The Vitality Wellness Programme Experience from South Africa

Discovery Corporate Profile

7,000 employees $4.8 billion annual revenue 100%

100%

100%

Launched 2001

75%

UNITED KINGDOM

SOUTH AFRICA

Launched 1993

75%

Launched 2007

Launched 2004

Launched 2007

25%

100%

UNITED STATES

Launched 2008

Launched 2011

25%

CHINA

Launched 2010

“Why is Discovery, a South African firm, paying its customers to get healthy while most Western insurance giants do not?”

The Economist, 20 February 2010

3

1

Background to the Vitality Programme

Key drivers of morbidity and mortality

Probability P b bilit off 15 year survival i l without ith t coronary artery disease, stroke or diabetes

The Oxford Health Alliance’s 3-4-50 model

4 Diseases Cancers, Diabetes, Lung g disease, Heart disease

50% of deaths worldwide

100% 15 ye ear survival p probability

3 Behaviours Smoking No exercise Poor diet

90%

81%

80%

86%

71%

70% 60%

56%

50% 40% 30% 20% 10% 0% Male aged 50: overweight smoker

Step 1: quit smoking

Step 2:get active

Step 3: lose weight

Source: Lifestyle and 15-year survival free of heart attack, stroke, and diabetes in middleaged British men men. Archives of Internal Medicine (1998) (1998), SG Wannamethee et al al.

Key drivers of mortality in South Africa Non-communicable diseases As a % of total deaths

MEN

WOMEN

Cardiovascular diseases (CVD)*

14%

19%

Cancers

8%

8%

Oth chronic Other h i diseases di

7%

6%

Respiratory

5%

4%

Diabetes

2%

3%

Total chronic diseases

36%

40%

Problem definition and underlying behavioral causes Problem definition: Increasing prevalence of diseases of lifestyle

Root cause: Under-consumption Under consumption of preventative care

Distribution of healthcare costs

Problem of behavioural economics

Genetic and age related risks

Immediate price to wellness, hidden benefit

Access

Hyperbolic discounting places undue emphasis on the present

Behaviour

Over-optimism O ti i off ability bilit tto ttake k corrective action

Behaviour

Modifiable h lth risks health i k

Facilitated access and immediate benefits are required to address behavior tendencies and to motivate longterm health behaviour change Source: Wellness Councils of America and the Center for Health Care Economics

2

Philosophy and Structure of Vitality

Member experience of the Vitality programme Obtain a Personal Pathway Determine Vitality Age and set health goals

Assets and capabilities biliti

Online c capability

Complete a Personal Health Review

Clinical and scientific basis

Personal Pathway algorithms

Earn vitality points and achieve a status

Actuarial points allocation methodology

Enjoy incentives

Reward network Valuable

Wellness network incentives

Vitality Age: supported by 75 million years of data

Cancer Prevention Study Nurses Health Study Multiple Risk Factor Intervention Trial Norwagian Population Cohort Harvard Nurses’ Health Study and Health Professionals Follow-… Korean National Health Insurance Study Swedish Construction Workers United Stated National Institute of Health-AARP Diet and Health… General Practice Research databse Korea Medical Insurance Corporation Sweden Lung Cancer Canadian National Breast Screening Study Taiwan teachers and civil servants cohorts Japan Collaborative Cohort Study Physicians Health Study Singapore Health Study Health Professionals Follow-up p Study y Others 0

4,000,000

8,000,000

12,000,000

16,000,000

Evidence for body mass index & risk for all-cause mortality

Evidence for physical activity & risk for all-cause mortality

Relative risk fo or ACM VPA) (min/wk MV

1.5 Yu 2003 (Caerphilly men)

1.0

van Dam 2008 (NHS women) Lee 2004 (HAS men)

0.5

Bucksch 2005 (German men) Bucksch 2005 (German women) Haapenen 1996 (Finnish men)

00 0.0

Inoue 2008 (JPHC men) Inoue 2008 (JPHC women)

-0.5

Richardson 2004 (HRSmen&women) Kujala 1998 (Finnish Twins) Kushi 1997(Iowa women's study)

-1.0

Leon 1997 (MRFIT men)

0

100

200

300

Min/wk MVPA

400

500

Outcomes of the scientific research Male – age 45; Risk factors – overweight, smokes, elevated cholesterol

Relative mortality risk factors, derived from the meta-analysis, translated into years of life expectancy t llostt

Drivers of extra mortality risk BMI: 31 Smokes: 20 per day Cholesterol: 232 mg/dl 17%

years lost

Overweight

increased mortality risk

43% Smoking

40% Elevated Cholesterol

40

45 age

50

55

60 Vitality Age

65

Vitality Personal Pathways™

Vitality Personal Pathways™

Vitality Personal Pathways™

Complete an HRA

Risk assessment

Determine Vitality Age and set goals

Vitality Age

41

1. Target BP

Actual Age:

2. Target glucose

Vitality Age: 42

3. Target cholesterol

Goals 4. BMI < 25 1. Improve diet 5. Tobacco free 2. Increase exercise 6. Exercise 3x per week

