The Wellness Economy: Its Time Has Finally Come

This week, two of three Americans will make New Year's Resolutions. Topping their lists will be “eating healthier” and “getting more exercise” (YouGov Poll). Within a month, four in five will have abandoned their pledge.

The reality is this: most Americans know eating healthier food and getting more exercise are important to their health. Last year, they spent $70 billion for diet programs and foods and $37 billion to use one of the 38,000 fitness facilities ranging from boutiques to large gyms. Adding what consumers spend for alternative care (i.e. yoga, mindfulness, et al), wearables, vitamins and supplements, streaming services like Peloton and home fitness equipment, it’s a $200 billion market growing at 7% annually in the U.S. and faster in certain global markets. And this doesn’t include emerging markets like genetic testing (i.e. 23&Me), medical cannabis and a plethora of self-care apps available to smart-phone users. Healthy living is big business!

But consumers want more. They recognize the importance of physical health but think healthiness is much more. They believe the current health system is geared to fixing medical problems for patients shortchanging preventive health and discounting the ability or inclination of consumers to control their own health. They are using their time and money in pursuit of wellness and the market is taking notice. It’s a major trend with monumental implication for the future of healthcare in the U.S.

Wellness and Healthy Living: The Current State
There is no shortage of data about the wellness of the U.S. population: the government’s Healthy People 1990, 2000, 2010 and 2020 Reports, the National Center for Health Statistics’ National Health Interview Survey (www.cdc.gov), the U.S. Census Bureau (www.census.gov), the Henry Kaiser Family Foundation’s Health Status Reports (www.kff.org), Gallup-ShareCare Wellbeing Index (www.wellbeingindex-sharecare.com) and the United Health Foundation’s Annual America's Health Rankings Report (www.americashealthratings.org)  are among the most widely cited. All point to the same conclusions:

Wellness involves physical, emotional and social determinants of health. Understanding an individual’s health requires more than a physical exam or history of medication use. Healthiness involves more than food choices and treadmills. It’s attentiveness to the whole person. The National Wellness Institute uses six domains in its framework: emotional, occupational, physical, social, intellectual, and spiritual health. “Addressing all six dimensions of wellness in our lives builds a holistic sense of wellness and fulfillment.” And analyses of clinical outcomes—mortality and morbidity rates, adherence to therapeutic directives, admissions and complication rates and others—show a clear correlation between attentiveness to a person’s social circumstances and emotional stability and positive outcomes.

The wellness of the U.S. population is declining. The U.S. spends $11,193 (2018) per person for its healthcare system—the most expensive in the world. Despite this, our overall state of wellness is declining. In the past 10 years, the prevalence of adult obesity has increased 17% to 31% (National Center for Health Statistics) and our level of stress has increased 23% to 6.2 on a 1-10 scale (APA Stress in America Survey). Our smoking rate is down but death by suicide or drug overdose are up.

In Gallup-Sharecare’s most recent report, which examined health in 186 communities, the authors concluded: “Overall, 2017 was a challenging year for Americans’ well-being. The national Well-Being Index score for the U.S. in 2017 was 61.5 – a decline from 62.1 in 2016. This overall drop was characterized by declines in 21 states, easily the largest year-over-year decline in the 10-year history of the Well-Being Index. Not a single state showed statistically significant improvement compared to the previous year, which is also unprecedented in Well-Being Index measurement.”

The U.S. system excels in taking care of our sick and injured; we offer the world’s most modern facilities, specialized programs and novel therapies, but we fall short in effectively managing the wellness of our population.

Perhaps that’s because the wellness economy has operated outside the traditional healthcare system as consumers make choices unknown to their doctors. Perhaps that’s because the wellness economy is significantly smaller than the more lucrative $3.5 trillion healthcare industry wherein surgeries, prescriptions tests and visits are the focus. Perhaps it’s because wellness is more complicated than eating right and exercising more.

Looking Ahead: The Mainstreaming of the Wellness Economy 
Three trends are driving the growth and importance of the wellness economy:

Increased Consumer Demand: Polls by Kaiser, Pew, Gallup and others show consumers are dissatisfied with the status quo, worried about costs and affordability and receptive to new models of care. Millennials want solutions that emphasize simplicity, minimalism and personalization. Boomers want predictable costs and better service from providers. Seniors want access to physicians they like and local hospitals that are nearby. Each sees wellness differently and all consider it more than physical health. And in growing numbers, antipathy toward the medical industry is feeding consumer receptivity to wellness and self-care alternatives.

