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More employers use workplace wellness programs to reward healthy behavior

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As employers pursue effective workplace wellness programs, their embrace of results-based financial incentives and other emerging health management strategies is likely to broaden this year.

Twenty-three percent of large employers polled in a survey released in December by Mercer L.L.C. said their wellness programs include incentives tied to an employee's achieving — or at least demonstrating progress toward — a certain health status or biometric reading, up from 20% in 2013.

Similarly, a September survey by Towers Watson & Co. found that 18% of employers already use outcomes-based wellness incentives, while another 10% plan to do so this year.

Outcomes-based incentives are “where we've been heading for a while now, and I don't see that changing,” said Jill Micklow, a Chicago-based wellness consultant at Schaumburg, Illinois-based Assurance Agency Ltd. “I think you're definitely going to see more of the same this year and into next year from employers.”

Another 48% of employers plan to add a results-based incentive strategy to their wellness program by 2016 or 2017, according to Towers Watson's survey.

“The days of giving employee small tokens like gift certificates or T-shirts are long gone,” said Lisa Weston, director of wellness promotion at human resources consultant Bagnall Co. in Phoenix.

Ms. Weston said most employers migrating toward outcomes-based incentive designs thus far have been larger firms.

Another recent development experts say could gain substantial momentum this year is the burgeoning popularity of value-of-investment metrics as an alternative way to measure a wellness program's positive and/or negative effects.

“Over the last two years, we've seen this debate rise up over the ROI of wellness, and I think there is a healthy level of skepticism to apply there,” said Ron Leopold, the Atlanta-based national practice leader for health outcomes at Willis North America Inc.

Unlike the cost/benefit-oriented return-on-investment assessments many employers use to gauge their wellness programs' financial viability, experts say value-of-investment assessments examine the breadth of a wellness program's cost-effectiveness relative to an employer's other operations.

“I think there's a growing recognition among employers that wellness is a marathon, it's not a sprint, and there are far more targeted ways to put in programs in order to lower your medical costs,” Mr. Leopold said. “The lion's share of what's in a wellness program ... does pay dividends over time.”

“There's also a growing body of evidence that suggests that companies that do invest in good health and wellness programs correlate with better business returns and greater profitability when compared to peer companies that have not invested in wellness,” he said.

As much as 32% of employers polled last year by Arthur J. Gallagher & Co. indicated they already use one or more of the most common value-of-investment metrics — including employee engagement, lost work time and lost productivity — to evaluate their wellness program.

“It gets to all of what comes out of all of the resources invested in wellness programs,” said LuAnn Heinen, a Minneapolis-based vice president at the National Business Group on Health. “It gives you a look at what your business results are, beyond the medical trend.”