Obtain a Personal Pathway

Earn Vitality Bucks and achieve a Vitality Status

Enjoy Vitality Rewards

Vitality Lottery

Vitality Personal Pathways™

Complete an HRA

Determine Vitality Age and set health goals

Obtain a Personal Pathway

Earn Vitality Bucks and y Status achieve a Vitality

Enjoy Vitality Rewards

Vitality Lottery Risk assessment

Vitality Age

37

1. BP high

Actual Age:

2. Glucose high

Vitality Age: 58

3. Cholesterol high

Goals 4. BMI > 30 5. Smoker 6. No exercise

1. Quit smoking 2. Lose weight 3. Start to exercise 4. Manage diabetes 5 Reduce cholesterol 5.

Broad Rewards Motivate Differing Aspirations: SA Vitality partner network

Travel

Va alue per use

Percentage discount tiered by Vitality status

10% discount on HealthyFoodTM for all members; 25% if Personal Health Review is completed

Integration with store card Additional benefits on partner store card tiered by status Cinema HealthyFoodTM Retail

Cash back on all purchases in retail network tiered by Vitality status

1/3 of retail price p available to all members

Frequency of use 18

Reward utilisation is high across the benefit spectrum

Participation p levels 600,000 500 000 500,000 400,000 300,000 200,000 100,000 0 Movie Club members

kulula.com flights

Gym benefit users

Activated HealthyFoods benefit

Clicks users

Vitality members shopping with a Discovery Credit Card

19

Overview of the Vitality rewards

Tangible rewards

Motivating factor

Example

Value

Nature of reward

Self-interest

Frequency of use

Charitable rewards

Noble cause

1. Earn money for a charity of your choice 2. Promotion through social networks

Lottery

Self-interest

1. Points convert into entries 2. Status gears number of entries

Equitable q Contribution Manager g 120

100

Contribution Manager

80

Loss aversion

60 ` 40 20

0 Non-engaged

Low engaged

Employer

Moderate engaged

High engaged

Employee

20

3

Clinical Impact of Vitality

The effect of engagement

1

D Does engagementt iin wellness ll reduce d healthcare h lth costs? t ?

2

Does Vitality induce wellness?

The effect of engagement

1

D Does engagementt iin wellness ll reduce d healthcare h lth costs? t ?

2

Does Vitality induce wellness?

Vitality studies conducted

VIP studies

• Cross-sectional study of 948 974 Discovery Health members from 2003 to 2007 • Determine the impact of engagement on medical claims experience and healthcare costs • Risk-adjusted Risk adjusted for covariates such as age, age gender chronic status and health plan • Done in conjunction with Harvard, University of Cape Town, University of the Witwatersrand

Vitality cross-sectional studies

VIP Study 1: Vitality engagement is correlated with lower healthcare costs Risk-adjusted hospital admission costs for engaged vs not engaged

Not Engaged benchmark

*

P < 0.001 for all categories (incl overall result) except cancer where P < 0.01 *Categorisation based on diagnosis-related groupers using ICD-10, CPT-4 and local procedural codes

VIP Study 2: Vitality engagement reduces the cost of managing chronic disease Risk-adjusted hospital cost for chronic members: engaged vs not engaged Hospital cost per non- engaged member

100% 90%

90

92

90

80% 70%

79 70

60% 50% 40% 30% 20% 10% 0%

Multiple metabolic conditions

Hypertension

Dyslipidaemia

Cancer

Mental illness

Beneficiaries with single conditions

P = 0.001 for multiple p metabolic conditions, all single g conditions are not statistically y significant g

VIP Study 3: Fitter people spend less time in hospital and incur lower healthcare costs 1. Admission per patient* • 9.6% 9 6% lower in highly active individuals vs inactive

1.60 1.55

1.57

1.57 1.52

1.50

1.49

1.45

1.42

1.40 NR

2. Length of stay in hospital • On average 0.57 days shorter for highly active individuals vs inactive

INACTIVE

LO

MED

HI

6.5 6.0

6.12

5.5

5.88 5 38 5.38

5.0 0

5.19

4.5

4.57

4.0

3. Cost per patient • Medical costs once hospitalised R5,052 lower for highly active individuals vs inactive

Thousands

NR 32 31 30 29 28 27 26 25

30

INACTIVE

LO

MED

31 30

30

26 NR

INACTIVE

LO

MED

Fit p people p make better patients p – admissions,, length g of stay y and costs are risk-adjusted j *Patients with at least one admission event

HI

HI

The case for wellness

1

D Does engagementt iin wellness ll reduce d healthcare h lth costs? t ?

2

Does Vitality induce wellness?

