The rise\u00a0of American healthcare costs\u00a0presents a huge opportunity to any company that can help control their growth.<\/p>\n
According to the Center for Disease Control, the US spent $9,523 dollars per person on healthcare in 2014; this comes out\u00a0to $3 trillion nationally, or 17.5% of Gross Domestic Product.[1]<\/a> This number is even more striking when considered on a relative basis; the United States spends 50% more on healthcare than any of its developed country peers.[2]<\/a><\/p>\n The Center for Medicare and Medicaid Services expects these costs to continue to rise over the next decade, at an average rate of 5.8% per year (or at a population-adjusted rate of 4.8% per year), rising to 20% of GDP by 2025.[3]<\/a> This rate of growth is mercifully slower than the long-term US trend in recent decades, but still far faster than projected GDP growth.[4]<\/a><\/p>\n Rising healthcare costs are a large and growing burden for corporations, many of whom pay the healthcare costs of their employees. According to the Bureau of Labor Statistics, healthcare costs are now on average 7.6% of total compensation paid to employees.[5]<\/a> Corporations also pay for employee health in other ways\u2014the CDC estimates that the \u201cproductivity losses linked to employees who miss work cost employers $225.8 billion, or $1,685 per employee, each year.\u201d[6]<\/a><\/p>\n American corporations are pursuing a few different strategies to deal with these rising costs. They are, for example, passing more and more of the costs of healthcare onto their employees.[7]<\/a> They are also, perhaps more importantly, working to attack rising healthcare costs earlier, through workplace health programs. According to the CDC, 98% of large corporations now offer corporate wellness programs of some sort.[8]<\/a> These programs, if effectively implemented, can lower the direct costs associated with health insurance purchases and the indirect costs of lost productivity due to poor health.[9]<\/a><\/p>\n Fitbit, the leading seller of wearable fitness tracking technology, is increasingly partnering with corporations on these wellness programs, leveraging their digital health tracking technology to improve employee wellness.<\/p>\n Fitbit sells wearable activity trackers that monitor heart rate, movement (often measured in steps), fitness level, breathing and sleep.[10]<\/a> The company was the early leader in the market, and continues to be a dominant player, with sales approaching $2 Billion in 2015.[11]<\/a> The company has largely been in the B2C space, selling wearable health tracking devices to consumers. Increasingly, however, they are moving into the B2B space, turning their device into a corporate healthcare cost reduction solution.[12]<\/a><\/p>\n In the B2B market, companies typically buy Fitbit trackers in bulk, or subsidize their employees\u2019 purchases\u2014for example, Target recently bought 330,000 for their staff.[13]<\/a> Fitbit then ships the devices, and gives employees access to online dashboards where they can track their own progress and compare themselves to their peers.[14]<\/a> The idea is that this tracking will incentivize employees to exercise more and live healthier\u2014and that the social component will incentivize healthy behavior while simultaneously improving company culture and morale.[15]<\/a> One value proposition for corporations is that healthier employees in turn reduce the indirect costs to employers from reduced illness and fewer missed days of work.<\/p>\n For companies buying the service, however, employee behavior change is only half the battle. To decrease direct healthcare costs, employers need to convince insurers that their employees are, in fact, healthier. To realize the full value of healthy employees, Fitbit has created a data capture and analytics capability that allows companies to aggregate the Fitbit health data and send it to their insurers. Based on the data, companies can receive significant discounts from insurers.[16]<\/a><\/p>\n Although the current version of the corporate program is relatively new, the anecdotal data that has been reported is all positive. One client, Appirio, saved 6% on their healthcare premiums by showing their insurer the Fitbit data, for example.[17]<\/a> If Fitbit can replicate these results, they will be able to capture a large share of the growing Corporate Wellness market. For now, the strategy is working well; their 2015 B2B revenue came in around $180 million, and is growing fast.[18]<\/a><\/p>\n For now, Fitbit is the market leader in this field. However, they are facing a number of challenges going forward. The market for wearables is increasingly competitive, involving many of the major technology companies, notably Apple; and it\u2019s far from clear that workers will accept corporate tracking of their health.