Here’s Part II (Part I) of my interview with Michael Dermer, the Chief Incentive Officer at Welltok, where we talk about engaging different patient populations, Apple Watch, and IBM Watson.
LK: Let’s talk about the Engagement Spectrum, which I’ve written about before. It’s easy to get someone who is maybe looking at a very scary situation, even death. It’s easy to get people engaged at the bottom of Maslow’s hierarchy, someone who’s just had a heart attack, for example, to change. Then there are the quantified selfers, there are those at the top of the hierarchy that are after optimizing their personal performance. But what do we do about the ‘C’ students in the middle? The 35 year-old that’s in pretty good shape, not great shape, but doesn’t think to much about health? Are rewards the answer there? Do they matter for her?
MD: Just like there’s a continuum of behaviors, there’s a continuum of personalities. From an extrinsic reward perspective, the thing we need to do is line up the dollar value with two major things. Number one is the level of effort, what you are asking them to do. Number 2, frankly, is their income. A $50 reward will not work as well for someone who’s making several hundred thousand dollars a year.
That’s the foundational part of it. There’s no question that some will do things without an incentive, some will never do anything no matter what the incentive is, but 80%, if you look at the studies, probably can be influenced to a degree. They will engage, but you have to optimize the dollar value you give them relative to their behaviors. Some of the early forays into the pay-for-performance incentives on the provider side, for example, didn’t work very well because they were just too small.
LK: You’re talking about, say, a highly-paid physician wasn’t going to pay attention to some of these smaller rewards given everything else they’re dealing with?
MD: Yes. So, take the example of e-prescribing and the Medicare e-prescribing incentives. If you give $100 to a physician that’s making over a couple hundred thousand dollars a year, you won’t get much movement. But if you give the same to an office administrator that makes $40K/yr, chances are you will get movement.
It’s not “if incentives” it’s more “how” (incentives). The interesting thing about the Medicare e-prescribing program, they credit the program to getting e-prescribing to over 70% across the country, and the incentives were not that big.
But typically, you’d expect, for someone who’s pretty well and not engaging with the healthcare system for prevention, or others at different levels, you have to get it right around what you are asking them and how much you are offering them.
LK: So it’s similar to the Fogg Behavior Model, there’s a trigger and there’s motivation and there’s how difficult the behavior is, and you need to find out where you are on that graph between difficulty and the reward needed to create the motivation (if it doesn’t exist already).
MD: When you think of people on Medicaid, for example, they are hard to communicate with because they are transient and they are dealing with fundamental life issues, but money is really important. If you can reach them, $50 is a lot of money. So you need to make those things available, food and communication. That’s why I use the term art and science, some of it is the science and the analytics, but a lot of it is the art of how those things are communicated based on who you’re trying to reach.
LK: Were there any big surprises on what came out of payments made to physicians (by pharma and device companies) that was released by CMS? (Speaking of incentives.)
MD: I think what’s going to happen with the evolution of providers is that it’s going to come down to something similar to what we’ve learned with consumers: that is, it’s not the concept of rewards and incentives, (that’s ultimately what’s happening when you’re reworking a whole payment model) it’s that you have to make it meaningful for providers for what you are asking them to do. In some cases, when it will be tied to what patients need to do when they leave the office. You have to make the incentives (for providers) meaningful enough so that the providers will invest in communications and new resources for follow-up and population health. We’ve always said that that people should do these things on their own, that providers should do these things anyway, but now that patients and providers are both being held more accountable, I think we’ll see that we’re in the very, very early stage of pay for performance and ACOs. We’ll really need to put our money where our mouths are in terms of how much we need to spend for different decisions and behaviors.
LK: So do you see the economics working out? Do we have enough to spend on rewards to change behaviors and reduce costs and then still come out on top and make overall savings and quality? Is it that easy?
