Beyond ROI:
Making the Business Case for Worksite
Health Promotion
George J. Pfeiffer
President
The WorkCare Group, Inc.
P.O. Box 2053
Charlottesville, VA 22902
(434) 977-7525
georgeworkcare@ earthlink.net
IAWHP Executive Summit, April 7, 2010
Critters
What Are We Going to Cover?
• Review the evolution of worksite health promotion
• Does it make a difference?
• Refocusing health promotion
• Addressing your entire population
• Common strategies
• Promising practices
First…
In the beginning…
The Ongoing Proposition….
“A healthy employee saves the
organization money and is more
productive.”
In the Beginning….
• A variety of employee support services:
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Occupational health and safety
Recreation
Travel
Employee Assistance Programs
Executive Fitness Programs
Executive Fitness Programs
1968…
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•
•
•
•
Exclusive
Medical department
Clinical— “The Executive Heart Attack”
Cardiovascular risk reduction focus
“Exercise prescription”
Employee Fitness Programs1976…
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•
•
•
Inclusive-major locations
Cardiovascular focus
Running boom: “Jim Fix Effect”
Expansion of recreation services or
facility management
Employee Health Management
Programs-1980…Phase I
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•
•
•
•
•
•
Hey! Our costs are rising!
Inclusive-all employees, and some households
Introduction of the Health Risk Appraisal (HRA)
Risk reduction focus
Health fairs/onsite programming
Medical self-care
Communication programs
Employee Health Management
Programs-1986…Phase II
• Hospitals and MCOs become vendors to
employers
• Onsite screenings
• “Health management centers” versus “fitness
centers”
• Computer learning
• Telephonic nurse-line, EAP
• Greater focus on high-utilizers
Employee Health Management
Programs-1996…Phase III
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•
•
•
•
Rise of the Internet (virtual programming)
Greater integration of services
Greater use of third-party vendors
Concept of presenteeism
Concept of risk migration and cost
Employee Health Management
Programs-Today…Phase IV
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•
•
•
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Population management
Integrated data management/HPM
Predictive modeling
Disease management
Health coaching
Targeted and tailored messaging (social
marketing)
• Value-based benefit design
• Incentives
• Culture of Health
So…Where’s the Beef?
R.O.I./Where’s the Beef?
From a review of 73 published studies of WHP programs1
– Average $3.50-to-$1 savings-to-cost ratio in reduced absenteeism and
health care costs.
From a review of 56 published studies of WHP programs2
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Average 27% reduction in sick leave absenteeism
Average 26% reduction in health costs
Average 32% reduction in workers’ comp. & disability mgmt. claims costs
Average $5.81-to-$1 savings-to-cost ratio
A comprehensive health management program at Citibank3
– $4.56-$4.73-to-$1 savings-to-cost ratio in reduced total health care costs
1. Aldana SG.
2.. Chapman LS.
3. . Ozminkowski RJ, Dunn RL, Goetzel RZ, Cantor RI, Murnane J, Harrison M.
So…what does this all mean?
“There’s a body of work that
demonstrates the efficacy of worksite
health management programs.”
So…what does this all mean?
Let’s move beyond the debate regarding
health promotion’s role in reducing
direct healthcare costs. Let’s move to
productivity management.
It’s all about WORK!
What’s Wrong With...
WORK?
Max Weber
“One does not work to live;
one lives to work.”
Our Work Can Provide:
Well-being
Opportunity
Reward
Know-how
What Drives Competitive
Advantage?
• Innovative
products/services
• Market share
• Shareholder value
• Positive R.O.I.
• Revenue/Profitability
• Value of human capital
What’s a Productive Employee?
•
•
•
•
•
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Competence (“know-how”)
Results-oriented
Quality focus
Team-oriented
Fully-engaged (“present”)
Physically and mentally
well
Key Observations
ONE:
Employee health directly affects an
organization’s bottom-line.
Runaway Health Care Costs
Year
2003
2004
2009
2018
Annual Cost
$6,020
$6,880
$8,160
$13,310
GDP
14.9%
14.3%
17.6%
20.3%
Employer Health Care Strategy Survey 2003, Delotte & Touche
The Problem:
Rising Medical Costs/Eroding Profit
$600
Billions of Dollars
$500
$488
$454
$478
$400
$300
$486
After-tax profits
$359
$263
$284
$494
$402
$315
Health benefit
cost (does not
include related
productivity
costs)
$200
$100
$0
1996
1997
1998
1999
2000
•
Source: The National Data Book:
2001 IRS Data Reports
Key Observations
TWO:
Direct health care costs are the “tip of the
iceberg.”