Employer Wellness Programs Expansion: Wellness programs are a staple for employers. More than 90% offer employees a wellness benefit usually consisting of education, risk assessment, smoking cessation and other features. The ROI for these programs exceeds 3:1 if designed to improve employee lifestyle and avoidance of risky behaviors. Since unemployment is at a 50-year low (3.7%) and costs associated with chronic disease are increasing employer costs at 6% annually, employers are increasingly using their wellness programs to lower turnover, improve productivity and reduce costs associated with presenteeism (workers who come to work ill or unable to work effectively). Employer-sponsored wellness programs are expanding to target chronic conditions and reduce employee stress and anxiety. In tandem, employers are doubling-down on relationships with local primary care practices that embrace holistic treatments and active engagement of individuals in their care.  

Managed Care: At year end, 2017, 80% of Medicaid enrollees are enrolled in managed care plans: that’s 65 million. A third of Medicare enrollees (32%) are enrolled in one of 2734 Medicare Advantage plans: that’s 19 million. 100% of the military, 4.6 million, access healthcare through a managed care model. And 99% of the commercially insured are covered by plans that employ managed care practices that limit consumer choices and reward medical cost savings. (National Center for Health Statistics) Managed care is a bull market. Each plan is focused on reducing unnecessary tests, visits and procedures and improving the health status of its members. The integration of wellness is central to their medical management strategies. It’s good business for payers to prevent hospital admissions and avoidable complications by expanding their primary and preventive health efforts. Equipping these providers with tools to gauge the status of the physical, emotional and social needs of individuals is central to these efforts. And payer efforts to manage the tsunami of chronic diseases, which account for 70% of total health costs, center on the integration of wellness with ongoing primary care.

The mainstreaming of the wellness economy with the conventional system of care is underway. These three trends point to its increased importance.

My take:

The race to capture the wellness economy on a broad-scale is underway. The opportunity is bigger and more complex than gyms and diets and there’s plenty of activity. Some signals from the market:

  • Notable industry mega-deals reflect growing recognition that consumers will play a more direct role in their care and wellness will play a key role in their value propositions to employers and their employees. Some recent examples: Walgreens & Humana, CVS & Aetna, Amazon, Walmart and others.

  • The diet and fitness industry’s mainstays are re-calibrating their strategies to align with the wellness economy. Tivity’s $1.3 billion acquisition of Nutrisystem is positioned as a strategy to manage “calories in, calories out,” WeightWatchers recently changed its name to WW International to associate itself as “Wellness that Works”. 

  • Entrepreneurs and private investors are bringing novel solutions to bridge the chasm between traditional delivery and wellness. TAVHealth, for instance, provides a platform for assessing data about the social determinants of a person’s health and integrating it with their medical records and insurance plans.

  • Prominent health systems are integrating social determinants and wellness diagnostics in their community outreach and care coordination protocols. Lee Health Coconut Point (Estero, FL) is a state-of-the art facility that serves as the hub for its wellness strategy which extends to 50,000 local households. The 163,000-square-foot, $140 million facility opened its doors last month featuring a Healthy Life Center, teaching garden and more.

  • And physicians are taking notice. Case in point: the American College of Lifestyle Medicine is advancing wellness as a multi-disciplinary specialty among physicians, medical professionals, allied health professionals and others committed to similar aims. (www.lifestylemedicine.org)

The convergence of the wellness economy with the traditional system is timely: forecasts are that the economy will slow (3.0% growth in 2018 vs. 2.6% in 2019 per Wolters Kluwer Blue Chip Economic Indicators) and 50% of economists think a recession is likely in the foreseeable future (National Association of Business). Interest rate hikes will make borrowing more expensive for businesses and individuals: 2 are scheduled by the Federal Reserve in 2019. The political environment and impending Campaign 2020 will intensify anxiety at a time when the public is experiencing unprecedented stress about the future (Gallup).

Addressing wellness is foundational to the health of our society, the success of our companies and the stability of our households. It’s not an afterthought or miscellaneous expense; it’s a strategic imperative.

The wellness economy is strong and growing. It is a grassroots movement reflecting growing discontent with the traditional system of care, its aversion to transparency and its profits.

So, while New Year’s Resolutions to eat healthier and exercise more are appropriate and timely for most of us, a more noble pursuit is wellness. But managing stress, reducing anxiety and loneliness don’t come to mind around New Year’s Day. Maybe they should.

Paul