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Vitality’s global health officer, Derek Yach, was proud as punch when we met in Davos. A five year, 100,000 person survey in the US commissioned by his group comprehensively proved the efficacy of Vitality’s shared value approach. The model, which incentivises customers to become healthier and save themselves money on health insurance attracted another major accolade here. This time it featured as a leading health innovator in the WEF/Willis Towers Watson report which shows how Vitality is using wearables like the Apple Watch to revolutionise the health incentive market. As Yach tells us, it all starts with a few more steps. – Alec Hogg
I’m here with Derek Yach and it’s really a pleasure to see another South African here in Davos. Derek you’re with Discovery’s international arm, Vitality and today Vitality’s model was once again acknowledged.
Yes, we were thrilled. Today there was release of a major report jointly by the World Economic Forum and Willis Towers Watson that highlights the power of behavioural economics to have a positive impact on health and what makes the report so important is that I think that it’s probably the first time that we’ve ever seen behavioural economics mentioned alongside health promotion at this level.
What’s behavioural economics?
Behavioural economics is basically applying the fact that we’ve assumed for so long that we are rational thinkers and Kahneman and Trotsky are people who have Nobel Prizes for this have shown that we often act in our worst, best long-term interest, so it includes everything from the way we would tend to avoid going for a run in the morning or in my case a swim in favour of a few extra hours in bed. We choose foods that we know will not have great impacts on the long-term because we favour their health, we structure our government programmes to favour treatment instead of prevention.
All of these are faults in the way we think because we’re always tending to focus on the short-term and the solutions that Discovery and Vitality have really pioneered over the last many years have been to say that the way you overcome that short-termism is by giving somebody an incentive or some reward to act in their interest now even though it may not be directly related to health but has an impact down the line and of course the implication has been that we’re then able to show that this leads to longer, healthier lives in a very pragmatic way and this report puts that at the central point.
You went quite a long way, 100,000 people were surveyed over a five-year period. That sounds like a logistical challenge of some note.
Well, I think it’s probably only just the Discovery programmes that really have got these massive numbers and the quality of the data and the meticulousness with which they follow it to actually allow us to do these kinds of studies. I take my hat off to the actuaries, particularly around the world doing it. So this really asked as well, one of many questions that we’ve published, namely, “Are there trigger activities in our lives that lead you to either undertake more healthy or less healthy things” and what we basically showed is that people who increase their level of steps or activity modestly then tend to go on to have a higher probability of being screened for things, they’re more inclined to eat healthy foods, they’re more inclined to go for screening. This sounds obvious to many people, but believe it or not there’s never been a study of this size or impact that’s shown it.
We then know if you then add onto that the power of the Apple Watch or another wearable with an incentive built into it, you see those levels of activity accelerate to levels that are very rarely seen. Now the fact that 100,000 people followed it, this then starts becoming believable because so many claims are made about how to actually drive and change healthy behaviour, but there’s simply no data. This state of course comes after years when they’ve followed a million people showing as they engage in Vitality Programmes, healthcare costs get cut by up to 40 percent or the 25 percent discount on healthy food, 300,000 will follow it for two years and many in South Africa may be unaware that, that’s the largest study in world literature by ten-fold and it’s the only massive study to say that the healthy food discount programme actually shifts diets in a meaningful way, all leading to better health.
So it all starts with the Apple Watch if you like, or a Garmin or some kind of a wearable and I’ll just give you my own example. I’ve got a little wearable, I like to get my 10,000 steps in somehow and I thought well maybe I’m a little bit of a freak and bumped into my friend, Stewart Bailey and he was showing me his fancy watch which has a link through to his mobile, also he says, “No, I’ll walk there because I want to get my steps in” and that’s where it starts and from what you’re telling us we then progress to even healthier other habits.
Yes exactly and I think once you show that you can achieve mastery in one aspect of your life that you thought was going to be tough to overcome (and the wearable is really just a trigger and a support mechanism), once you’ve done that you’re then more likely to go on and try some of the really tough issues. Weight management is really tough even on portion size or eating healthier. Getting screened on time is probably also tough and some of the toughest ones are people who smoke, to use reduced risk products or to quit completely because they’re both addicted biologically as well as in their behaviour.
People, who drink excessively, will drink excessively.
That again and I wish I could tell you that we have a successful programme on excessive alcohol use. We don’t as yet, but I’m sure if you watch this space within a year or so, we’ll finally put it on the agenda alongside the other risks, tobacco, unhealthy diets, inactivity, alcohol as being the top four risks that if we address, will tackle the major causes of death and disease in South Africa, in parts of Asia, in America, in the UK, and every market we operate in.
Well, there are 12-step programs, maybe they could do with a bit of support, but getting back to something like cigarettes, when someone smokes a cigarette they don’t feel the immediate danger that they’re in. Is there a way of reversing that i.e. by inverting your positive approach that you have towards people stepping or walking more?
