Last updated on October 19, 2011
Perhaps surprisingly, the most interesting incentives have been developed in an emerging economy: South Africa. The Discovery group, based in Johannesburg, has crafted a programme called Vitality that applies the “air miles” model to health care. You earn points by exercising, buying healthy food or hitting certain targets. You rise through various levels, from blue to gold, as you accumulate points (rewards are adjusted to your starting level of fitness to give everybody a chance of making progress). And you are given a mixture of short- and long-term rewards ranging from reduced premiums to exotic holidays.
Discovery has formed alliances with a host of companies to provide rewards linked to your “vitality level.” Pick ‘n’ Pay, a South African grocery chain, provides discounts of up to 25 percent on 10,000 “healthy foods.” Airlines such as Kulula offer discounted flights. Discovery can measure whether people actually go to the gym, rather than just join, by swiping their membership cards. It says it has solid evidence that participation in the program more than pays for the rewards: active participants are less likely to fall ill and, if they do, they spend a shorter time in hospital.
This model has taken Discovery from “one man and a desk” in 1992 to become South Africa’s largest health insurer, with 5,000 employees. The company is now entering new markets. (…) Adrian Gore, Discovery’s founder and chief executive, says the company was forced to concentrate on prevention because there are so few doctors in South Africa to effect cures: even those with private insurance share one GP between 1,000 people.
This is from The Economist‘s Schumpeter column in the October 8, 2011 issue of the magazine.