Direct Costs Related to Indirect
Estimated
$12,000
per Employee
Medically
Related
Productivity
Costs
Medical
& Pharmacy
*$6,000
Per Employee Direct
Medical Costs
Absenteeism
Presenteeism
STD
LTD
Sources: Loeppke, et.al., JOEM, 2003; 45:349-359
and Brady, et.al., JOEM, 1997; 39:224-231
Estimated Total
Costs $18,000
PEPY
Being “There” or “Here”?
Presenteeism
• Chronic disease (e.g,
depression, diabetes)
• Acute conditions (e.g.,
allergies, U.R.T.I.)
• Work issues (e.g.,
management style, change)
• Personal issues (e.g., caregiving, financial)
We Can’t Ignore Direct Costs,
Yet, We Need to Focus More on…
• Absenteeism
• Presenteeism
The costs of absenteeism and
presenteeism may be three
times your direct healthrelated costs.
Key Observations
THREE:
A “perfect storm” is brewing that will further
impact the affect of employee health and
health care delivery on organizational
performance and competitiveness.
“A Perfect Storm?”
• High health care costs with questionable
quality
• Aging workforce
• Rise of chronic health conditions
• Low consumer accountability
• Global economy/competition
High Costs/Questionable Quality
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•
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U.S. is near bottom of Western
countries regarding healthcare
measures, but pays the most.
Participants received only
54.9% of recommended care.
Majority of chronic conditions
were underused regarding care.
Deficits pose serious threats to
the health and well-being of
Americans.
Sourse: McGlynn, E.A., Asch, S.M., Adams. J. et.al. The quality of health care deleivered
to adults in the United States. N Engl J Med 348;26, 2003
Aging Workforce/Chronic Conditions
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The median age of workers in 1988
was 35.9, and in 2008 was 40.7
In many “mature” industries the
average age is 48 years and above.
125 million Americans had chronic
ailments in 2000 ($510 B)
78% of costs attributed to chronic
conditions
1. Bureau of Labor Statistics:http//bls.gov/opub/ted/2001/june/wk4/art02.htm
2. Partnership for Solutions. Projection of chronic illness prevalence and cost inflation. Johns Hopkins University and Robert Wood Johnson Foundation, 2001;
http://www.partnershipforsolutions.org/statistics/direct_costs.htm
Low Consumer Accountability
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Entitlement mentality
Traditionally distanced from
true cost of health care (CDHP)
Low commitment to self-care
Lacks appropriate decisionmaking skills
Low compliance to treatment
regimen
Economic Uncertainty
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Global competition
High unemployment
High overhead costs
Eroding profit margins
Key Observations
FOUR:
Health management needs to not only focus
on disease management, but on primary
prevention and risk reduction.
Why?
In order to stay competitive, we cannot ignore
the impact that employee health has on
organizational effectiveness.
To begin, we need to understand that our
population’s health risks can be a predictor
of business performance.
Understand Your Population!
Understanding Your Risks
• Within a population, the
distribution of medical costs is
always the same
• Approximately 60 percent of a
working population is categorized
as low risk (e.g., market share)
• At any given time, there is a
migration (“churn”) of employees
between risk categories
Source: University of Michigan Health Management Research Center.. The Ultimate 20th
Century Cost Benefit Analysis and Report. March 2000; 1-12
Understanding Your Risks
• Health risks and medical care costs
increase and decrease independent
of interventions (e.g., natural flow of
a population)
• Identify the “natural flow” of a
defined population–benchmark
against this cohort
• Move population to low cost or low
risk
Source: University of Michigan Health Management Research Center.. The Ultimate 20th Century Cost
Benefit Analysis and Report. March 2000; 1-12
Understanding Your Risks
Health risks follows costs:
– Direct medical costs
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•
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Tests/procedures
Out-patient
In-patient
Pharmaceuticals
– Indirect costs
• Absenteeism (STD/LTD, sick days)
• Presenteeism
Group Your Risks, Move Your
Population
Risks:
Categories
0-2
3-4
5+
Low
Medium
High
HPM research shows a direct
relationship between health risks
and direct and indirect costs.
Source: University of Michigan Health Management Research Center.. The Ultimate 20th Century Cost Benefit
Analysis and Report. March 2000; 1-12
Don’t Ignore Your Healthy!
Improve Your “Market Share”
• Keep healthy people healthy
– $350 is saved when a lowrisk employee remains
low-risk
• Target high risk populations
– $153 is saved when a highrisk employee’s health
risks are reduced
Source: University of Michigan Health Management Research Center.. The Ultimate 20th Century
Cost Benefit Analysis and Report. March 2000; 1-12
No Engagement, No Effectiveness
• 80%-85% low risk
• 90% total participation within
three years
– Health Risk Appraisal
– Health Coaching
– Two other programs
So…What’s Health Management to
Your Organization?
• Cost-driver?
• Performance
driver?
St. Paul’s American Workers Under
Pressure , 1992
“Successfully managing
human risks requires
organizations to pay
attention to the whole
employee, both on and
off the job.”
