Nationwide Better Health, part of Nationwide Mutual Insurance Company, will close its doors in September after five years in the wellness and productivity business.
This came as a surprise to industry leaders who see more and more employers providing wellness programs to their employees, in large part because it leads to prevention, the key to a lower health care plan rate.
According to the National Association of Manufacturers, 77% of America’s leading employers offer formal health and wellness programs.
It came as a shock when 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.
But, to president of the subsidiary Terri Hill, it made sense.
“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, they had 250 customers and in 2008, 350, but by May 25, the list was lower than 100. “No matter what we would have done, it could not have changed the course based on the external factors.”
Better Health was formed from joining two legacy Nationwide companies in 2006 and acquired three companies and made partnerships with at least two other wellness-related companies.
“They grew too quickly, 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.”
The changing health care market also played a role in the limited strategic fit with Nationwide.
“It was always an interesting a stretch for the property casualty company to enter into this business,” Hill says. “We had a premise around the possibility for this to be more preventative, some of that didn’t prove out along with investments.”
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 is offering a 25% to previous Better Health clients through September 30. Henry Albrecht, CEO of Limeade says the success of Limeade has been in part to the low price-point of social technology and being fully focused on wellness.
“Technology plays a huge role, if you can engage 90% of the workforce and you can use the internet and mobile devices and peer support to drive that engagement, it’s a huge positive on the cost side of the house,” says Albrecht. “Having a company that’s business is wellness with 100% focus, you get a best of rethinking and service.”
Though clients weren’t offered a transition plan with another wellness company, transitions to new wellness companies take over 90 days to implement, according to Albrecht and Kyle Rolfing, CEO of RedBrick Health, another health management company, who says they have reached out to known 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, but he also mentioned that RedBrick had streamlined their process to get companies acquainted in 60 days. Rolfing considers RedBrick to be part of the second wave of wellness companies that have popped up in the past few years that are more focused on social media, technology and engagement.
Stephano agreed, adding 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, is to compliment a wellness program with an employee engagement program. You can bring them to water but you can’t make them drink.”
