Interview With Michael Dermer – Chief Incentive Officer at Welltok

I had a chance the other day to interview Michael Dermer (@rewardforhealth) who is the Founder of IncentOne and currently the Chief Incentive Officer at Welltok.  I’ve known Michael for a while and wanted to learn more about how he saw the market now that he’s sold IncentOne and has launched his blog – www.michaeldermer.com. 

As the pioneering Social Health Management™ company, Welltok is revolutionizing the way population managers optimize consumer health by aligning activities and behaviors with the right incentives and rewards. CaféWell, the company’s Health Optimization Platform™, drives engagement and incentivizes healthy behaviors though a novel combination of social, gaming and personalized activities. Welltok provides population health managers with a Platform as a Service solution that enhances revenue growth, increases administrative efficiencies and delivers health care value.

The first thing we talked about was trends in the incentive market.  He said that incentives have become an accepted part of the strategic assets that a payer can use to drive behavior change.  That was validated by Obamacare where it allows for increased use of incentives tied to outcomes.  He also pointed out that you’re seeing a jump in dollars allocated to incentives with companies spending $500-$1,000 per employee on incentives. 

Another point he made is that you’re just starting to see more sophisticated incentive program design.  He estimated that we’re at a 2 out of 10 in terms of sophistication.  We traditionally saw companies providing incentives linked to actions like taking an HRA or participating in a wellness or disease management program.  Companies are now looking for a more immediate and predictable ROI which will likely lead to a mix of actions for which consumers can earn incentives. 

He made a really interesting point about the “retailing of healthcare” which we’re seeing even with the healthcare.gov debacle.  The reality is that healthcare is moving towards more consumer responsibility with HDHPs (high deductible health plans), CDHC (consumer driven health care), transparency, and exchanges. 

The big question is whether incentive will be a differentiation point in health plan selection.  For credit cards, we’ve certainly seen the value of the incentive program be a huge focus.  There are numerous TV ads pointing to this.  Michael sees incentives creating this differentiation over time. 

I asked Michael about mHealth since I’ve seen numerous mobile solutions and web vendors showing me how they’ve integrated incentives into their program.  In his view, mobile is simply a new channel, but it’s not a disruptive force for the incentive market.  It provides a way to track and view rewards, and it will generate data to provide rewards for (e.g., steps). 

We also talked about another topic that I always struggle with which is the challenge of sustained behavior change versus a one-time boost.  I think incentives are great to open the door and get people to take an action, but after I’ve gotten my incentive, what keeps me involved.  This is where he linked back to the complexity of the program.  He suggested that incentive programs need to be dynamic.  They need to evolve both over the years of the program, and they can’t be a big bang (i.e., $500 for your HRA and nothing else).  They need to link into activities and actions throughout the plan year. 

I asked him what tips he would give to someone new to incentives.  Here was his list:

1. Reverse the traditional order of focus.  Create a program that gets “points” on the board quickly with an immediate ROI.  Focus on the outcome-based, long-term changes second. 
2. Weave the incentive program into the company culture.  You need to communicate about the program and link it into the company brand. 
3. Understand the theory of relativity…which means

• The relative dollars year over year.
• The relative dollars per activity.  (i.e., should you get the same incentive for taking an HRA as you do for reducing your BMI by 3 points?)
• The relative dollars compared to the average employee’s salary.
• The relative dollars compared to the level of effort and value. 

On the flipside, I asked him what to avoid.  He had two very straightforward points:

1. Having too many activities for too few dollars.
2. Having a great program with no awareness. 

So, in wrapping up, I asked him why did they sell to Welltok.  He pointed out several opportunities that he saw in the combined entity:

• The combination of engagement and incentives is foundational to healthcare success.  This is true in social, mobile, gaming, and platforms. 
• They offer a platform as a service where different programs can be combined in different configurations. 
• They offer a Health Optimization Hub which will optimize the efficiency of programs and maximize incentives and engagement tools.