Union Coalition Delegates Conference Zero Trends: Health as a Serious

Economic Strategy

Leadership: A

Transformational Approach to

Health

UNIVERSITY OF MICHIGAN

HEALTH MANAGEMENT RESEARCH CENTER

Dee W. Edington

Think about what it would be like if you worked in the best performing organization you could imagine and the best place to work.

What words would you use to describe the workplace and how would you describe the workforce?

Business Problem

Currently, most costs associated with workplace and workforce performance are growing at an

unsustainable rate

How are we going to be successful in this increasingly competitive

world without a healthy and high performing workplace and

workforce?

How can we turn costs into an investment?

UM-HMRC Corporate ConsortiumConsortiumFordDelphiKelloggWe EnergiesGeneral Motors Crown EquipmentDelphi Automotive Southern CompanyUniversity of MissouriMedical Mutual of OhioFlorida Power and LightSt Luke’s Health SystemSt Joseph Health System Allegiance Health SystemCuyahoga Community College United Auto Workers-General Motors

American Construction Benefits GroupAustralian Health Management

Corporation

Steelcase (H) Progressive (H)

JPMorgan Chase (H) Affinity Health System (H)

SW MI Healthcare Coalition (H)Wisconsin Education Association Trust

(H)

*The consortium members provide health care insurance for over two million individuals. Data are available from three to 20 years.

Meets on First Wednesday of each December in Ann Arbor.

Union Coalition Delegates Conference Zero Trends: Health as a Serious Business and Economic

StrategyMarch 25, 2011

MissionChange the Economic Assumptions from Treating Disease to the 21st Century Assumptions about Creating and Maintaining Healthy Populations

Natural Flow of a Population High Risks and High Costs

Business Case Health as a Serious Business and Economic Strategy

SolutionEngage Champion Companies in Systematic, Systemic and Sustainable Five Pillars which Promote a Healthy and High Performing Workplace and Workforce

Section I

The Current Healthcare Strategy

Natural Flow

Wait for Disease and then Treat

(…in Quality terms this strategy translates into

“wait for defects and then fix the defects” …)

Estimated Health Risks

Health Risk Measure

Body WeightStress Safety Belt UsagePhysical ActivityBlood PressureLife SatisfactionSmoking Perception of Health Illness DaysExisting Medical ProblemCholesterolAlcoholZero Risk

High Risk

41.8%31.8% 28.6% 23.3% 22.8%22.4% 14.4% 13.7%10.9% 9.2% 8.3% 2.9%14.0%

OVERALL RISK LEVELS Low Risk 0-2 risks Medium Risk 3-4 risks High Risk 5 or more

From the UM-HMRC Medical Economics Report

Estimates based on the age-gender distribution of a specific corporate employee population

1640 (35.0%)

4,163 (39.0%)

678(14.4%)

Risk Transitions (Natural Flow)Time 1 – Time 2

High Risk(>4 risks)

Low RiskLow Risk(0 - 2 risks)(0 - 2 risks)

Medium RiskMedium Risk(3 - 4 risks)(3 - 4 risks)

2,373 (50.6%)

21,750 (77.8%)

4,546(42.6%)

10,670 (24.6%)

4,691 (10.8%)

27,951 (64.5%)

11,495 (26.5%)

5,226 (12.1%)

26,591 (61.4%)

892(3.2%)

1,961 (18.4%)

5,309 (19.0%)

Modified from Edington, AJHP. 15(5):341-349, 2001

Average of three years between measures

Total Medical and Pharmacy Costs Total Medical and Pharmacy Costs Paid by Quarter for Three GroupsPaid by Quarter for Three Groups

Musich,Schultz, Burton, Edington. DM&HO. 12(5):299-326,2004

The 20-80 rule is always true but

terrifically flawed as a

strategy

LowLow

Costs Associated with RisksMedical Paid Amount x Age x Risk

Annual Medical Costs

Med RiskMed Risk

Age Range

HighHigh

Non-ParticipantNon-Participant

Edington. AJHP. 15(5):341-349, 2001

Section I: Four Learning Concepts

1. The flow of Risks is to High-Risks

2. The flow of Costs it to High-Costs

3. Without early identification, the High Cost Spike is not Modifiable

4. Costs follow Risks and Age

Section II

Build the Business Case for the Health as a Serious Economic Strategy (200+ Publications)