MD: Yes, if we can help providers get over the initial investments in population health tools, then aligning the dollars will make sense. Once providers have those things in place, once they go through the, “I’m an ACO. What are the real foundational assets I need to invest in and have in place?” so they maybe need to get their EMR wired to population health management tools and medication protocols. They’ll need to get those kinds of assets in place and then wrap the incentives around them, then we can make the economics work. Health plans and employers in many ways have already gone through that, they’re deploying more and mores assets every day around different conditions and risk factors. If providers can do that, then the math will work fine.
LK: Is that something Welltok is doing? Who’s going to provide these services and help them see that the math works, that it’s worth the investment, as it really is a whole new business model?
MD: When you look at what we’re doing at Welltok with a health optimization platform, we’re organizing all those assets into one place. We do that for health plans today and more and more for providers. Right now health plans have a lot of assets in place and we’re helping them to organize them and optimize the assets. Providers, a lot of times, are even less versed in that and so I think a lot of providers will get their assets from their health plan partners. Aetna’s accountable care services businesses say, here’s what we’ve learned, we’ll provide those assets to the provider groups to help optimize. Then once those assets are aligned for the provider, they can get aligned for the consumer and you have that complete alignment. There’s still things that need to flesh out on the ACO side, but hopefully we can help them do that so they can focus on the behaviors that need to happen before, during and after they are in the doctor’s office.
LK: I can’t have this conversation without asking about the Apple Watch and what it might mean to the behavior and health incentive business. I wrote a few weeks ago about how it seems they are really going to be able to tie location, behavior, messaging, purchasing and payment and activity into a pretty unique, comprehensive package. Do you see them as a threat, an opportunity, how might this play out?
MD: I think any time you give the consumer a way to organize all the ways they are interacting with the health care system, that’s terrific, and hard to do. I think I mentioned last time we talked that we were the first investment of the IBM Watson Portfolio. And now IBM Watson and Apple have struck a deal to work on some of their health care initiatives together. What Apple brings to the table is a lot of things, a trusted brand and certainly a great consumer experience. And what everyone is fighting for in health care is a great consumer experience. So I think there’s great alignment for Apple to start to bring together a lot of assets that could make up a great consumer experience in health care.
The caveat to that of course is that, if you look at Health Vault and some other attempts to do this in health care, there’s a lot of complexity compared to other arenas, with privacy and HIPAA and protected health information. All that has to be wrapped together.
But at the end of the day, if you look at what Apple has done, what Wal-Mart has done (Wal-mart has $110 million people in it’s health rewards program), they’re not just rewarding for shopping at Wal-Mart, they’re rewarding for using Fitbit and all sorts of other health behaviors
For orbs like that that have a brand that’s somewhat trusted (unlike health plans), there’s a massive opportunity.
LK: And it seemed like Microsoft and Google were maybe a little early, because the technology transparency wasn’t there and it wasn’t automated—consumers still had to manage and even enter that data. Then there’s the whole trust issue, as you say, is it a trusted entity (unlike health plans)?
MD: Yes, and it’s heavier lifting to bring together claims data and all these other kinds of data, even more so than the financial services industry’s transactional data (even though that’s complex).
So if you look at IBM’s and Apple’s relationship with us, it’s the realization that it’s difficult stuff to pull all these complexities together. Our leadership now at Welltok, as you know, is the former leadership from Trizetto, which was heavy-duty claims and administration. IBM brings that gravitas. To your point, Microsoft may have been early. The idea was good, getting all this info in one place, but maybe there was a lack of understanding this complexity as well.
It’s a very exciting time to see all this power in the hands of consumer, which is what everyone is seeing as the right way to go.
LK: Is your work with Watson about learning what works for consumers?
MD: What’s really interesting about our partnership with Watson is being able to take all this unstructured data from a consumer’s life and bring it back to them in a way, with tasks and reward and opportunities, to help them make healthier choices. That could be location services, marrying that with health information to make recommendations. So when you get off of a plane, Watson can recommend a gym and where to eat lunch. To bring together all that unstructured data, and present it in a way that’s meaningful, that really has the opportunity to be groundbreaking.