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New Report Raises the Bar for Cluelessness in Wellness
This is Part 2 of the $895 IBISWorld Wellness Industry Report review. Here is Part 1.
What do you get for your $895? To begin with, some of the most creative facts we’ve ever seen, delivered in some of the most creative sentence structures we’ve ever seen, Yet, tempting as it may be, we’re going to completely ignore head-scratchers like:
Wellness firms may offer employers stress management courses and sessions that offer music therapy, aromatherapy, Tai Chi, and post disaster stress reduction through coaching.
Government-funded initiatives that promote wellness to cut costs related to chronic ailments (e.g., obesity and diabetes) has further exacerbated many businesses movement toward purchasing corporate wellness services.
And my favorite:
The industry provides wellness programs to businesses across the United States, including small, medium and large businesses in the private sector and businesses in the public sector.
“Businesses in the public sector”? I knew that many of our legislators are for sale but I didn’t realize they had incorporated.
I’ve read this next one several times and still can’t figure out what they are saying, other than they don’t realize (1) that health screenings and biometric tests are basically the same thing; (2) that it is impossible to take someone’s blood pressure without including both the systolic and diastolic readings; (3) and that prior to publication they should have had this material reviewed by a smart person:
Ok, we’re done completely ignoring these head-scratchers now.
Misinformation
Instead we will focus on the fact that most of what they report is simply wrong, like: “There is increasing acceptance of the value of programs offered by this industry.” For example, they claim that the ROI for corporate wellness, according to RAND, is $3.80 per dollar invested. I would have to exhaust America’s entire strategic reserve of electrons in order to point out everything wrong with that figure. Besides its general ludicrousness, there is the slight problem that RAND itself says exactly the opposite:
How could they be so clueless, even by the standards of wellness? Even though this is a wellness industry report, and most wellness companies don’t touch disease management, they mistook the RAND ROI for disease management as the ROI for wellness. Despite RAND being cited more than 100 times, nowhere did they bother to mention that RAND says wellness loses money. Hello? What did you expect for a measly $895? (In all fairness, if you look hard enough, at one point they say RAND says that “lifestyle management” saves a “mere $6.0 [sic]” per employee per month.)
So basically the fact that wellness loses money–which at this point even the Health Enhancement Research Organization itself acknowledges–is completely missing.
There are also a huge number of statements that make no sense when placed side by side. So “wages comprise 3-4% of industry revenue,” making wellness possibly the least labor-intensive industry in the country. Yet, several pages later, IBISWorld decides that “the industry is labor-intensive.”
The Largest Wellness Companies?
You’d think for $895 they could at least identify the largest independent wellness companies. No such luck. They anoint ComPsych as the largest. I personally had never even heard of them, and what employee is going to give personal health information to a company named ComPsych? IBISWorld got one thing right — ComPsych does at least offer wellness — if you squint hard enough:
The other two they name are ValueOptions, now Beacon Health Options, and Ceridian. Not sure where they came up with the idea that those are the largest. Neither is even in the wellness screening business. They might as well have named Dunder Mifflin or Vandelay Industries.
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Question: How is Wellness the Opposite of King Midas and Gold?
Answer: Everyone who touches wellness turns to stupid.
Speaking of which, we are going to do a two-part review of the IBISWorld report Corporate Wellness Services in the US. The difference between the worthless information in this report and all the other worthless information on wellness economics is that this worthless information will set you back maybe $895.
The first statistic you learn — and you don’t even have to buy the report to “learn” this statistic because it’s right on their home page — is IBISWorld says this $7-billion industry employees a whopping 3,120 people.
To give you an idea of how wildly low that jobs figure is, I myself have more than 3,120 Linkedin friends in the wellness industry. And that’s despite the fact that no one in wellness likes me.
Just Healthways alone, a company that is deemed too trivial to even mention in this report (they’re in good company — I am ignored as well), employs 2700 people. I guess the consulting firm’s Young Turks (including Sarah Turk) lack access to a calculator. Otherwise they might have wondered how wellness could be one of the most profitable industries in the world: sales per employee are roughly $2.3-million, more than twice that of Goldman Sachs.
