wellness programs, the disencentive may be the new incentive. That’s the approach that several startup ventures and their clients—employers—are trying in an effort to nudge employees toward taking better care of themselves.

They are taking the “stick” idea—as in the carrot and the stick­—and applying it to wellness programs instead of drawing employees in with the carrot: financial incentives. It’s a “get tough” strategy that employers might warm up to because money or prizes can go only so far, experts say.

Research suggests that employers can incentivize workers up to $350 per year to fill out health assessments and participate in wellness improvement activities, but beyond $350, the return on investment stops paying off.

“It has to be at least $350,” says Amanda Goltz, a senior manager at San Francisco-based Pacific Business Group on Health, a coalition of large employers including Wal-Mart, Boeing and Wells Fargo. But doubling that investment won’t reap double the participation, she says.

StickK is a new company that is trying the disincentive strategy to create behavior change. StickK, which demonstrated its concept at the Health 2.0 conference in San Francisco , was co-founded by Dean Karlan, an economics professor at Yale University, and former Yale student Jordan Goldberg, who serves as chief executive officer.

On stickK’s website, users set goals—losing 20 pounds or quitting smoking, for instance—and then sign a “commitment contract” that binds them to that goal. Next, users add “stakes”—motivators that would help achieve the goal. For instance, stickK takes the user’s credit card number and charges the card a set amount every week that users don’t achieve their set goal. StickK can even donate the money to an “un-charity”—an organization the user dislikes.

StickK users can also designate a “referee,” such as a friend or a colleague, who monitors the user’s progress, verifies whether the user is on track with his or her goals and keeps the user on the straight and narrow. Designated “supporters” cheer users on in a social aspect to the site.

Goldberg says stickK is focusing on attracting large self-insured employers to the model, as opposed to individual consumers.

StickK, which is based in New York, isn’t the only wellness program placing bets on penalties.

Denver-based LifeVest Health, which also launched at the Health 2.0 conference, works like “a stock tied to your individual health,” the founders say. The “stock” goes up when users get healthier and drops when they don’t.

Users plug in biometrics such as weight and blood pressure and then select how much money they want to invest in their health. They can also recruit “sponsors”—including their employers—to kick in cash. Over three months, they update their health status on a regular basis and track progress. At the end of that period, if they achieve their goals, they gain value on their original investment. If they fall short, they lose money, says Jon Cooper, founder and CEO of LifeVest Health.

Employers and health plans can adopt LifeVest Health as part of their wellness initiative and add incentives for individual employees.

LifeVest Health charges a $5 account fee and about 10 cents for every dollar users earn by improving their health, it says.

Goltz, of the Pacific Business Group on Health, says the group’s member companies, which collectively insure 10 million employees and their dependents, haven’t embraced disincentives. But she plans on talking with member companies about some of these new ventures, especially LifeVest Health.

“That’s a great idea that I intend to bring to my members,” Goltz says, adding that she believes the program offers more flexibility than traditional incentive programs because the goals are flexible and set by the user. She says many incentive programs don’t work for diabetics or others with chronic conditions because they can’t achieve standard targets.

Rebecca Vesely is a writer based in San Francisco. Comment below or email

Rebecca Vesely is a writer based in San Francisco.

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