Engage the Total Population to get to the Total Value of

HealthComplex Systems (Synergy & Emergence)

versus Reductionism (Etiology)

Low RiskLow Risk

Excess Diseases Associated with Excess Diseases Associated with Excess Risks (Heart, Diabetes, Excess Risks (Heart, Diabetes, Cancer, Bronchitis, EmphysemaCancer, Bronchitis, Emphysema

Percent with Percent with DiseaseDisease

Med RiskMed Risk

Age RangeAge Range

HighHigh

Musich, McDonald, Hirschland, Edington. Disease Management & Health Outcomes 10(4):251-258, 2002.

Percentage of Employees with a Disability Claim by Risk Status*

HRA Participants1998-2000 HRA

WC Claims

STD Claims

Absence Record

Disability Claim

Low Risk0-2 Risks(N=685)

25.4%

23.4%

49.9%

61.3%

Medium Risk3-4 Risks(N=520)

30.2%

30.8%

63.1%

72.5%

High Risk5+ Risks(N=366)

38.0%

46.7%

69.7%

81.7%

Non-Participants

(N=4,649)

30.2%

29.6%

41.0%

64.4%

Wright, Beard, Edington. JOEM. 44(12):1126-1134, 2002

*Over three years 1998-2000

Excess Disability Costs due to Excess Disability Costs due to Excess RisksExcess Risks

$491$666

$783

$1,248

Wright, Beard, Edington. JOEM. 44(12):1126-1134, 2002

Excess Medical Costs due Excess Medical Costs due to Excess Risksto Excess Risks

$2,199

$3,039$3,460

$5,520

Edington, AJHP. 15(5):341-349, 2001

Excess Pharmaceutical Costs Excess Pharmaceutical Costs due to Excess Risksdue to Excess Risks

$345$443

$526 $567

$750 $754

$1,121

Burton, Chen, Conti, Schultz, Edington. JOEM. 45(8): 793-802. 2003

Excess On-The-Job Loss due to Excess On-The-Job Loss due to Excess RisksExcess Risks

Burton, Chen, Conti, Schultz, Pransky, Edington. JOEM. 47(8):769-777. 2005

14.7%

Outcome Measures

Low-Risk

Medium-Risk

High-Risk

Excess Cost Percentage

Short-term Disability $ 120 $ 216 $ 333 41%

Worker’s Compensation

$ 228 $ 244 $ 496 24%

Absence $ 245 $ 341 $ 527 29%

Medical & Pharmacy

$1,158 $1,487 $3,696 38%

Total $1,751 $2,288 $5,052 36%

Association of Risk Levels with Association of Risk Levels with Cost MeasuresCost Measures

Wright, Beard, Edington. JOEM. 44(12):1126-1134, 2002

Change in Costs follow Change in Risks

-$600

-$400

-$200

$0

$200

$400

$600

3 2 1 0 1 2 3Co

st

red

uc

edC

os

t in

cre

ase

d

Risks Reduced Risks Increased

Updated from Edington, AJHP. 15(5):341-349, 2001.

Overall: Cost per risk reduced: $215; Cost per risk avoided: $304 Actives: Cost per risk reduced: $231; Cost per risk avoided: $320 Retirees<65: Cost per risk reduced: $192; Cost per risk avoided: $621 Retirees>65: Cost per risk reduced: $214; Cost per risk avoided: $264

Medical and Drug Cost (Paid)*

Improved=Same or lowered risks

Slopes differ

P=0.0132

Impr slope=$117/yr

Nimpr slope=$614/yr

Business Case

Zero Trends follow

“Don’t Get Worse” and

“Help the Healthy People Stay Healthy”

Total Value of Health Medical/Hospital Drug Absence Disability Worker’s Comp Effective on Job Recruitment Retention Morale

Disease

HealthRisks

The Economics of Total Population Engagement and Total Value of

Health

Low orNo Risks

Where does cost turn into an investment?

