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Workforce HealthWorkforce Health-- From Cost to Value ---- From Cost to Value --
Thomas Parry, Ph.D.President
Integrated Benefits Institute
Michigan Purchasers Health Alliance
September, 2006
Today’s Discussion
• What’s the issue?
• Does senior management get it?
• What are the real costs of health?
• Emerging ER strategies to manage health and productivity
What’s the What’s the RealReal Issue? Issue?
ThisThis??
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Calendar Year
Bill
ions
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
GD
P S
hare
NHE GDP Share
National Healthcare Expenditures
Source: CMS, Office of the Actuary, National Health Statistics Group.
Actual
Projected
Plan Design
Healthcare Costs
Then, The Solution
Or ThisOr This??
Leveraging Human Capital
0
1
2
3
4
5
6
7
8
9
10
A B C D E F G H I J
HC
L R
atio
Company
Demonstrating Healthcare Value
Health Status
Business Impacts
Black Box
About IBI• National, non-profit
• 400+ corporate sponsors
• Programs
– Research
– Health & productivity measurement
– Benchmarking
– Education
Can Senior Management Can Senior Management be Change Agents?be Change Agents?
IBI’s CFO Research
Linking Health, Productivity & the Bottom Line
Moderate link32%
Weak link7%
Strong link61%
The Impact of Ill-Health
0%
25%
50%
75%
100%
Highermedical
Job focus Absence Bottomline
Otherbenefits
costs
Largerworkforce
Agree Strongly agree
96%90% 86% 84%
71%
47%
How Much Absence?
16%
48%
24%
8%
1%
4%
0% 10% 20% 30% 40% 50% 60%
DK
> 15%
10 to 15%
5 to 10%
2 to 5%
< 2%
Rat
e
How Much Presenteeism?
7%
4%
9%
22%
35%
23%
0% 10% 20% 30% 40%
DK
> 15%
10 to 15%
5 to 10%
2 to 5%
< 2%
Rat
e
Lost Worktime Criticality
32%
17%
51%
0%
10%
20%
30%
40%
50%
60%
Actual > Critical Actual = Critical Actual < Critical
CFO’s Role in Benefit Decisions
71%
51%47%
18%
0%
20%
40%
60%
80%
Analyticalsupport
Benefitsofferings
Integral teammember
Primary leaderof strategy
Measuring the Impact
• Absence– Overtime pay
– Lost revenue
– Temporary help
– Quality lapses
– Wage replacement
• Presenteeism– Overtime pay
– Temporary help
– Quality lapses
– Lost revenue
– Additional staff
Are CFOs Being Informed?
• Absence– 44% never get reports on occurrence
– 72% never get reports on financial impact
• Presenteeism– 83% never get reports on occurrence
– 84% never get reports on financial impact
Healthcare Management Objectives for Next Two Years
1
1.2
1.4
1.6
1.8
2
2.2
2.4
2.6
2.8
3
Controlcosts
ManageHC costs
Improvehealth
Shift costs QuantifyHC impact
Improvebenefits
Expandbenefits
Rati
ng
Quantifying Health-Related Lost Productivity
29%
22%19%
13%16%
0%
5%
10%
15%
20%
25%
30%
Opportunitycost
Time lost fromwork
Staffing cost Wagereplacement
cost
All othermeasures
Translating to the Business79%
51%45%
13%
0%
20%
40%
60%
80%
100%
% of humancapital cost
Total health-related costs
% of revenue Share priceimpact
How CFOs Would Use Productivity Information
75% 75% 73% 70%65%
0%
20%
40%
60%
80%
Consideragainst health
plan costs
ReduceAbsence
Manage allhealth costs
Examinebusiness
impact ofhealth plans
Reducepresenteeism
Then, the SolutionHealth Status
Absence Presenteeism
Healthcare Costs
Lost Productivity
Business Impacts
The Real Costs of Health
Perceived Costs/Program
$0
$1,000
$2,000
$3,000
$4,000
Ave. Cost
/FTE
EE GH WC STD LTD Incid.Absn.
FMLA
2002 Benefit Data
$3,090
$172
$762
$6
* Mid-point of lost productivity estimate used
$435 $387
What is the real cost of people being away from work?
The Opportunity Cost of Absence
Responding to Work Absence
Employer Strategy
Lost Revenue
Staffing Costs
Do Nothing XTemp Help/ Overtime X XAdditional Staff X
The Range of Lost Productivity Costs
$2,929
$19,433
$0
$5,000
$10,000
$15,000
$20,000
Avera
ge/FTE
Excess Staffing Lost RevenuePotential
2002 Benefit Data
Full Costs/Program
$0
$1,000
$2,000
$3,000
$4,000
Ave. Cost
/FTE
EE GH WC STD LTD Incid.Absn.
FMLA
Payments Lost productivity
2002 Benefit Data
$3,090
$675
$1,890
$178
$2,621
$418
Top 15 Health Conditions
11%
12%
12%
14%
14%
15%
17%
17%
21%
24%
27%
28%
29%
31%
40%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Bronchitis
Urinary
Headache
Irritable bowel
Hypertension
Anxiety
GERD
Back/neck
Arthritis
High cholesterol
Obesity
Depression
Allergy
Fatigue
Sleep disorder
% w/ condition in workforce
Top 15 Causes of Lost Work Time
0
50
100
150
200
250
300
350
400
450
500L
ost w
orkd
ays/
100
FTE
s
Absence Presenteeism
How are Employers How are Employers Responding?Responding?
Employers Abandoning Silos
0%
20%
40%
60%
80%
Siloed Programs Linked Programs
Both integrated &coordinated programs
Coordinated programsonly
Integrated programs only
Siloed programs21%
44%
17%
18%
IBI 2004 Employer Survey
3%
6%
6%
7%
7%
19%
26%
29%
0% 15% 30%
Other
Change insurers/providers
Absorb cost increases
Change health plan type
Improve medical-care delivery
Promote workforce health
Shift costs to EEs
More EE healthcare responsibility
“Most Important” Strategies Today
IBI 2004 Employer Survey
Be Careful of This
17%
31%35%
21%
31%
40%
26%
42%48%
0%
10%
20%
30%
40%
50%
% d
elay
ing
heal
thca
re d
ue to
co
st
Total With healthproblems
<$50K annualincome
Comprehensive HDHP CDHP
Managing the Economic Burden of Ill Health
2%
61%
23%15%
0%
25%
50%
75%
Minimize MedicalCosts Year-to-Year
Manage WorkforceHealth
Manage in Concertwith Absence,Disability andProductivity
Other
IBI 2004 Employer Survey
5%
6%
18%
24%
47%
5%
8%
19%
36%
32%
0% 20% 40% 60% 80% 100%
Absorb costs
Limit coverage
Cost shift to EEs
Manage diseaseas continuum
Incent EE health
Best ApproachSecond Best
Approaches to Offering Health Benefits Longer Term
IBI 2004 Employer Survey
The Health-Related Data Solution
49%
37%
14%
0%
20%
40%
60%
Group health data only Link GH data to absence,disability and productivity
Integrated health,absence/disability,
productivity/financialoutcomes
IBI 2004 Employer Survey
For More InformationFor More Information