<\/p>\n Going forward, Fitbit should consider focusing on the cost savings to their clients. They can do this by showing the\u00a0reduced health expenditures of using their products, and packaging this information in a way that insurers will easily understand. They will also, however, need to be careful in the speed of their implementation, being sure\u00a0to not provoke negative reactions from employees worried about privacy concerns.<\/p>\n (786 Words)<\/p>\n *****<\/p>\n Featured Image: Fitbit Website, “Developers”. https:\/\/dev.fitbit.com\/, accessed November 2016.<\/p>\n [1]<\/a> Center for Disease Control and Prevention: National Center for Health Statistics, \u201cHealth Expenditures\u201d. http:\/\/www.cdc.gov\/nchs\/fastats\/health-expenditures.htm<\/a>, accessed November, 2016.<\/p>\n <\/a>\u00a0[2] The Commonwealth Fund, \u201cUS Spends More on Health Care Than Other High-Income Nations But Has Lower Life Expectancy, Worse Health\u201d, October 8, 2015. \u00a0http:\/\/www.commonwealthfund.org\/publications\/press-releases\/2015\/oct\/us-spends-more-on-health-care-than-other-nations<\/a>, accessed November 2016.<\/p>\n [3]<\/a> Center for Medicare and Medicaid Services, \u201cNational Health Expenditures Projections 2015-2025\u201d. https:\/\/www.cms.gov\/Research-Statistics-Data-and-Systems\/Statistics-Trends-and-Reports\/NationalHealthExpendData\/Downloads\/Proj2015.pdf<\/a>, accessed November 2016.<\/p>\n [4]<\/a> ibid<\/p>\n [5]<\/a> US Department of Labor: Bureau of Labor Statistics, \u201cNews Release: Employer Costs for Employee Compensation\u2014June 2016\u201d, 8 September 2016. http:\/\/www.bls.gov\/news.release\/pdf\/ecec.pdf<\/a>, accessed November 2016.<\/p>\n [6]<\/a> Center for Disease Control and Prevention, \u201cAt a Glance 2015: Workplace Health Promotion: Using the Workplace to Improve the Nation\u2019s Health\u201d. http:\/\/www.cdc.gov\/chronicdisease\/resources\/publications\/aag\/pdf\/2015\/aag-workplace-health.pdf<\/a>, accessed November 2016.<\/p>\n [7]<\/a> Benefit News, \u201cEmployers Passing Rising Healthcare Costs onto Employees\u201d. Otto, Nick, 30 August 2016. http:\/\/www.benefitnews.com\/news\/employers-pushing-rising-healthcare-costs-onto-employees<\/a>, accessed November 2016.<\/p>\n [8]<\/a> Center for Disease Control and Prevention, \u201cAt a Glance 2015: Workplace Health Promotion: Using the Workplace to Improve the Nation\u2019s Health\u201d. http:\/\/www.cdc.gov\/chronicdisease\/resources\/publications\/aag\/pdf\/2015\/aag-workplace-health.pdf<\/a>, accessed November 2016.<\/p>\n [9]<\/a> Center for Disease Control and Prevention, \u201cAt a Glance 2015: Workplace Health Promotion: Using the Workplace to Improve the Nation\u2019s Health\u201d. http:\/\/www.cdc.gov\/chronicdisease\/resources\/publications\/aag\/pdf\/2015\/aag-workplace-health.pdf<\/a>, accessed November 2016.<\/p>\n [10]<\/a> Fitbit Corporate Website, \u201cFitbit Charge 2\u201d. https:\/\/www.fitbit.com\/charge2<\/a>, accessed November 2016.<\/p>\n [11]<\/a> Forbes, \u201cFitbit\u2019s Game Plan for Making Your Company Healthy\u201d. Olson, Parmy, 18 January 2016. http:\/\/www.forbes.com\/sites\/parmyolson\/2016\/01\/08\/fitbit-wearables-corporate-wellness\/#2c174a1e4527<\/a>, accessed November 2016.<\/p>\n [12]<\/a> ibid<\/p>\n [13]<\/a> ibid<\/p>\n [14]<\/a> Fitbit Corporate Website, \u201cGroup Health\u201d. https:\/\/www.fitbit.com\/group-health<\/a>, accessed November 2016.<\/p>\n [15]<\/a> ibid<\/p>\n [16]<\/a> Forbes, \u201cFitbit\u2019s Game Plan for Making Your Company Healthy\u201d. Olson, Parmy, 18 January 2016. http:\/\/www.forbes.com\/sites\/parmyolson\/2016\/01\/08\/fitbit-wearables-corporate-wellness\/#2c174a1e4527<\/a>, accessed November 2016.<\/p>\n [17]<\/a> Forbes, \u201cFitbit\u2019s Game Plan for Making Your Company Healthy\u201d. Olson, Parmy, 18 January 2016. http:\/\/www.forbes.com\/sites\/parmyolson\/2016\/01\/08\/fitbit-wearables-corporate-wellness\/#2c174a1e4527<\/a>, accessed November 2016.<\/p>\n [18]<\/a> Forbes, \u201cFitbit\u2019s Game Plan for Making Your Company Healthy\u201d. Olson, Parmy, 18 January 2016. http:\/\/www.forbes.com\/sites\/parmyolson\/2016\/01\/08\/fitbit-wearables-corporate-wellness\/#2c174a1e4527<\/a>, accessed November 2016.<\/p>\n","protected":false},"excerpt":{"rendered":" As healthcare costs continue to rise, Fitbit is using its wearable activity trackers to help employers reduce their health expenditures.<\/p>\n","protected":false},"author":2148,"featured_media":19466,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-19465","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/digitization-challenge-2016\/","yoast_head":"\n