And that misinformation is featured right on their website. If anyone sues to get their purchase price back, IBISWorld’s best defense could be: “You knew it was wrong before you bought it.”
Report Highlights
We know employees aren’t getting paid seven figures to poke us with needles. Likewise, there is no significant capital involved in wellness, so with $2.3-million/employee in sales, these companies must be insanely profitable, right? Maybe that home page display is a tease to get potential industry entrants to buy the entire report in order to learn how they can get a piece of this action.
And yet…
After you buy the report, you learn the whole thing was a setup — profits are precisely $434.6-million, or only 6% of sales. (Precise or not, this figure is made up, since no wellness company is going to disclose its profits.) So where is all the employer’s money going, if not to wages, profit or depreciation (0.6% of revenues, they say)? Apparently, IBISWorld has a plug category for “purchases.” I guess their computer program uses this category for whatever is left over after fabricating the other figures:
What is in the category “purchases”? Mostly software and lab equipment, they say. I guess with only 0.6% of revenues going to depreciation, somehow these massive capital expenditures don’t get depreciated, perhaps because what most HRA/screening vendors do is worthless to begin with.
They are also confusing capital expenditures, which are never listed in a bar chart of “expenses” because they aren’t an expense, with purchased services, which are. It’s understandable that these people don’t understand wellness economics — most wellness vendors and consultants don’t understand wellness economics. However, for $895, a customer purchasing a financial report should be able to assume the report-writer understands financial reporting. (Several pages later, by the way, they put capital expenditures themselves at 0.6% of revenues.)
Here is the list of what they classify as “purchases”:
Notice anything else about this paragraph, besides making no accounting sense? It makes no wellness sense. They seem to have somehow confused biometric screening with health risk assessments (HRAs): “To provide health risk assessments, corporate wellness service companies may need equipment that helps extract biometric data.”
Leaving no stone unturned, the biometric data include not just “blood pressure” but also “systolic and diastolic blood pressure.” IBIS, hate to tell you this but even the dumbest wellness vendor knows you need both those values to create a reading. Otherwise it would be like the George Carlin sportscaster routine: “And here’s a partial score from a game in progress: New York Knicks 46.”
Perhaps IBISWorld assumes that the $895 price tag itself convinces buyers that they must know what they’re talking about. And yet, as we’ll see in the next installment, in addition to confusing screening and capital expenditures with operating expenses, they also don’t understand the difference between wellness and disease management.
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Something in Wellness that Actually Works (Pinch Me)
Yes, I know it’s not always about me (my ex-wife was quite clear about that) but we did just receive our first “review” of Quizzify from a major, highly respected healthcare blogger, Paul Levy, former CEO of Beth Israel-Deaconess Medical Center in Boston. (Disclosure: I do know Mr. Levy socially, but nowhere near well enough to convince him to lie for me.)
Because there are so many new scams in workplace wellness to expose (and every time we expose one, they come up with another, this being our favorite example of invalidity-meets-Whack-a-Mole), we don’t have time for a lot of selfies.
Today is one of those rare exceptions. Here is the summary of the review:
“If I were in the corporate world, I’d seriously consider offering this service to my employees. The messages learned are much more likely to have a beneficial effect on people’s health and on their use of the health care system than a lot of the more invasive programs being forced on employees.”
If anyone out there would like to play the Launch Quiz — the first step in creating a culture in which employees understand that wise and cost-effective choices in healthcare extend way beyond eating broccoli, obsessing with cholesterol, walking 5000 steps, and buckling seat belts — let me know and I’ll set you up.
Update January 12: Here is a comment submitted on the original blog. We think it captures the essence of workplace wellness — the bewilderment by an employee that HR thinks these things could possibly save money, and the running joke in this person’s office that the program has become:
My employer has added a wellness program. I’m not sure if its the same category as the Safeway ones that you refer to, but what it does is give funds to a health-care account for completing programs run by an outside wellness company about healthy eating, meditation, stress, etc. You can get $100 or so in real money (spendable only on health care) for doing these, up to a capped amount. So the cost to the company is this money plus whatever the 3rd party charges to run it.