The biggest opportunity we now have for adults who smoke is to recognise that nicotine replacement therapy doesn’t give them what they really want and that’s why the success rates there have been bad. Advice has virtually no effect, financial incentives has a bit of an impact, but that’s incredibly costly at a population level, so we were interested at looking at what accord reduced risk products, e-cigarettes, Heat-not-Burn products, a range of these products which many still regard as contentious. I believe actually by separating nicotine from the stuff that really kills you, you’re going to lower your risk by 95 to 99 percent.
— Willis Towers Watson (@WTWcorporate) January 19, 2017
As far as I’m concerned that’s a fantastically good thing and we’re seeing uptake in the UK, in the US, and Japan, around the world at much higher levels of getting onto a reduced risk product, which may not be the perfect complete solution, but it’s actually cutting out most of the risk which would mean that in on a worldwide basis our current figures of about six to eight-million people dying every year of tobacco could probably be cut faster through these products than almost anything else they have on the market.
Okay, brag a little. How many people do you estimate, by doing what you’re doing, by incentivising people to be healthier, how many people’s lives are you saving every year?
It’s a great question Alec and I wish we had the numbers, but we could probably calculate it. We have almost five-million people on Vitality Programmes. I would say that probably 20 percent of them are getting a very material benefit in terms of longevity and in terms of quality of life and probably another 34 percent, 30 to 40 percent, a sort of interim they’re getting some reasonable benefit and for the others maintaining where they are is a good thing in itself. We forget that if we’re actually able to have people simply maintain a low level of risk, which about a third of the population are practicing anyway and keep it for five, ten years, that constitutes a huge win because otherwise naturally they’ll be drifting into high levels of risk.
It’s such an interesting programme that you have developed. However, a missionary rarely gets recognised in his own country. You have to almost come out of South Africa to see how Vitality is impacting the world. You certainly see it in London, now you see it here at the World Economic Forum and it’s based on this shared value concept where, if you can save me money then the company can benefit as well and we all move forward together, but you’ve been involved here in Davos in taking shared value, not just in the health insurance area, but elsewhere.
Yes, people probably know that Mark Kramer and Michael Porter first developed this notion of shared value, companies like Nestlé adopted it. I think what was interesting, that at the point of them defining it, it was already common practice in Discovery. So we’d like to think that the name shared value came after the practice of developing the Vitality Programme because at its core, the Vitality Programme succeeds because it lowers the cost to the company, it improves longevity and that combination allows long-term profit growth, so we have worked with a wider range of companies to say, “What would shared value insurance do for the world in the health sector?”.
We know we would have longer, healthier lives, but what about in areas of climate change when people looking at infrastructure and the big insight I think that we’re all getting is that in the past, insurers have tended to assess how much you must pay for a big, terrible event, the terrible event happens, and you get a large cheque. They’re kind of watching these events unfold, it could be a death or it could be a storm and a destruction of infrastructure, there’s no real difference to the insurer. So what I think Vitality shows, is they’ve said, “What happens if we act to prevent it, what happens if we act, actively lower the risk, and don’t just watch the risk unfold?”
That believe it or not is regarded as revolutionary and has incredible implications for how we think about infrastructural costs associated with future hurricanes, for example, or predicting and preventing in advance what may be inevitable consequence of extreme weather events. The notions that were developed in Discovery for health actually are going to be increasingly applied, we think in areas where there are hundreds and trillions of Dollars of investment at stake and what we convened here in Davos with AIG and with FSG and some shared value partners, was a group to take this forward and think about what are the core principles, how can the insurers truly involved in shared value distinguish themselves from others and have a big impact, both on their own profitability, but on society?
Derek, the sun’s just gone down here and the temperature is already in the minuses so we’re really going to freeze if we stay for much longer, but I’ve just got to ask you this, worldwide, Vitality, you’ve now got all of these partnerships that you’ve struck pretty much everywhere, you’re rolling out things like the Apple Watch, which is the first partnership that Apple’s made with anybody in that space, how has that transpired, how many Apple Watches are you guys selling, and how is that benefiting the business?
I can’t tell you the numbers, but I know that it’s above expectations and I think the linkage between insurer and Apple is sort of surprising to the average consumer in the street and its transforming, I think both companies. It’s having Apple realise it’s actually in the business of health and saving lives, not just some fun gimmick that you wear on your watch and it’s getting the insurers to realise that the behavioural economic theories that we spoke about really only work if you have advanced technologies that are personalised and this is just the start. I have no doubt that we’ll see a wide range of new personalised devices. Eventually, believe it or not, we’ll probably have a wearable that’s embedded in us as a permanent feature. Some will find that horrific, others will realise that means that we’ll be in an era where we’re continuously able to assess our health, we’ll get support to improve it over the long-term.
For the movement, as long as you put in your steps you get a massive discount on an Apple Watch and you can wear it and get other benefits too.
Yes and don’t forget you’re getting huge benefits on life insurance premiums and long-term pay outs which translate into very significant amounts of money.
Hence the shared value.
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