The Economics of Health and Wellness (Part 1)

There is no question that workplace wellness is worth it. The only question is whether you’re going to do it today or tomorrow. If you keep saying you’re going to do it tomorrow, you’ll never do it.
— Warren Buffet
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The US healthcare system is broken. We spent $3.65 trillion on healthcare in 2018, which was up 4.4% from 2017, and the costs are only going up, by 5.5% between 2018-2027 by some estimates. If this holds true then by 2026 healthcare spending will comprise 19.4% of US GDP. This is unsustainable.

But this huge and ever-growing expense doesn't even correlate to better health or longer lives. While the US spends far more on healthcare than any other country America ranks 43rd in life expectancy globally. According to the World Bank, the US spends 500% of what Chile spends on healthcare yet Chileans enjoy longer lives than their American counterparts. To add insult to injury, in 2017 the Commonwealth Fund ranked the US healthcare system the worst among the 11 high-income, developed nations.

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It's not only American's life expectancy that's suffering. We're suffering while we're alive, too:

The Centers for Disease Control and Prevention has recently estimated that 90% of healthcare spending goes toward caring for chronic conditions: surgery and other invasive treatments; medication to treat the primary condition; and medication to treat the symptoms caused by the patient's primary medication.

Meanwhile, by some estimates, between 30-50% of these costs could be eliminated by teaching people how to avoid getting sick in the first place. This is called lifestyle medicine:

  • teaching people how to eat a healthy diet

  • getting people to move more and be less sedentary

  • teaching people how to better manage stress

  • supporting people to give up unhealthy habits like smoking cigarettes or excessive alcohol consumption

Yet, despite the potential upside, only $0.05 of every healthcare dollar is spent on prevention. The rest of the money is spent on disease and symptom management. Meanwhile, the root causes of chronic illness are never addressed.

Primary physicians, overwhelmed by the profiteering demands foisted upon them by their corporate overlords, spend what little time they are granted with patients treating symptoms rather than coaching them on how to hack their health by changing their lifestyle and adopting healthy habits.

But even if they had the time most doctors lack the expertise; most have only had minimal education in nutrition during their medical school training. A wasted opportunity for sure, and a seeming institutional willfulness to ignore Hippocrates' admonition to "let food be thy medicine and medicine be thy food."

Yet over the past 40 years study after study has proven that simple lifestyle interventions -- eating healthier, moving more, managing stress, immersing yourself in nature -- are effective in slowing, stopping and even reversing many chronic illnesses:

  • a European Prospective Investigation into Cancer and Nutrition (EPIC) study of almost 20,000 men and women showed that those who adopted 4 healthy lifestyle factors -- moderate exercise of at least 30 minutes per day; not smoking cigarettes; maintaining a healthy weight; and a high intake of vegetables, fruits and whole grains and minimal meat consumption (that is, a whole-food, plant-based diet) had:

    • 78% lower risk of developing any chronic disease

    • 93% lower risk of getting type 2 diabetes

    • 81% reduced risk of a heart attack

    • 50% lower risk of stroke

    • 36% reduction in all forms of cancer

  • a large-scale 2018 study of more than 100,000 patients by the Harvard School of Public Health found that those that adopted 5 healthy lifestyle habits – a healthy diet, smoking cessation, limited alcohol consumption, more physical activity, a healthy weight – lived an average of 12-14 years longer and had:

    • 82% lower risk for dying from cardiovascular disease

    • 65% lower chance of dying from cancer

    • 74% lower risk of dying from all causes during follow-up

Lifestyle medicine programs such as the Health Warrior Way and Ornish Lifestyle Medice are the antidote to this epidemic of chronic illness and its financial lamprey, runaway healthcare spending. If we could shift at least some of the focus from disease management -- medication, surgery and other expensive treatments -- to low-cost yet highly effective lifestyle-based prevention programs we could, by finally addressing the root causes of many of our chronic illnesses, begin to bend the healthcare cost curve.

Enlightened businesses understand this.They invest in wellness programs for their employees because (a) they are an expected perk in the war for talent, and (b) they work, driving decreases in medical spending ($3.27 for every wellness dollar spent) and decreased employee absenteeism expenses (by $2.73 for every wellness dollar spent).

These employers treat their workforce as their most strategic asset. Poor employee health costs U.S. employers $530 billion a year, including lost productivity due to absenteeism and chronic conditions that cause ‘impaired performance,' and healthy employees are happier, miss fewer days of work and are more productive while they're at work.

And higher wellness scores track with business results. Healthy employees mean healthier businesses: higher profitability, higher market value and higher shareholder returns.

Why, then, are only 13% of employer-sponsored wellness programs comprehensive in scope, that is, they combine screening services (to detect illness or the probability of illness), lifestyle management services (to slow, stop or reverse disease) and disease management services (to manage illness with conventional medical interventions and medication). The majority of these programs (34%) offer only limited services across all three components.

Despite this underinvestment there's strong evidence that corporate wellness programs have a better ROI than many other strategic business programs and can help free up a bigger slice of the corporate budget, of which 7.6% is allocated to healthcare according to SHRM, dollars that can be more profitably spent, for example, on R&D, demand generation, business development, sales enablement or employee development.

Demand for corporate health and wellness products and services is high, and it's growing. There are thousands of corporate wellness vendors and suppliers competing tooth and nail for every discretionary healthcare dollar. The global corporate wellness market size was valued at $53.6 billion in 2018 and is expected to register a CAGR of 6.8% between 2018 and 2026. Savvy employers are tapping this marketplace for products and services that help many of their employees (the ones which opt in) reduce their health risks.

The potential opportunity for lifestyle medicine in the workplace is huge. Approximately 156 million Americans -- employees and their dependents -- 49% of Americans, get their healthcare benefits through their employers. Teaching millions of people how best to avoid getting sick, how to help heal themselves if they already are sick, or how to prevent a relapse if they're in remission would have an enormous impact not only on corporate P&Ls but also on the US economy.

But it won't be easy to disrupt the US healthcare status quo. There are powerful entrenched interests lurking in the US healthcare system, interests which view sick people as an annuity, a (truncated) lifetime's worth of revenue from prescription medication and expensive treatments all while delivering diminished quality of life. The incentives in the current healthcare system are all wrong; illness, not wellness, generates profitability, shareholder returns and corporate wealth.

You can't patent common sense. Maybe this is why lifestyle medicine is still considered fringe, a New Agey alternative to conventional treatment, when in reality it was the original -- the only! -- medical intervention. Before medicine and surgery, before radiation and chemotherapy, there was food and exercise, the support of loved ones and the embrace of nature.

This is too important to forget.


The Business of Health and Wellness, Part 2

In Part 2 of my Business of Health and Wellness series (coming soon!) I'll detail what I believe to be the missing components of the health and wellness ecosystem and why I believe that it's crucial for these these components to be in place before employers make the leap from investing primarily in disease management to betting big on lifestyle medicine.

Stay tuned!

Dick