If the research shows these to be effective, I can’t imagine how. People joke about going “click, click, click” until they’ve completed as much of a program as they are allowed that day, then coming back a day or two later for more.
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Wellness Greatest Hits Collection: Wellnet Detects Undetected Claims Costs
We are actually doing our “Day Jobs” today, which means we are digging into our Greatest Hits Collection rather than, in the immortal words of the great philosophers in ABC’s sports department, spanning the globe to find the Agony of Defeat. (Truth be told, we don’t have to span anything except our keyboards for that.) Here is one of our favorites, Wellnet. Besides the usual wellness vendor numerical creativity (check the y-axis on both graphs), Wellnet features “undetected claims costs.” If, despite all your years in the benefits business, you’ve never heard of “undetected claims costs,” you might want to google on that phrase. You will find two sets of references to “undetected claims costs”:
(1) Wellnet
(2) Us making fun of Wellnet.
We asked them a number of questions, which naturally they refused to answer. So before we published Why Nobody Believes the Numbers, we hired a well-known team of investigators to answer them for us. This is what they found.
‘‘Holmes, Wellnet saved $4 million in ‘undetected claims cost’ just on the highest-cost Cumulus employees. That is very impressive.’’
‘‘Watson, you see but you do not observe. The most common mistake in wellness is to present conclusions that are mathematically or epidemiologically impossible. The distinction is clear. Wellnet’s website says that the most expensive 2 percent of the employees of Cumulus Media avoided about $72,000 apiece—in so-called ‘undetected claims cost.’ This has Moriarty’s fingerprints all over it. Claims costs that don’t get incurred because they aren’t detected. No doubt those claims are making their way into Moriarty’s pocket.’’
‘‘You cannot detect them, Holmes? But you are the world’s greatest detective.’’
‘‘Indeed perhaps I am not, if I cannot detect undetected claims cost and Wellnet can. Or at least Wellnet has benefits consultants and HR executives believing that impossible arithmetic is possible. If Moriarty has invented a way to control our wellness industry through Wellnet so that benefits managers believe impossible results, he is making new rules of math. He could rewrite all the textbooks used in Grade 1 to Grade 6, in whatever those schools are called.’’
‘‘Elementary, my dear Holmes.’’
‘‘Watson, now what do you have for me?’’
‘‘Holmes, I have a lot of questions about how Wellnet detects undetected claims cost. Could they be using those gadgets for finding coins on the beach? Or do the employees have to pass through a scanner every day, like Karen Silkwood or Meryl Streep? And if Wellnet did not avoid all those undetected claims, how would employees get reimbursed for them? Would they fill out claims forms using invisible ink?’’
‘‘I’ll ask the questions, Watson. You get me the data. I can’t make my bricks without clay. Tell me, Watson, what is the data?’’
‘‘The data, Holmes, is that they also avoid $37,000 apiece in ‘undetected claims cost’ for the medium-risk members. Quite an impressive wellness company.’’
‘‘Watson, you ignorant slut. You see everything, but you fail to reason from what you see. $72,000 is much more than the top 2 percent of a company’s employees would be predicted to spend in avoidable expenses in the year following their inclusion in the top 2 percent, and equates to about four avoided hospitalizations apiece. Add to that about $37,000 in ‘undetected claims cost’ avoided for the medium-risk members, and Wellnet is avoiding $21 million of ‘undetected claims cost’ for Cumulus Media.
‘‘Here’s the rub, Watson: Cumulus Media’s total healthcare spending is only about $6 million/year. Therefore they can’t have saved $21 million. When you have eliminated the impossible, whatever remains, however improbable, must be the truth. Another case solved. Another Moriarty plot foiled. Math is saved for future generations to enjoy.’’
‘‘Brilliant, Holmes. How do you do it?’’
‘‘You know my method, Watson. It is founded upon the observation of trifles, a little cocaine, and an occasional allusion to Saturday Night Live.’’
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And Another One Bites the Dust: Employee Benefit News Eviscerates McKesson’s Koop Award
Believe it or not, I do have a Day Job (www.quizzify.com), but it’s hard to focus on it when the Wellness Ignorati keep throwing me red meat. I would suspect a conspiracy to distract me masterminded by the Ignorati and my competitors, except that Quizzify doesn’t have competitors. No company except Quizzify seems to employ executives who know how to read. Otherwise, vendors would have read that insured Americans already consume far too much healthcare, so the solution should not be to force them to get even more of it, via bribes and fines.
