How Fitbit Became The Next Big Thing In Corporate Wellness

Most mornings, Brett Broviak rises at 4:30 for a walk around a nearby track before work. The winters in his native Indiana are long and cold, but Broviak trudges on. Occasionally, he steals a glance at his Fitbit to check his progress toward his daily goal: 20,000 steps, or about 10 miles.

It wasn’t always that way. In 2014, Broviak’s cholesterol and blood sugar levels were sky-high. After years of unhealthy habits, his weight had ballooned to 255 pounds. Like many Americans, he regularly indulged in fast food and drove almost everywhere, including to the Indiana University Health Center where he worked as a respiratory therapy manager. “I was borderline diabetic,” he says. “I knew I had to make some changes.”

Broviak is now the poster child for his employer’s corporate wellness program. When the university’s health center introduced a weight-loss challenge in 2014 with an option to buy a discounted Fitbit, Broviak enthusiastically signed on. In a sin-gle month, he topped 1 million steps and eventually shed 30 pounds and lowered his cholesterol to normal levels, after also changing his diet.

Broviak is not alone in his health kick. Employers across the country are handing out activity trackers by the thousands and creating corporate wellness challenges to motivate employees to adopt healthier—and more productive—lifestyles. Obesity sets back American businesses a mammoth $73.1 billion per year in medical expenses and lost productivity, according to a Duke University study. And researchers have found that morbidly obese employees cost their companies, on average, more than twice as much in health care and related costs as normal-weight ones do.

Although Fitbit, which debuted on the public markets in 2015 at a valuation of more than $4 billion, has made its name in consumer tech, in the last couple of years its once-modest enterprise division has blossomed into a lucrative business. Its name-brand customers include BP, Bank of America, IBM, Kimberly-Clark, and Time Warner. In September, the retail giant Target announced it would offer 335,000 Fitbit Zip trackers to its U.S. employees. Barclays followed a month later, offering subsidized devices to 75,000 employees.

“Growth has been explosive,” says Fitbit CEO James Park. “We see the two sides of the business as symbiotic.” Today, less than 10% of the company’s revenues are drawn from enterprise. That’s still a small fraction of its overall business (Fitbit shipped 21 million devices in 2015), but the market potential is huge. A study from ABI Research predicts that by 2018 more than 13 million trackers will be incorporated into corporate wellness plans. And Fitbit is positioning itself as the go-to device for employers.

Modernizing the traditional corporate wellness program wasn’t in Fitbit’s initial business plan. But shortly after Park and his cofounder, Eric Friedman, debuted their first activity tracker in 2009, they received a flood of messages from human resources departments. “At the time, I found it strange,” Park says. “Why would these businesses want to buy a Fitbit?” He quickly saw the opportunity, though. He handed the reins over to Amy McDonough, an early business-development hire, and tasked her with figuring out how to sell their devices to employers in bulk.

McDonough says she heard from plenty of companies that were struggling to enroll even 20% of their workforce in wellness programs. She observed that while employees were sporting the latest consumer-health gadgets around the office, including Fitbits, their HR teams were expecting them to cast these aside in favor of a corporate-issued activity tracker: “Can you imagine asking an engineer to wear a janky old pedometer and write down their steps?”

Today, McDonough heads up a wellness division that includes a slew of tools for employers, including webinars, dedicated service support, and dashboards where benefits managers can monitor how employees are performing. These programs are about more than just getting employees to walk. According to Park, they are aiding in job safety by helping workers track sleep and activity levels, as well as improving office culture by getting employees to meet their fitness goals together. (Fitbit excels at fostering this kind of community engagement.) In September, Fitbit added compliancy with the U.S. Health Insurance Portability and Accountability Act (HIPAA) to its arsenal, to assuage employers’ fears about the privacy and security of employees’ health information. That’s a big step for Fitbit, which can now court entities that are covered by HIPAA, such as health plans and some self-insured employers.

The key to McDonough’s corporate sales pitch lies in the data that Fitbit’s research team is accumulating to demonstrate the long-term results of wearing a tracker—both in increased engagement in wellness programs and improved health outcomes. Retention, after all, is considered Fitbit’s Achilles’ heel; research firms have found that consumers lose interest in activity trackers within six months. Much of Fitbit’s data has not been released yet, but its business customers are starting to share their results.

IBM, which gave out Fitbits to 40,000 employees over two years, found that 96% of them routinely logged their health data, including eating habits. According to Barbara Brickmeier, IBM’s vice president of benefits, employees who participated in the challenge reached an average of 8,800 steps per day, more than double the average of people who don’t wear pedometers. Brickmeier says she was floored to discover that 63% of IBM employees continued to wear their Fitbit months after the challenge wrapped up. “We know sometimes that there’s a ‘wow factor’ about getting something new and then interest wanes,” she says. “But employees were active and eager.”

Some employers are going a step beyond health and wellness to use trackers to bring down insurance costs. Park cites Fitbit’s recent program with the San Francisco–based cloud-services startup Appirio, which bought fitness trackers for about 400 workers. Using data from the wearables, Appirio persuaded its insurer, Anthem, to shave about 6%, or $280,000, from its annual health bill. In the coming years, Park expects that more employers will leverage data from their employees’ Fitbits to negotiate with their health insurers. “We’re finally seeing traction with payers,” he says. “Going forward, we want to integrate more into the health system.”

Some of the tactics used by corporate wellness programs have raised concerns with health experts, who fear that employers will only further alienate employees who have unhealthful habits or chronic ailments, like diabetes. LuAnn Heinen from the not-for-profit National Business Group on Health says that some employers are still struggling to engage the very people they most want to reach. “The employees who aren’t in shape might not want to go through one of these challenges,” she says. Many companies use leaderboards, for instance, which can lionize the fit but demoralize those with health issues.

Moreover, privacy advocates worry that wellness challenges could be used to penalize employees who decline to participate—or, worse, simply fail to succeed. Companies have increasingly used a combination of carrots (free vacation days!) and sticks (higher premiums) to coerce employees into participating in health screenings and wellness programs—a practice that the Equal Employment Opportunity Commission has fought with varying success. With trackers, it’s not always clear what data is being collected about employees’ health habits. “People might assume or expect that there are [privacy] protections,” says the Electronic Frontier Foundation’s Lee Tien, who specializes in privacy law. “But they don’t know what data is being collected.” Most employers say that they only look at data in aggregate. But since HIPAA doesn’t cover wellness programs that aren’t integrated with insurers, in some cases, employees will need to take their company’s word for it.

Park seems unperturbed about these privacy concerns. He says Fitbit will never sell data to third parties, like marketers, nor will it work with employers who don’t meet its privacy standards, which include obtaining consent before sharing personally identifiable data. “It’s detrimental to our core business if employees have concerns about what’s being done with their data,” he explains. “We are trying to take the issue of privacy off the table.”

For his part, Broviak didn’t seem particularly concerned about his employer’s involvement. “I racked up enough points for a free exercise ball and a slight discount on my insurance,” he says. “But by far the biggest reward was my health.”

A version of this article appeared in the May 2016 issue of Fast Company magazine.