increase

increase

decrease

Section II: Four Learning Concepts

1. Excess Risks lead to Excess Costs

2. Risks Travel in Clusters

3. Change in Risks lead to Change in Costs

4. Controlling Risks leads to Zero Trends

Health and Wellness ProgramsHealthierHealthier

PersonPersonBetter

EmployeeGains for TheOrganization

1. Health Status

2.Life Expectancy

3.Disease Care Costs

4. Health Care Costs

5. Productivity

a. Absence

b. Disability

c. Worker’s Compensation

d. Presenteeism

e. Quality Multiplier

6. Recruitment/Retention

7.Company Visibility

8. Social Responsibility1981, 1995, 2000, 2006, 2008 D.W. Edington

Lifestyle Change

Health Management Programs

In December of 2006 we celebrated the first 30 years of our work: the

Business Case was solid, although not yet perfect.

Congratulations!

However, nothing has changed in the population

No more people doing physical activityNo fewer people weighing lessNo fewer people with diabetes

Why the disconnect between the business case and the intervention

outcomes?

A short Health & Performance Quiz

If you continue to wait for defects and then try to fix the defects: Will you ever solve

the fundamental problems?

If you put a changed person back into the same environment: Will the change be

sustainable?

Is it better to keep a good customer or find a new one?

Is the action you reward, the action that is sustained?

The world we have made as a result of the

level of thinking we have done thus far

creates problems we cannot solve

at the same level of thinking

at which we created them.

- Albert Einstein

Where do we go next?

TO A NEW LEVEL OF THINKING

… to a Transformation from the Tired Old 20th Century Assumptions About Disease to the New 21st Century Assumptions About Healthy and High Performing Populations

1. From health as the absence of disease to health as vitality and energy

2. From only caring for the sick to enabling healthy people to stay healthy

3. From the cost of healthcare to the total value of health

4. From individual participation to population engagement

5. From behavior change to a Culture of Health

Section III

The Evidence-Based Solution: Zero Trends

Integrate Health into the Environment and the Culture

(…in Quality terms this strategy translates into “…fix the systems

that lead to the defects” …)

Vision for Zero Trends

Zero Trends was written to be a

transformational approach to the way

organizations ensure a continuous healthy

and high performing workplace and

workforce

Based upon 175 Research Publications

Integrate Health into Core BusinessHealthierHealthier

PersonPersonBetter

EmployeeGains for TheOrganization

1. Health Status

2.Life Expectancy

3.Disease Care Costs

4. Health Care Costs

5. Productivity

a. Absence

b. Disability

c. Worker’s Compensation

d. Presenteeism

e. Quality Multiplier

6. Recruitment/Retention

7.Company Visibility

8. Social Responsibility1981, 1995, 2000, 2006, 2008 D.W. Edington

Lifestyle Change

Health Management Programs

Company Culture and Environment Senior Leadership Operations Leadership Self-Leadership Reward Positive Actions Quality Assurance

LAYING THE GROUNDWORK FOR TRANSFORMATIONAL CHANGE

What is the value to you of a healthy and high performing

champion workplace and workforce?

To your organization?

To your community?

Characteristic of a Transformational Champion

Organization

Systematic Strategies

Make the Solutions Systemic

Make it Sustainable

TransformationWhere are you?

Pillar 5 Quality Assurance

Champion

Comprehensive

Traditional

Do Nothing

Senior Leadership

Operational Leadership

Self-Leadership

Recognize Positive Actions

Quality Assurance

Senior Leadership

Create the Vision

•Commitment to healthy culture

•Connect vision to business strategy

•Engage all leadership in vision

“Establish the value of a healthy and high performing organization and workplace as a world-wide competitive advantage”

People are inspired by the purpose of the effort

People feel that their values and ideas are incorporated into

what the organization is trying to achieve

People can easily communicate the direction of the effort

People recognize that both individual and organizational needs

are being addressed

People see how their day-to-day activities can support the

overall goals of the effort

Create the Vision

A Vision Must be Woven into Everything & Repeatedly Promoted!

