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Finding the Business Value in
Workforce Health
Thomas Parry, Ph.D. President
Integrated Benefits Institute
Today’s discussion
• How is the world changing for
employers? Why?
• What does workforce health REALLY
mean to employers?
• Can CFOs “get it?”
• How do we deal with measurement
and the business case for health?
The world is changing • The rise of consumerism
• New health/risk financing and delivery
mechanisms
• A broadening view of “health”
• Market consolidation
• The breakdown of industry segmentation
• Rapidly changing technology and resulting
data challenges
• The need to demonstrate health value to
senior leaders
Employer journey: moving
beyond costs to outcomes
• Healthcare as cost of doing business
• Changing plan designs to control costs
• Managing health risks to dampen
healthcare cost trend
• Broadening outcomes to include
absence, disability and performance
• Integrating other factors: EE
engagement, health culture, financial
wellness, wellbeing
What’s at Risk
Economically for
Employers?
Case profile: an example
• 10,000 life manufacturer
• Workforce
71% male
54% between 35-54
48% operators, 13% skilled crafts
It’s all about medical costs
It’s about medical and pharmacy costs
We should include wage replacements
… And the other impacts of absence
What about reduced EE performance?
Research - going beyond medical &
pharmacy to absence and presenteeism
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
Co
st
per
1000 E
Es
Medical Pharmacy Absence lost prod Presenteeism lost prod
Co-morbidity and lost time
So It’s Not Just about Healthcare Cost …
Do CFOs Get It?
Results from the Integrated Benefits Institute’s
Latest CFO survey
Finding the Value in Health
Key highlights
• CFOs are integrally involved in
benefits strategy/decisions
• CFO focus goes well beyond
controlling healthcare costs
• CFOs want to achieve broad
organizational goals
− And those translate into consistent
strategies/plan designs
• Measurement is a challenge
CFOs are involved
Since ACA …
An Emphasis on Engaging Employees in their Health
Increased Cost-Sharing
50% EE’s premium share
Out-of-pocket amounts
High-deductible plans
45%
44%
Enhanced wellness programs
Premiums linked to lifestyle
Wellness financial Incentives
52%
41%
31%
Balanced with …
CFOs most important goals since ACA
For every 10 CFOs who say controlling costs is
most important
• 4 say “helping enrollees become healthier, better consumers of care”
• 4 say “attracting, retaining talent or improving productivity”
• 1 says “improving customer service or business performance”
9 Other CFOs Report Another Goal as the Most Important
Connecting goals to actions
• Human capital
• Business performance
• Enrollee health
CFOs that Emphasize Human Capital
Are Less Likely to …
increase high-deductible plans
increase out-of-pocket costs
raise employee premiums
eliminate coverage
CFOs that Emphasize Employee Health
Are …
Less likely to offer high-deductible
plans
More likely to:
increase wellness programs
link premiums to lifestyle choice
offer wellness financial incentives
offer value-based benefits
offer specialty pharma coverage
CFOs that Focus on Business
Performance Are …
Less likely to:
increase employee out-of-pocket
costs
raise employee premiums
More likely to enhance:
disability benefits
specialty pharma coverage
Assessing the performance
of benefits programs
Health and business performance
94%
MGM Mirage Case Study
Estimating lost productivity at MGM
1.8 lost
days per
FTE/Year
6.2 lost
days per
FTE/Year
Lost worktime = 8
days per FTE/Year or
$2,598 per FTE/Year
in Lost Productivity
Lost-time improvement’s impact
on EBIDTA
Reducing 1 lost day/FTE = $15
MM to EBIDTA* from
Productivity Gains
*Earnings before Interest, Depreciation, Taxes and Amortization
The bottom line
Savings $15.0 MM Wall-Street Multiple 10.7X Outstanding Shares 284.3 M Gain in Stock Price $ .56/share Principal Owner (56%) $90 MM
One Day of Productivity Improvement
Communicating the Right
Data to CFOs
Key workforce health dimensions*
Financial (cost)
Program participation
Biometric screening
Health risks
Utilization
Preventive care
Chronic conditions
Lost worktime
Lost productivity
Employee engagement
* Thomas Parry and Bruce Sherman, A Pragmatic Approach for Employers to Improve Measurement in
Workforce Health and Productivity, Population Health Management, Vol. 15, No. 2, 2012
Dimensions & dashboard metrics
Dimension Summary Metric
Financial Program cost/EE
Program participation EEs participating/All EEs
Biometrics EEs reaching target/All EEs
Health risks # of health risks/EE
Utilization # EEs getting care/All EEs
Preventive care # EEs getting screened/All EEs
Chronic conditions # EEs w/ chronic conditions/All EEs
Lost worktime # of lost workdays/EE
Lost productivity Lost productivity $/EE
Employee engagement Engagement score/EE
Telling the story to senior leaders
Leading
Indicators
Treatment
Indicators
Lagging
Indicators
Health risks
Biometrics
Chronic condition
prevalence
Preventive care
EE engagement
Health services
utilization
Program
participation Financial
Lost worktime
Lost productivity
Telling the story to senior leaders
Leading
Indicators
Treatment
Indicators
Lagging
Indicators
Health risks
Biometrics
Chronic condition
prevalence
Preventive care
EE engagement
Health services
utilization
Program
participation Financial
Lost worktime
Lost productivity
Telling the story to senior leaders
Leading
Indicators
Treatment
Indicators
Lagging
Indicators
Health risks
Biometrics
Chronic condition
prevalence
Preventive care
EE engagement
Health services
utilization
Program
participation Financial
Lost worktime
Lost productivity
Thinking Differently About
Outcomes
Employee
Health &
Wellbeing
Top-Line
Value
Bottom -
Line Costs
Employee
Health &
Wellbeing
Healthcare
Costs
Excess
Labor
Costs
Absence/
disability
Health and bottom-line costs
Wage
Replacement
Payments
Employee
Health &
Wellbeing
Employee
Job
Satisfaction Employee Job
Performance
Customer
Satisfaction
Core
Business
Processes
Customer
buying
behavior
Corporate
Financial
Performance
Excess
Labor
Costs
Health and top-line value
Health, human capital and business
AMEX - improvements in customer
service and workforce health risk
Goodyear - an unhealthy workforce
does poorer quality work
Compelling opportunities exist to more closely link
health and business goals
1.5
2
2.5
3
3.5
4
4.5
$4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 $11,000
Waste
Pro
du
cti
on
as %
of F
inal S
tock
Valu
e
PEPY medical/drug costPEPY Medical and Drug Costs W
ast
e P
rod
uc
tio
n a
s %
of Fin
al
Sto
ck
Va
lue
Sherman B, Lynch W. Am J Manag Care, 2014.
For every $1000
reduction in
healthcare costs,
output increases
by $2000
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