NASHO

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NASHO 4th Annual Leadership SummitAugust 1 2,
2006 Value and Profitability in Specialty
Partnerships
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Health and Productivity Management The Health
Care Model of the Future National Association of
Specialty Health Organizations (NASHO) 4th Annual
Leadership Summit La Jolla, CA August 1-2,
2006
Sean Sullivan, JDCo-founder, President CEO
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New Age of Human Capital

• Rapidly aging workforce in all industrialized
  countries
• Looming shortage of skilled, middle-aged workers
• Shift from economy of things to economy of ideas
• Unaffordable medical costs

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New Age (cont.)

• Skilled labor will be the scarce resource
• Its performance will be critical for
  organizational success --- even survival
• Biggest untapped source of that performance is
  individual health and functionality
• Thus --- the medical model of cost containment
  must yield to the human capital model of
  performance enhancement

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Components of Human Capital

• Education / Training / Skills
• Tools and technology
• Motivation / Support
• Health
• multiplier on other components

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Employers Need a New Value Model in Health Care

• The old cost/quality model is inadequate
• Cost and quality are not correctly defined
• As a result, they are not properly measured and
  managed to produce true value
• The definitions of cost and quality must be
  expanded
• And the measurement of cost and quality must be
  improved

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The New Value Model Health and Productivity

• The old model was confined to a medical view of
  cost and quality
• Direct medical costs of care
• Quality defined clinically and by patient
  satisfaction
• The new model gets outside the medical box to
  look at the workplace for value
• The value of health benefits-and health care- for
  employers is seen in healthy employees who are
  productive

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The New Value Model Health and Productivity

• Cost-savings opportunities in the new value model
  are much larger
• Medical cost offsets
• Reduced absence from work
• Reduced productivity loss while at work
• Enhanced quality of goods and services
• Thus employee health becomes a big contributor to
  business performance
• No longer just an expense to be controlled
• But an investment with a return to be gained

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From Medical Model to a Human Capital Model

• From illness to health
• From health to functionality
• Not just health status
• From functionality to performance/productivity
• Physically
• Mentally
• Socially

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From Cost of Keeping Employees Healthy to Cost of
Having Unhealthy Employees

• Direct health related costs
• Wellness / Prevention
• Medical treatment
• Indirect health related costs
• Lost work time
• Impaired performance
• Ripple effects
• Other workers
• Quality of output
• Customer relations

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Producing Bigger Outcomes Requires Measuring
Indirect Cost Savings as well as Medical Cost
Offsets

• Absence from work
• Incidental absences or sick leave are not easy to
  obtain any more
• Short-Term disability is the common proxy for
  productivity loss due to absence
• Presenteeism is the new frontier of health and
  productivity measurement
• Data are self-reported via survey tools designed
  and tested to produce valid results

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Measuring Performance Loss On-the-Job

• Presenteeism is the new frontier of health and
  productivity measurement
• More important than absence in its total impact
  on performance in an economy producing more ideas
  than things
• Not found in any corporate databases
• Created by using psychometrically designed
  self-report survey tools
• Validating self-reported data where objective"
  data exist (e.g., call centers)

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Measuring On-the-Job Productivity

• Questions About the Doer
• How health is affecting feeling
• Physical
• Mental / Cognitive
• Emotional
• Social
• Questions About the Doing
• How health affects pace or method (How quickly,
  carefully)
• How much gets done (but not how it turns out)
• Questions About What Was Done
• How health affects quality of output
• How many errors are made

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ROI and BOI (Burden of Illness)

• Employers want a return on their investment in
  their employees health
• But ROI cannot be calculated on health basis
  alone
• Need to know the BOI first
• Workplace cost including ripple effects
• Care giver burden for family members
• Without knowing these costs employers cannot
  determine the true cost, or value, of their
  health costs

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Integrated Health Management Requires Linking
Several Key Activities

• Health Risk Assessment
• Wellness and Health Promotion
• Disease Prevention
• Disease Management
• Disability Management
• Health and Productivity Management requires
  targeting these activities to produce the biggest
  outcomes

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The New Value Model Health and Productivity

• The new model views employee health as the
  outcome of an integrated system of
• Health management
• -Keeping the population mostly healthy most of
  the
• time to avoid all the direct and indirect costs
  of
• illness
• Disease management
• -Managing increasingly prevalent chronic
  conditions
• in an aging workforce to optimize the
  health,
• functionality, and productivity of these
  employees
• Demand management
• -Engaging employees in managing their own health

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Integrated Health and Productivity Management

• Integrating data on health-related costs
• Busting the silos inside corporations
• Analyzing employee demographics/cost/risks
• Targeting intervention for the best returns
• Integrating prevention and care management
• Preventing risks from becoming serious
• events or chronic conditions
• Managing chronic conditions
• Measuring the impact on workplace performance
  and total health-related costs.

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The HPM Value Chain
OUTCOME Improved corporate financial performance
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• www.ihpm.org

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NASHO 4th Annual Leadership SummitAugust 1 2,
2006 Value and Profitability in Specialty
Partnerships