Employee Benefit News just published a smackdown of McKesson’s 2015 Koop Award. It is based largely on our own smackdown of McKesson. The article itself predated our Unified Theory of Koop Award Cluelessness, which shows that McKesson has lots of company in fabricating outcomes — all Koop Award winners overstate savings by roughly the same mathematically and clinically impossible multiple. We call this multiple the “Goetzel Factor.”
McKesson made a big deal out of their principal investigator being a graduate student at the Harvard School of Public Health named Andrea Feigl. However, I don’t recall Ms. Feigl being in class the day I guest-lectured on wellness outcomes evaluation. Had she shown up that day, she might have avoided some of her rookie mistakes. (Bada-Bing!)
As is always the case with wellness evaluators, her defense merely confirms our findings. She is still claiming $13 million in savings, but says it’s based on a “cohort” of roughly a third (14,000) of McKesson’s 43,000 employees, whose risk collectively declined by 2%. We had observed that $13 million is about 7% of McKesson’s total spending on all 43,000 employees. Watch what happens if we accept her argument that we should only allocate the savings only to the third of McKesson’s employees who participated. In that case, instead of being 7% of total spending on the whole population, $13MM is 21% of the spending on that third. 21%! Not bad –wiping out a fifth of all McKesson’s spending by urging people to eat more broccoli. (There is no mention of their off-the-charts 27% tobacco use rate, which barely budged, and seems just slightly off-kilter for a company with an award-winning wellness program.)
This figure of course is a massive multiple of all spending on wellness-sensitive medical events (WSMEs). To achieve that savings, the program would have to wipe out WSMEs not only on all participants but also all non-participants — plus about 160,000 of their closest friends. Plausibility test, anyone?
To support that finding, she said:
“Health indicators in 2013 and 2014 were adjusted in the analysis, while several sensitivity analyses of the ‘inter-individual’ impact that used a matching approach confirmed the results.”
In other words: “I can’t explain it in English so you’ll have to take my word for it.”
She also said that I confused the narrative, that said McKesson employees lost weight, with the data, which said McKesson employees gained weight. Those would seem to be opposite results, which she calls “apples and oranges” because the narrative and the data are different. One is “descriptive” and the other is based on “repeated cross-sections.” So it’s OK for these results to completely contradict each other. Got it.
In any event, neither gaining a little weight nor losing a little weight generates a 21% cost savings, especially when tobacco use is basically unchanged (-1%).
The bottom line: there was no plausibility test, no attempt to reconcile the narrative findings with the data, no curiosity about how such a trivial risk reduction could generate such a substantial reduction in total costs, no understanding of participation bias, no understanding of population health, and no concern that neither tobacco use nor weight changes could possibly support the financial findings.
In other words, McKesson was a shoo-in for a Koop Award.
Update, January 9: Actually it’s even worse than I thought. Kudos to Robert Dawkins, for pointing out on Linkedin that I was crediting McKesson with a 1% decline in tobacco usage over this period…but if you look at the CDC data, it turns out that the rest of the country declined by a greater percentage over the same period. So McKesson quite literally achieved less than nothing both in weight and in tobacco.
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Catch up on all the wellness news that WELCOA censors.
We’ve added a number of recent news items to our “In the News” feature. Real news of the kind that real people might read if they want real information. Hence this is news you won’t find on other wellness websites, which only publish rally-the-base propaganda. (Really–see if you can find a single site that thinks the New York Times’ articles on wellness are worthy of mention.)
Most recently, Michael Prager did an interview with me in which he called me a “Corporate Wellness Leader.” I’ve been called a lot of things but never that. So, which is it? Bully? Jerk? Corporate Wellness Leader? Or all three. You make the call.
