Dollars and Sense of Employee Health and Productivity

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Dollars and Sense of Employee Health and
Productivity
CALIFORNIA HEALTH PROMOTION COALITION TELE-CONFERE
NCE SESSION By Larry Chapman MPH Chairman and
Senior Consultant Summex Corporation (206)
364-3448
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Agenda

• What makes employee health a strategic business
  concern?
• How do most senior managers view employee health?
• How should senior managers view employee health?
• How can it be positioned as a strategic concern?
• How does employee health relate to overall
  business productivity?
• What are the bottom line results business
  leaders want?

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What is Employee Health?
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Why is Employee Health Strategic?

• People as the means of production
• Human capital as an asset to be managed
• Potential for significant legal and financial
  liability
• Investment consequence substantial
• Major component of labor cost

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Employee Health Productivity Costs
1998 Median Health Cost/Employee
Total 9,992
Source Goetzel, JOEM, Jan, 2001. N 43
Employers with 950,000 employees
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After-tax Profits and Health Benefit Costs All
U.S. Corporations 1996-1998
Billions of Dollars
Source The National Data Book 2000 and IRS Data
Reports.
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The Strategic ViewThe Real Economics of
Employee Health

• Secondary Health Costs
• FASB 106
• Dread disease coverage
• Eldercare support
• Early medical retirement
• Medicare surcharge
• FASB 112
• FMLA costs
• Retiree supplements
• EE contributions
• EE out-of-pocket costs
• State premium taxes
• Flexible spending accts
• Employee health

• Primary Health Costs
• Health benefit cost
• Group medical plan
• Dental plan
• Vision plan
• Drug plan
• COBRA payments
• Administrative cost
• Worker comp costs
• Sick leave costs
• STD costs
• LTD costs
• Life insurance ADD costs

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Employer Health Cost Growth Rates
Annual Percent Change
Sources Multiple
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Employee Health as

• A necessary evil

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Potential of Employee Health
Productivity
Cost Avoidance
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Employee Health as.
Sound Health Management Principles
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Sound Health Management Principles

• Population focus
• Prevention-oriented
• Proactive in nature
• Functionally integrated
• Using consistent messages
• Cost avoidance-oriented
• Productivity enhancing
• Family supporting
• Strategically relevant
• Evaluatively sound

?
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Whats on a CEOs Mind?
?

• Strategic movement
• Competitiveness
• Profitability
• Performance
• Productivity
• Avoiding threats
• Fixing problems
• Surviving
• Leaving a legacy

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Concerns of Other Senior Managers

• COO DM
• Productivity
• Morale
• Cost reduction
• CFO
• Profitability
• Liability
• Cost reduction
• CHRO
• Satisfaction
• Retention/recruitment
• Cost reduction

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Concerns of Employees

• Improving compensation
• Future financial security
• Financial protection
• Self-service
• Supportive services
• Privacy and confidentiality
• Personal autonomy
• Freedom to choose
• Limited constraints

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Productivity Framework
Healthier People
Better Employee

• Productivity Gains
• Health costs
• Absenteeism
• Injury cost
• Turnover
• Non-effectiveness rate
• Decision-making quality
• Stamina resilience
• Inter-personal skills
• Positive attitude
• Physical strength flex
• Company loyalty
• Morale
• Recruitment retention

• Work Performance
• Attitudes
• Energy
• Commitment

ImprovedLifestyle
Wellness Programs
Adapted from the work of D. Edington, University
of Michigan.
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Finding the Hot Buttons

• Read
• Listen
• Ask
• Clarify
• Write
• Test
• Confirm
• Educate
• Influence
• Cultivate

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If its.

• Cost avoidance

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Effects of Single Risk Factors
HERO Study, JOEM, Oct. 1998
Percent Higher Annual Health Costs
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Effects of Multiple Risk Factors
Multiples
Number of Health Risks
Source Yen et.al., AJHP, 1991.
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Preventable Health Costs
Stress Smoking Obesity Blood Sugar Sedentary
Life Depression Blood Pressure
Source Anderson, et. al., The Relationship
Between Modifiable Health Risks and Group-Level
Health Care Expenditures, American Journal of
Health Promotion, Vol. 15, No. 1, Sept/Oct, 2000,
P. 45-52.
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Health Risks and Cost Over Time
Annual Health Care Costs
Source Extrapolated from Yen and associates,
JOEM, 1998.
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Major HCM Choices

• 1 Restrict providers/plans
• 2 Reduce benefit coverage
• 3 Increase point of use cost sharing
• 4 Increase premium cost sharing
• 5 Move to defined contribution
• 6 Reduce the need and demand for care

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Evolution of Worksite Wellness
Conventional Model
Quality of Work Life
PHM Model
Fun activity only No risk reduction No high risk
focus Not HCM focused All voluntary Site
based No personalization No evaluation
Mostly health focus Some risk reduction Weak high
risk Limited HCM focus All voluntary Site
based Weakly personal Weak evaluation
Mostly health focus Strong risk reduction Strong
high risk Strong HCM focus Some required
activity Virtual site based Strongly
personal Strong evaluation
Health Benefit Cost Savings
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Core of PHM Approach
Name Address Phone
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Cost/Benefit of Worksite Wellness
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The Rate of Return is Driven by the Participation
Rate
Cost/Benefit Ratio
13.0
50
100
Participation Rate
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Bottom-line Results.

• Economic
• Health costs
• Absenteeism
• Injury cost
• Turnover
• Non-Economic
• Retention
• Recruitment
• Work effectiveness
• Decision-making quality
• Stamina resilience
• Inter-personal skills
• Positive attitude
• Physical strength flex
• Company loyalty
• Morale

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Whats it going to take?

• Organizational mandate
• Common vision
• Balance of and ???
• Team approach
• Population perspective
• Health management principles
• Integration of interventions
• Informational infrastructure
• Cultural change

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Getting an Organizational Mandate

• Do it yourself or get help
• Find the hot buttons
• Build economic case
• Build your evidence
• Cultivate your champions
• Build a support team
• Formulate the process
• Make the pitch
• Get the nod
• Follow through

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Planning Process

• Clarify organizational mandate
• Organizational needs assessment
• Establish Design Team
• Hold one day planning retreat
• Develop draft Program Plan
• Revise Program Plan
• Present Program Plan to executive team
• Implement
• Evaluate and refine approach

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A Vision for the Future
And a new integrated management capability for
employee health
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Summary of Key Points

• Have to find the hot buttons
• Likely to be economic issue
• Health-related employee costs will increase
  significantly
• Many of these costs are preventable
• The economic evidence is credible and significant
• An organizational mandate is necessary
• Building of an informational and programmatic
  infrastructure is required
• Strong metrics and economic results are critical
  to the long term future of employee health

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Questions