Data shows increasing engagement over time

Engagement levels amongst longitudinal study test participants over the investigation period 100 90

12%

20%

80

% of members

70

26% 28%

60 50

13% 22%

40 30

49% 9% 20

30%

10 0 Y Year 1

Y Year 5

High engaged

Low engaged

Medium engaged

Not engaged

Longitudinal Study of Fitness Engagement

•

A retrospective analysis of 304,000 adults over the period 2004 to 2008

•

The analysis was designed to test » For significant changes in engagement with fitness-related activities over time » Whether these changes were associated with changes in the probability and cost of hospitalisation

Increase in Fitness Engagement

31.1

31.8

4

5

27.0 % of m members using the gym beneffit g

24.8 21.1

1

2

3

Year

Outcomes associated with transitions between engagement levels

Year 1

Year 3

Hospital cost per member, Year 4 to 5

Inactive

Benchmark

Inactive Active

6%

Less active

A ti Active

Benchmark

A ti Active

8%

More Active

9% 90

92

94

96

98

100

Relationship between increasing activity and the odds of hospitalisation

1.00

Odds rratio for ho ospitalisattion in Years 4 to 5

3% 7% 10%

0 95 0.95

13%

0 90 0.90

0.85

0.80 0.5

1.0

1.5

Number of additional gym visits per week from Y Year 1 tto Y Year 3

2.0

4

Case study – the impact of HealthyFoodTM

HealthyFood™

25% saving on nutritional items purchased at Pick n Pay

36

HealthyFood™ structure

Fruitit and Fr vegetables 3,000 products Grains and cereals 1,425 products Lentils and legumes 373 products

Nutrient

WHO dietary recommendations

S Saturated fat f

10 en% %

Trans fat

1 en%

S di Sodium

1 2 /k l 1.2mg/kcal

Added sugar

10 en%

Di Dietary fib fibre

1 3 /k l 1.3mg/kcal

Chicken, fish and Chicken meat alternatives 479 products Vegetable oils and nuts 536 products Milk and dairy products 217 products

61,000 products assessed; 10,000 classified as HealthyFoodTM

HealthyFood™ mechanics

HealthyFood purchases HealthyFood™ marked on till slips

38

HealthyFood™ Marketing and Communication

39

HealthyFood™ Marketing and Communication

Proprietary and confidential: Not for use or disclosure outside The Vitality Group and its clients.

Adoption of the HealthyFood Benefit TM

Number of HealthyFood Store Vi it Visits

HealthyFood as % of cart 35.00%

12,000,000

30.00%

10 000 000 10,000,000

25.00% 8,000,000 20 00% 20.00% 6,000,000 15.00% 4,000,000 , , 10.00% 2,000,000

5.00%

Mar-11

Jan-11

Nov-10

Sep-10

Jul-10

May-10

Mar-10

Jan-10

Nov-09

Sep-09

Jul-09

May-09

Mar-09

-

0.00% pre-launch

2009

2010

2011

Result: Over 240,000 families have activated the HealthyFood™ benefit

5

Broader Health Promotion Initiatives

Healthy Active Kids Report Card 2010

Healthy Active Kids Report Card 2010

Physical Activity (Grade D): •

Less than 70% of high school learners report having regularly scheduled physical education education.

•

Less than 50% participate in enough physical y for it to be considered ‘health-enhancing’. g activity

Nutrition (Grade D): •

Just over 2 servings of fruits and vegetables per day, with less than 1 serving of fruit per day.

•

Over 50% drink sweetened cool drinks more than 4 times a week week.

•

Nearly 30% eat fast food between 2 and 3 times per week.

Healthy Active Kids Report Card 2010

Screen time (Grade F): •

Nearly y 1 in 3 adolescents watch more than 3 hours of television daily

Overweight, obesity (Grade C-) and stunting (Grade D-): •

20% are overweight and 5% are obese

•

13% of teens are stunted

Smoking (Grade D): •

29.5% of adolescents report having smoked

•

21% are current smokers

Vitality Schools Program

www.vitalityschools.co.za

Vitality Schools Program

www.vitalityschools.co.za

Developing healthy active kids

Developing healthy active kids

Developing healthy active kids

Vitality Schools Program

Vitality Schools Program

Vitality Wellness Centres

Vitality Fitness Convention

Vitality Wellness Network

Vitality Healthiest City

Vitality Healthiest City

% Difference in mortality risk, compared to Johannesburg

12.7

98 9.8

4.7 2.8

Durban

Pretoria

Port Elizabeth

Cape Town

Vitality Healthiest City High Blood Pressure

High Cholesterol

Unhealthy Weight3.9 3.4

31 3.1

29 2.9

1.2

0.9

1.3

1.5

1.4

Cape Town

Durban

Pretoria

-0.2

-2.5 -3.2 Durban

Pretoria

Port Elizabeth

Cape Town

Durban

Smoking

Pretoria

3.9

Port Elizabeth

Insufficient Physical Activity

2.6 1.7

1.8

Durban

Pretoria

2.0 1.2

0.0

-0.9

Durban

Pretoria

Port Elizabeth

Cape Town

Port Elizabeth

Cape Town

Port Elizabeth

Cape Town

Discovery Healthy Company Index

Discovery and the Vitality Programme

Over 3.7 million unique clients; representation in four countries

Scale

Research

“The outfit that seems to have more experience with these kinds of incentive programs than any on the planet is a South African company called Discovery.” New York Times, January 2011

Partnerships Largest, L t and d oldest, UK life assurer

4th-largest US health insurer

World’s W ld’ 2ndd-largest l t insurance company

World’s W ld’ premier i consumer health company

The Vitality Wellness Programme Experience from South Africa