Nationwide Better Health, part of Nationwide Mutual Insurance Company, closed its doors Sept. 1 after five years in the wellness and productivity business. The company announced on May 25 that Nationwide would sell its productivity services to Sedgwick Claims Management Services Inc. and wind down disease management and wellness programs.

Although the closure came as a surprise to industry leaders, to president of the subsidiary Terri Hill, it made sense to close. "The biggest external factor that affected our business was the economic downturn. We were building up this company in 2007 and 2008 when employers were faced with difficult choices: Do they fund the 401(k) program or offer wellness?," Hill says.

In 2007, Nationwide Better Health had 250 customers and in 2008, 350, but by May 25, the client list was smaller than 100. "It was always an interesting stretch for the property casualty company to enter into this business. No matter what we would have done, it could not have changed the course based on the external factors," she comments.


What went wrong?

During a time when employers are maintaining if not increasing their wellness investments - according to the National Association of Manufacturers, 77% of America's leading employers offer formal health and wellness programs - why would Better Health opt to cease operations?

"They grew too fast, with too many acquisitions," says Renee-Marie Stephano, president of the Corporate Health & Wellness Association, speculating on the possible causes of Better Health's closing. "They grew too quickly to allow themselves a financial cushion to weigh the outcomes of their programs."

She adds that she presumes "the issue with Nationwide was a lack of engagement - you need to set up the programs appropriately to begin with. If it was a financial issue, it was because they didn't have a good engagement program, which is the most challenging thing for any employer - to compliment a wellness program with an employee engagement program. You can bring them to water, but you can't make them drink."

Better Health was formed by joining two legacy Nationwide companies in 2006, and the company later acquired three companies and made partnerships with at least two other wellness-related organizations. One of those was INTERxVENT, which offered a lifestyle management and cardiovascular risk reduction program.


Poor customer service?

Missy Jarrot, human resources administrator for Chatham Steel, which has 287 employees across six states, says Chatham used INTERxVENT for its reporting and mentoring services for its in-house health and wellness program. After a few years with INTERxVENT, Nationwide took over.

"Let's just say that the customer service wasn't as good - you'd have to go through a lot of people to get answers," she says. "We were a small blip on their radar, I imagine, so I don't think we were a priority, which is sad."

However, Chatham stresses that her experience with INTERxVENT as a program didn't falter; it was still a top-notch program.


Filling the vacuum

Better Health's clients were notified when the decision went public, but employers were not given guidance beyond RFPs, so a few wellness providers stepped up with limited-offer discounts, such as Limeade, a second-generation wellness provider that offered a 25% discount to previous Better Health clients through Sept. 30.

Kyle Rolfing, chief executive of RedBrick Health, a health management company, says his firm also has reached out displaced Better Health clients and won a few.

"Some of their clients were taken by surprise and had a short time to find a home; normally it's a long process when you consider finding a consultant, getting a request for proposal, decision-making time and implementation process," Rolfing says, adding that RedBrick had streamlined their process to get companies acquainted in 60 days.


Sign of larger trend?

LuAnn Heinen, vice president of the National Business Group on Health, a nonprofit association of large U.S. employers, maintains that Better Health's closing "is an unusual situation.

Part of the business was sold and the part that was left hadn't established enough a presence. It doesn't reflect an industry trend."

Though Stephano of the Corporate Health & Wellness Association acknowledges that the U.S. is behind in terms of wellness, she agrees with Heinen.

"With increased health care costs and health care reform, there will be a greater focus on the part of the employer to engage their employees in prevention and wellness. I don't see this as a trend," Stephano says.

The piece Nationwide may have been missing - engagement must be present for wellness companies to exist, she adds. "Comprehensive programs that take into consideration the engagement of employees and their families will prove good outcomes and results. . . . You'll see an availability of those programs."


Advisers must be 'first, faster and stronger' on health reform

It is time for brokers and consultants to face the much-talked-about health care reform challenges head on and move forward being "first, faster and stronger" than their competitors. The goal is to make clients understand that the cost of doing nothing might be the "most expensive, more detrimental thing to a business," a former adviser said recently.

Speaking at the 6th Annual Employee Benefit Adviser Summit in Dallas, Kevin Trokey, president and chief executive of St. Louis-based consultancy Benefits Growth Network said that because the challenges are so difficult, brokers need to differentiate themselves from the competitor by tackling them now.

It's time for advisers to become "new school" and change their business model, agrees Robert Liebelin, managing partner of Harrisburg, Penn.-based advisory firm Hales and Company. Liebelin, who spoke in a separate panel at the summit, warned his colleagues that, "If you go down the middle road of staying where you are, you will become irrelevant."

Of course, it's not the first time advisers have faced a looming problem. Recalling the mid-1990s prospect of nationalized health care, former New York Governor Eliot Spitzer going after income and the Internet, Trokey says that "most of these things came with a glancing blow [and] nothing delivered that knockout punch." But that punch is coming - in the form of health care reform and MLRs, and that requires facing your challenges by taking control, he says.

Brokers and advisers often couldn't take control in the past, since the products they sell are typically from insurers, who control the rates, for example. To take control, you need to partner with the human resources department, "which has the potential to truly be that strategic driver in an organization." Yet, when companies realized that HR could change their companies and create the experience employees need, they often did not find strategic thinkers, Trokey says. Instead the departments consisted primarily of administrative staff. "They weren't prepared to take on this [strategic] role with the organization," he says.

That "creates opportunity for us," Trokey maintains. "If you get yourself aligned with [a client's] strategic vision, that's when you go from being an expense to being an investment. . . . [It's] your time to come in and fill the strategic void. And when you fill that strategic void, that's something you can control and take control of how you get paid," he adds.

Everyone benefits when you can get HR connected, which all starts with building a plan. "If you can't commit to that, I don't know what to tell you," Trokey concludes. "The cost of doing nothing at this point -- that could be detrimental." -Brian M. Kalish

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