Earlier this year I wrote an article for the CCD News Update about how the Affordable Care Act is affecting the health club industry. The article summarized how new incentives and public policy changes put forth through health care reform are opening up great new possibilities for health club operators who want to boost membership and improve their club’s bottom line. The simple truth is as the cost of health care goes up, employers that self-insure are bearing most of the burden. Many have turned to wellness programs and employee incentives as a way to lower their costs and encourage their employees to stay (or get) healthy.
We are also now seeing doctors and allied health professionals start to work more closely with health clubs as a way to encourage their patients to make positive changes in their lives. Overall there’s an increasing trend toward prescriptive wellness — and this positive trend, and the opportunities that come with it will undoubtedly continue to increase in the coming years. As an extension of my prior article, this quarter we take a little closer look at examples of how clubs in California are benefiting from this rising tide in the hope of fostering ways your club might be able to benefit too.
Health Care Reform and Health Clubs
So where does your health club fit into this changing landscape? In the first article, I highlighted that the Affordable Care Act (ACA) includes provisions addressing two kinds of wellness programs: participatory programs and health-contingent programs. Participatory programs can potentially subsidize the costs of a club membership across an entire employee base. Health-contingent programs, on the other hand, require participants to meet specific health-related criteria. An example of this type of program in California is California WorksWell (for more information visit: http://www.calhr.ca.gov/employees/Pages/wellness.aspx) , which provides state employees with discounted memberships at health clubs across the state through a partnership with GlobalFit, as well as free guest passes at partnered health clubs. It is no secret that major corporations in California are increasingly offering wellness discounts for its members. If you are club operator on the MINDBODY platform it may behoove you to learn more about their Exchange program (for more information visit: https://www.mindbodyonline.com/exchange/get-listed).
Focusing on Health-Contingent Wellness Programs
Among health-contingent wellness programs are physician-referred exercise programs (PREPs). These programs have several potential benefits. First, physicians are an often-untapped source of prospects. Doctors and allied health professionals are increasingly encouraging their patients to get more active (reference: http://www.cdc.gov/nchs/data/databriefs/db86.htm). Second, if you convert these referrals they are generally more likely to be intrinsically motivated, couple this “drive” with effective economic incentives from their employers, and the data supports that your are likely to retain these members for longer than your general member based (for the supporting data visit, click here).
Finally, these programs can also benefit your staff by reconnecting them with a higher purpose. With PREPs, the goal isn’t just selling memberships – it is about helping people change their lives for the better. For general managers worried about employee morale, reminding your staff about the positive change they create every day is a great way to get them reengaged your club’s “why”.
If you want to try to use PREPs as a way to improve membership, try these tips for connecting with the medical community:
- Make friends with the office staff of local medical centers
- Host an event for medical professionals at your health club or find other creative ways to encourage them to visit your club
- Attend events you know will attract medical professionals and network
- Hire a liaison to help you make connections with physicians
- Have a knowledgeable staff member provide guest content for a local medical website and negotiate some sort of reciprocity agreement
Boost Business by Targeting Key Demographics
You can also boost your club’s business by targeting underserved demographics. For example, SilverSneakers (http://www.silversneakers.com) is a nationwide program available through various health care providers, including Medicare, that encourage senior citizens to focus on their health. It empowers them to get fit by providing free memberships for seniors. And the market holds plenty of potential for this segment. Consider these statistics:
- People 55 and over control more than 75 percent of America’s wealth
- Baby boomers, the people born between 1946 and 1964, spend more than any other generation — $400 billion more each year — on goods and services
By offering special programming targeting this group you can draw in an otherwise underserved demographic. SilverSneakers provides compensation to health clubs based on participation, along with additional opportunities for revenue from supplemental programs. You also get access to program and marketing support, free class equipment, and free training to better serve your members. You can attract SilverSneakers members by emphasizing benefits such as fewer hospital admissions and lower medical care costs.
It is important to note that these opportunities transcend the baby boomers demographic. The ACA also needs low-risk populations to buy health care coverage from their exchange. Covered California, the state’s health care exchange, is awarding millions of dollars in grants for outreach programs that educate young adults about the benefits of health and encourage them to enroll.
More to Come
There are many more ways health clubs can use health care reform to their advantage. If you are willing to deal with the often-complex regulations of HIPAA, you can collaborate with employers to offer health screenings and track biometric data. This biometric data can be used by employers to offer discounts on health care premiums. There are California startups like Jiff (http://www.jiff.com) that you can partner with to make it easier to offer these type of services at scale.
Furthermore, in 2018, health insurance benefits exceeding a certain threshold ($10,200 for individuals and $27,500 for families) will be subject to a 40 percent excise tax. High-end employers will start looking to wellness programs to help further reduce their costs and alleviate this particular burden. Given this segment has significant disposable income it could be an advantageous group to target if your club is properly set up to cater to a high-end demographic.
For the original California Clubs of Distinction print version please click here.