Newtown, CT – August 16, 2013
When pressure builds, the steam has to eventually come out or the pot will blow up, and boy is the steam coming out – A few weeks ago Penn State announced that it was going to institute an employee benefits change that would create a penalty for those that didn't comply with certain wellness steps. Unsurprisingly, the coddled and entitled employees of that institution have started to rebel. The fact that they are rebelling is itself a very important and positive lesson on consumer incentives – the stick works, which of course we know from studies on Prospect Theory. And it works because today the incentives are essentially designed to encourage bad behaviors, so applying a penalty for lack of compliance is a way of rebalancing the employee's motivation to become more active in their health. The purpose of course is to shift the motivation from simply using the benefits when you're sick to using them to be far more proactive in managing health. This ties well to the changes in payments that are reducing the toxic effect of fee-for-service and motivating providers to manage patient health, not just disease. And that's having a growing effect if you look at the most recent analysis from the Altarum Institute on health care employment and the shift to outpatient care.
What this means to you – disrupting the status quo always has implications, and there will be a lot of groans, moans, and pain before it's all done. As Jack Welch was fond of saying, you know you're close to the target when you're getting flack, and that's what's happening at Penn State. Employees of public organizations have been coddled and feel a sense of entitlement, but we must not forget that their salaries and benefits are partially (in some instances completely) funded by our tax dollars. Their lack of motivation to manage their health results in higher expenditures for which we pay. It's time to turn those tables. Similarly, the source of employment that many states were gleefully reporting up to a few years ago – health care jobs – have proven to be a source of sorrow instead because they translate to higher health care costs. In a report we published last year, you can read how one community's growth in health care jobs increased the cost for all who pay health care insurance. So the pressure that has built is to lower costs, and that means getting employees and health care organizations to get leaner. We all need to trim off some of the excess fat. So let the steam whistle blow and don't turn off the heat.