Earlier this week, the Society for Human Resources Management published a great article on the hazards of overscreening. Kudos to Stephanie Pronk of AonHewitt for stepping up with some very thoughtful comments. On the other hand, the National Business Group on Health, which, a la Walter White, has devolved from an important player in DC to a trade group of wellness vendors determined to hold back the tides, still supports overscreening today, overscreening tomorrow, overscreening forever.
Last month, in case you missed it (and you did, since it is subscription-only and online copies aren’t even available), The Bloomberg BNA Health Care Report absolutely eviscerated this scam. Literally, all you need to know about fabricated data and employee harms is in these 1500 words, summarized and linked here.
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Wellness Shock-and-Awe: Federal Court OKs 100% Non-Participation Fines
While most of us were buying supplies for partying down on New Years Eve (in my case, I was in charge of bringing broccoli and Boggle), the federal court in the Western District of Wisconsin quietly handed down an earth-shattering decision in the Flambeau case, which pretty much went unnoticed due to the timing. You may recall that this was the case where employees refusing wellness lost all insurance benefits. The case looked like a layup win for the EEOC. After all, the Affordable Care Act clearly states that penalties for non-smokers are capped at 30%, and this was 100%.
But here’s the rub: Flambeau conditioned the entire insurance benefit on participation in their “pry, poke and prod” program. They knew most employees hate “pry, poke and prod” programs to begin with. So they created a program so onerous that some number of employees would prefer to forego insurance altogether than participate in wellness. And indeed, that’s what happened at Flambeau. This decision means they’re getting away with it, saving thousands of dollars apiece for each employee who refused to submit.
Make sure you catch that distinction between the 30% penalties and the 100% penalties:
(1) It is not OK to penalize an employee more than 30% for refusing to submit to a “pry, poke and prod” program if they already have insurance, or they can get insurance through the employer without this requirement.
(2) However, it is OK to say: “There is no incentive or penalty for wellness once you have insurance, but you can’t have insurance at all unless you submit.” If that seems like an artificial distinction, well, that’s because it is. All an employer has to do is require pry-poke-and-prod before you get insurance.
Assuming other federal courts follow this district’s lead (as they usually do), employers create a 100% de facto non-participation penalty: If you don’t participate, you don’t get insurance, period.
The implications of this case:
(1) It will allow some vendors, like Bravo, to double down on bragging about the “savings” from wellness by creating programs that employees don’t like;
(2) Because the decision only applies to participatory programs and not outcomes-based programs, many companies will either not switch to outcomes-based programs or else maybe switch back.
It also puts pressure on the EEOC to put the kibosh on this end-run around the ACA’s wellness provision. Note that the decision can and should be appealed. Otherwise it is a de facto repeal of a big chunk of the Affordable Care Act.
The bottom line is, now there is universal agreement (albeit inadvertently in the case of HERO, which apparently didn’t mean to tell the truth, but failed to proofread their own document) that wellness loses money. So any pretense of “pry, poke and prod” being about the employee is gone. Obviously, forced wellness isn’t about trying to save the $0.99 PMPM (that’s before program fees!) that HERO Says can be saved with healthier employees. It’s about gutting the key ACA requirement that employers provide insurance.
And unless the EEOC steps up in its final regulations and/or prevails on appeal of Flambeau, they will have succeeded.
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Eureka! Someone who thoughtfully disagrees with me…and has good points!
Usually a tease like that leads to exactly the opposite content, as in Wellness Corporation Solutions Gives Us A Dose of Much-Needed Criticism, which of course turned into the poster child for our observation that “in wellness you don’t have to challenge the data to invalidate it. You merely have to read the data. It will invalidate itself.”
This is not that situation.
Michael Prager points out on his blog that I overstated the wellness-programs-as-fat-shaming case. Note he doesn’t say I’m wrong, but he does say I overplayed my hand, which I did. Many wellness programs fit my thesis…but some don’t. If a company’s program is all about offers rather than threats, about creating an environment conducive to health improvement instead lecturing people on their weight, about doing wellness for employees instead of to them, and about leaving people alone who don’t want to or can’t lose the weight, then I’m all for it. I should have been clearer about that.
If anyone would like to nominate an employer who has such a program, I would be happy to write it up.