Pillar 1: Senior Leadership

Example Vision - Intel

Operations Leadership

Align Workplace with the Vision

•Brand health management strategies

•Integrate policies into health culture

•Engage everyone “You can’t put a changed person back into the same environment and expect the change to hold”

The Transformation needs New Tools

Next Generation Health Risk Assessments

Corporate Culture and EnvironmentalAudit and Gap Analyses

Where do Employees go after Work?Community and Home

From Best Practices to Next Practices

A socially and structurally-constructed set of core attributes reflecting the prevailing values, underlying assumptions, expectations and definitions that members of a work organization collectively maintain.

The sum of these characteristics effect the way members think, feel, and behave related to matters of personal and group health.

What is a Culture of Health

Pillar 2: Operations Leadership

Promote Self Leadership

Create Winners “Champions”

•Help employees not get worse

•Help healthy people stay healthy

•Provide improvement and maintenance strategies “Create winners, one step at a time and the first step

is don’t get worse’

Self-Leadership and High Performance

•Personal Personal ControlControl

•OptimismOptimism

Self-Self-leadershipleadership

•ResilienceResilience

•ConfidenceConfidence/ Self-/ Self-efficacyefficacy

•Self-Self-esteemesteem

•Knowledge Knowledge •Health LiteracyHealth Literacy•Negotiation SkillsNegotiation Skills

•Vitality/Vitality/VigorVigor

• ConsumerismConsumerism• EngagementEngagement

•Social Social SupportSupport–ColleaguesColleagues–Community Community –FamilyFamily

• Environment Environment and culture and culture

Other possible *constructs: Change, Vision, Trust, Thrive, Enthusiasm, Ethics, Energy, Spirituality, Creativity, …

•Low-Risk Health Status

•Purpose-Values-Mission-Vision

Strategies Focused on Individuals

Lifestyle/behavior change programs (e.g., programs to help employees stop smoking or abusing drugs, lose weight, or better manage stress)

Health and safety training (e.g., training employees on general workplace safety practices and those that apply to their specific jobs)

Clinical and preventive services (e.g., screenings and immunizations for employees and their families)

Source: UCI Health Promotion Center, Workplace Health Promotion, Information and Resource Kit. http://www.seweb.uci.edu/users/dstokols/hpc.html

Pillar 3: Self-leadership

Weight ManagementPhysical Activity Stress Management CommunicationsSafety Belt UseSmoking CessationNutrition Education On-Line InformationNurse LineNewslettersBehavioral Health & EAPPharmacy ManagementCase ManagementAbsence ManagementDisability Management

• Business Specific Modules• Career Development• Communications• Financial Management• Social/Information Networks• Clinic or Medical Center• On-Line Information• Ergonomics• Vision • Dental• Hearing• Chiropractic• Complementary Care• Integrative Medicine• Physical Therapy

Population Based ResourcesPillar 3: Self-leadership

Recognize Positive Actions

Reinforce the Culture of Health

•Recognize champions

•Set recognition for healthy choices

•Reinforce at every touch point“What is rewarded is what is sustained”

Incentives Tied to Medical Plan Design:

•Premium reduction

•HRA completion

•HRA credits to offset deductibles

•Reduced co pays for preventative services

•Reduced co pays for Rx adherence of certain drug classes

•Non tobacco user incentive

Incentives Tied to Behaviors and Results:

•Wellness rebates for participation in physical activity; weight management; tobacco cessation programs

•Greater subsidy of healthy foods in cafes, lower costs to employees

•Recognition of employees that improve their health through positive lifestyle changes

Encourage Desired BehaviorsPillar 4: Recognize Action

Tangible IncentivesCash

Merchandise

Vacation days

Avoidance of costs (such as health care premiums or deductibles)

Intangible IncentivesExtrinsic:

Recognition Group competition Acceptance and approval of

peers

Intrinsic: Personal challenges A sense of accomplishment A sense of belonging

Incentives can be tangible or intangible

The Science and Art of Motivating Healthy Behaviors, by Barry Hall, BENEFITS QUARTERLY, Second Quarter 2008. http://www.buckconsultants.com/buckconsultants/portals/0/documents/publications/published_articles/2008/Articles_Hall_Benefits_Quarterly_Q2_08.pdf