The M.E. Factors
Meaningful Employment is
a product of:
Meaningful Engagement
+
Meaningful Environment
Shifting the Discussion
We need to question the
value of our health
promotion initiatives:
Cost Effectiveness?
versus
Life Effectiveness?
It’s Alive!
I See Dead People
The Bottom Line…
• Though we need to focus on the “hard
factors” (e.g., products, markets, margins)
of the business…
• We cannot ignore the “soft factors” that
truly sustain a business…
The Organization is People!
Healthy Employees…
A healthy workforce
improves an
organization’s ability
to survive and thrive
within a competitive
economic
environment.
Health Promotion is…
Work Promotion
“Organizational policies
and practices that
protect, support, and
enhance your human
capital.”
Employee health and
safety are primary
agents
ProfitAbility
The ability of an organization to
optimize value by maximizing
growth (revenues) and
managing costs (expenses)
“Work promotion addresses
the productivity of your
human capital with health
as a critical success factor.”
EmployAbility
The ability of an individual to
increase his or her value through
the acquisition and practice of
transferable work-related
competencies.
“Health management is a
transferable job competency”
Integrating
Self-Care and Work-Care
• Self-Care: “Accepting
responsibility for ones health.”
• Work-Care: “Accepting
responsibility for ones work.”
Each have their own skills and
competencies.
Common Strategies
Cross-Functional Integration
• Human Capital Teams
• Alignment/Accountability to Business Goals
• Cross-marketing: wellness, benefits, work/life,
safety, communications
• Dashboard metrics
Common Strategies
Culture of Health
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Culture is elastic
Culture is nodal
Culture begins at the top, but needs to be systematic
Leading by Example: Partnership for Prevention
Management accountability, alignment with
business goals
• Team leaders: grass roots
• Environmental supports
• Reducing barriers to participation
Common Strategies
Value-Based Benefit Design
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Uses integrated data to guide benefit design decisions
Identifies opportunities for targeted interventions
Identifies and reduces/removes cost and access barriers
Tiered incentive plans (e.g., HSAs contributions)
– Pitney Bowes: reduced coinsurance to select medications
– Improved medication adherence to asthma and diabetes drugs
– Reduced hospitalizations, E.R. visits, and disability
Common Strategies
Integrative Databases
• Establishment of data warehouses that integrates
data into person-centric files
• Evaluates the total cost per life
• Helps focus on the best R.O.I.
• Establishes benchmarking and “performance
dashboards”
Common Strategies
Health Risk Appraisal
• Emerging as a “risk engine” for predicting total
costs and establishing benchmarks for program
outcomes.
• Stratifies population—intervention
• Often linked to incentives for participation.
• Accumulative participation drives market share to
lower risk/cost status.
• “Health Score” serves as a dashboard metric.
Common Strategies
Incentives
• Carrot or Stick Approach?
• Used to motivate and engage
• Different plans: premium decrease, HSA
contribution, cash, merchandise
• Questionable impact on sustained behavior
change except for tobacco cessation
• “Dutch Auction” model
Common Strategies
Risk Intervention
• Based on HRA data and other screening tools,
organizations are able to identify, invite, and
intervene at pre-clinical stages.
• Linked to health coaching and other intervention
tools—online and telephonic coaching.
• Incentive and disincentive plans
Common Strategies
Medical Consumerism
• Important component for Consumer Directed
Health Plans
• Medical self-care education and informed
decision-making designed to reduce
inappropriate medical utilization.
• Decision-tools to improve patient-provider
interaction
• On average 3:1 R.O.I.
Common Strategies
Disease Management
• Targets high cost/high utilizers in selective disease
conditions.
• Targets individuals who have predisposing factors.
• Integrates lifestyle management and evidencedbased practices.
• May include incentives for both patient and provider
(e.g., Bridges to Excellence)
• Adherence management. Every 20% improvement =
$1,074 average in net savings for diabetes.
Common Strategies
Programming is Communicating!
• Leveraging formal and informal
communication channels
• Promoting your brand!
• Your program is not a screen!
• Getting into the home!
• Using user-generated content-efficacy
• Affinity social networks
Get Your Bearings!
Benchmark Your Population
“Promising Practices”
Benchmarking Study
1.
2.
3.
4.
5.
6.
7.
Align features and incentives with the organization’s core mission, goals,
operations, and administrative structures;
Operate at multiple levels.
Target the most important health care issues.
Tailor components to needs of individuals.
Achieve high rates of engagement and participation, — short and long term.
Achieve successful health outcomes, cost savings, and additional organizational
objectives.
Evaluate based upon clear definitions of success— scorecards and metrics.
Adapted from: Goetzel RZ, Shechter D, Ozminkowski RJ, et al. Promising practices in employer health and productivity management
efforts: findings from a benchmarking study. J Occup Environ Med. 2007;49:111–130.