And as you can see, we are also open to criticism of our positions, as long as the person writing the critique has a good point. Naturally, this industry is overflowing with vendors and consultants who probably have never had a good point in their lives…and naturally Wellsteps is leading the way. When we observed that Wellsteps’ most recent outcomes report showed costs going up and down at the same time, here is their (Troy Adams) rebuttal: We are full of “hot air.”
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Dee Edington’s book is inscrutable.
I apologize. He asked me to do a review but I couldn’t make any sense out of it. It simply isn’t a good book. I got about 100 pages in and just gave up.
Wish I could say something positive about it.
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That Was the Year that Was: Our Top Contributions of 2015
Our year-end jubilee has so far featured lists of the worst vendors and the funniest vendors. To close out the year on a more serious note — if for no other reason than to show we are indeed capable of treating the extremely serious topic of wellness with the Extreme Seriosity it deserves — we’ll list the most influential posts of the year.
In terms of views, the top spot is shared by our two smackdowns of worthless employee weight control programs. Our peer-reviewed smackdown, in the American Journal of Managed Care, should end the year at #1 on their list too, of the most-viewed articles. I say “should” because a lot will depend on people clicking through on it today or tomorrow (hint) and at least pretending to be enthralled by it, even though it is a bit dry.
The Reader’s Digest version got picked up on Huffpost. Absent the constraints of peer review, we took the gloves off. Our reward is that we are the most-widely read Huffpost of the year on wellness.
If “most shocking” is the criterion, the winner is our recent evisceration of Aetna’s employee DNA collection program. This one is best viewed here, at Insurance Thought Leadership, but was also picked up by The Health Care Blog. You know the old Woody Allen joke about the two ladies in the Catskills? One of them says: “You know the food here is terrible.” The other replies: “Yeah, and the portions are so small.”
Collecting employee DNA is a shockingly stupid idea on many levels — the kind of program that someone would make up in order to make wellness look bad, but we didn’t have to. As if that weren’t enough, Aetna also decided to fabricate outcomes. And because the program was so expensive, to show a 2-to-1 ROI they had to concoct $1464/person in savings in the first year alone–on employees who, by Aetna’s own admission, weren’t even sick. One of the editorial board members of the journal that published it wrote that it should never have passed peer review.
The biggest category — and the one where it would be hardest to pick a winner from among the many worthy entries — would be: “Most likely to show Ron Goetzel making things up.”
You might vote for yesterday’s post on how Ron said wellness programs increased stock price valuations when in reality they reduce stock prices. (Ron also misused the word “valuation”. It is not a synonym for “stock price.” In all fairness, the only people who would be expected to know the distinction would be people who write articles about stock valuations that are actually intelligent and insightful.) However, he probably didn’t make up that conclusion. I reviewed 5 years and compared each company to its relevant sector index. By contrast, he reviewed a longer period and has probably never heard of a sector index. We reached opposite conclusions about the correlation of wellness programs and stock prices. The real answer, though, is that wellness programs have absolutely no meaningful effect on either stock prices or stock valuations. If they did, one securities analyst somewhere, writing a report on one company anywhere, would have noted it. Not to mention that a hedge fund would have made a business out of buying shares in companies with the best wellness programs.
Another candidate would be our expose of the HERO report, in which we observed that HERO and their cronies accidentally admitted — a la Robert Durst — that wellness loses money. Despite co-signing this document — a document that required “two years and countless hours” of collaboration, and in which the word “consensus” appears 39 times, Ron insisted during our debate that he had nothing to do with anything in this document that he himself didn’t write. (Of course, in the debate he also insisted that he had nothing to do with Penn State — meaning he just wandered into their press conference by mistake, or maybe I am confusing him with another Ron Z. Goetzel.)
Nonetheless our vote goes to the Unified Theory of the C. Everett Koop Award, in which we reverse-engineered the mathematically impossible formula (the “Goetzel Factor”) that Ron and his integrity-challenged cronies use to anoint award winners, whose programs are almost invariably hilarious and show a complete lack of understanding of the way healthcare and healthcare math work. To paraphrase the immortal words of the great philosopher Samuel Goldwyn, “If Dr. Koop were still alive, he’d be rolling in his grave.”
They Said What? 