Recognize Positive ActionPillar 4: Recognize Action

Can be the tipping point that moves someone from inaction to action

Quality Assurance

Outcomes Drive the Strategies

•Integrate all resources

•Measure outcomes

•Make it sustainable“Metrics to measure progress towards the vision, culture, self-leaders, actions, economic outcomes”

Onsite / Onsite / Near-site Near-site MedicalMedical

Fitness Fitness CenterCenter

Behavioral Behavioral Health Health

Case Case ManagementManagement

Absence Absence ManagementManagement

Employer DataEmployer DataHealth Plan Health Plan

DesignDesign

Disease Disease ManagementManagement

Health Health AssessmentAssessment

Health Health PortalPortal

Data Integration: Core of Quality Management

Consolidated Data andConsolidated Data and and Relational Outcomes and Relational Outcomes

ReportingReporting

Data Warehouse

Health Health AdvocacyAdvocacy

Wellness/ Risk Wellness/ Risk Reduction ProgramReduction Program

• CompensationCompensation• Employer/ Job Employer/ Job

typetype

• Performance Performance • Safety/Risk Safety/Risk

ManagementManagement

• Risk informationRisk information• Health OutcomesHealth Outcomes

• Web MetricsWeb Metrics• Program ParticipationProgram Participation

• Risk informationRisk information• Behavior ChangeBehavior Change• Health OutcomesHealth Outcomes

• Medical Medical Service Service utilization datautilization data

• Performance Performance • Safety/Risk ManagementSafety/Risk Management

•Program Program engagement engagement datadata

• Data on use of Data on use of CenterCenter

• Exercise freq./ Exercise freq./ durationduration

• Data on plan Data on plan coverage, copay coverage, copay levels, etc.levels, etc.

• Absenteeism Absenteeism informationinformation

• Mental health service Mental health service utilization datautilization data

•Program Engagement dataProgram Engagement data•Adjunct risk and health Adjunct risk and health behavior databehavior data

Pillar 5: Quality Assurance

Evaluate Outcomes

Were there changes in Psychosocial

Outcomes?

Did health behaviors improve?

Did health and clinical outcomes

improve?

Were there changes in worker

productivity ?

What types of organizational

outcomes were seen?

Was there a positive return on

investment?

53

Program Outcomes Program Outcomes

Psychosocial (Examples)•Self-efficacy•Resilience•Quality of Life

Behavior Change (Examples) •Healthy Diet•Regular Exercise•Smoking Cessation•Stress Reduction

Health Indicators (Examples) •Health Status•Clinical Indicators

Performance•Absence•Disability•Worker’s Comp•Presenteeism

Organization Level Impact•Recruitment/ Retention•Company Visibility•Social Responsibility

Financial•Service Utilization•Expected Cost Trend •Demonstrated Cost Trend

Measure and understand change in outcomes that drive health and cost trends…

Outline an outcomes framework and system of measurement to determine the ongoing effectiveness of the program and the organization’s financial gains

Quality Assurance

Evaluate Outcomes

Pillar 5: Quality Assurance

Summary

Characteristic of a Transformational Champion

Organization

Systematic Strategies

Make the Solutions Systemic

Make it Sustainable

Overall Business StrategyWhat is your vision?

Pillar 2: Operations Leadership

Vision from

Leaders

Healthy System & Culture

Champion

Everyone a Self-Leader

Recognize Positive Actions

Progress in All Areas

Comprehensive

Traditional

Do Nothing

Speech from

Leader

Reduction in Risks

Reduce Health Risks

Reward Achievement

Change in Risk &

Sick Costs

Inform Leader

Programs Targeting

Risks

Health Risk

Awareness

Change in Risks

Status Quo

Senior Leadership

Operational Leadership

Self-Leadership

Recognize Positive Actions

Quality Assurance

Status Quo Status Quo Status Quo Status Quo

Reward Enrollment

What’s the Point

Thank you for your attention.Please contact us if you have any questions.

Phone: (734) 763 – 2462Fax: (734) 763 – 2206

Email: dwe@umich.edu

Website: www.hmrc.umich.edu

Dee W. Edington, Ph.D. , Director Health Management Research Center School of Kinesiology University of Michigan 1015 E. Huron Street Ann Arbor MI 48104-1689