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The Era of Big Data How Manufacturers Can Leverage Information to Offset Rising Workers Compensation and Disability Management Costs Related to Shifting Demographic and Wellness Trends ? Tuesday April 9, 2013 2:00 – 3:00 PM EST
Transcript of The Era of Big Data Data...The Era of Big Data 3 Administrative To ask a question, use the “Ask A...
The Era of Big Data
How Manufacturers Can Leverage Information to Offset Rising
Workers Compensation and Disability Management Costs
Related to Shifting Demographic and Wellness Trends?
Tuesday April 9, 2013
2:00 – 3:00 PM EST
2 The Era of Big Data
Contact Information for Today’s Presenters
Mike Stankard
Industrial & Materials Practice Leader
Aon Risk Solutions
+1.248.936.5353
Tom Parry, Ph.D.
President
Integrated Benefits Institute
+1.415.222.7280
Joe Galusha
Managing Director, National Casualty
Risk Control Team Leader
Aon Global Risk Consulting
+1.248.936.5215
Tim McDonald
Senior Consultant, National Clinical
and Health Improvement Solution Team
Aon Hewitt
+1.847.771.4362
Sander VanderWerf
Vice President, National Absence
Management Consulting Practice
Aon Hewitt
+1.908.803.4281
3 The Era of Big Data
Administrative
To ask a question, use the “Ask A Question” icon on your
media player (be sure to hit the “X” after you have submitted
your question to close the dialog box), or send an e-mail to
To view Speaker Bios, use the “Speaker Bios” icon on your
media player.
Help Desk: 1-800-785-0681 or outside the United States at
1-954-861-5783
“Big Data” Doesn’t Have to Be as Big as You Think
Thomas Parry, Ph.D.
President, Integrated Benefits Institute
5 The Era of Big Data
New Employer Realities
Show the C-suite the value of improved workforce health
Healthcare reform: the value of a healthy workforce or the
cost of healthcare?
Dead end: attempting to control claims costs in separate
program silos
Looking for best strategies to improve workforce health,
reduce lost time and enhance productivity
Limited data, time and dollars
6 The Era of Big Data
What’s at Risk for
Employers
7 The Era of Big Data
The Full Costs of Health
10,000 life manufacturing company
70% male
25% of employees 55 years or older
62% skilled/semi-skilled laborers
8 The Era of Big Data
Health Costs – The “Traditional” View
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Health Costs – The “Integrated” View
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Health Costs – Adding Absence
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Health Costs – Adding Lost Productivity
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Quantifying Financial Lost Productivity*
Lost productivity – “the financial impact on a company when
employees are not at work and fully functioning”
Two components: absence and decrements in job performance
(“presenteeism”)
The Financial Impact of Absence
• Wage replacement payments
• “Opportunity costs” of ER’s response
The Financial Impact of Presenteeism
• Wage and benefit “overpayments”
• Opportunity costs of resulting lost time
** Source: Sean Nicholson, Mark Pauly, et al., "Measuring the Effects of Work Loss on Productivity with Team Production," Health Economics 15: 111-123 (2006).
13 The Era of Big Data
Full Cost Components
Medical Wage replacements
Absence LP Performance LP
8% 48%
28%
16%
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Published in:
- Forbes
- Kaiser Health News
- Washington Post
15 The Era of Big Data
The Challenge of “Big
Data” to Employers
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Workforce Key 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
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The Temporal Dimension
Leading indicators
Health risks
Biometrics
Chronic condition prevalence
Treatment indicators
Preventive care
EE engagement
Health services utilization
Program participation
Lagging indicators
Financial
Lost worktime
Lost productivity
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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
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Thinking about Metrics as Hierarchies
Dashboard
metrics
Component
metrics
Contributing
metrics
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Dimension: Lost Work Time Health
Dimension
Dashboard
Metric
Component Metrics Contributing
Metrics
Lost worktime
21 The Era of Big Data
Health
Dimension
Dashboard
Metric
Component Metrics Contributing
Metrics
# of lost
days/EE
Dimension: Lost Work Time
22 The Era of Big Data
Health
Dimension
Dashboard
Metric
Component Metrics Contributing
Metrics
Incidental absence
days/EE
LTD lost days/EE
WC lost days/EE
Reduced performance
days/EE
STD lost days/EE
Dimension: Lost Work Time
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Health
Dimension
Dashboard
Metric
Component Metrics Contributing
Metrics
Incidence/100 EEs
Ave.
duration/claim
Median
duration/claim
Dimension: Lost Work Time
Joe Galusha
Managing Director, Aon Global Risk Consulting
A Changing American Workforce
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• How are our workplaces being effected and how can we use this
information to help us?
• Can we turn what we are learning into a competitive advantage?
35%
20%
The US Workforce
Obese
Over 50
Data is Pointing to a Troubling Evolution in the Workplace
A Changing America
26 The Era of Big Data
A Changing America - Obesity
According to the Center of Disease Control
More than one-third of adults and almost 17% of youth are obese
Obesity prevalence did not differ between men and women.
Adults aged 60 and over were more likely to be obese than younger adults.
The cost of obesity among U.S. full-time employees is estimated to be $73.1 billion,
according to a new study by a Duke University obesity researcher, published today in
the Journal of Occupational and Environmental Medicine.
27 The Era of Big Data
Research Indicates Negative Impacts on Health and Function
Obesity doubles work limitations and has the same effect as 20 years
of aging
Truncal obesity causes anterior bending force and a compressive force
on the spinal column, leading to disc pathology and back pain.
An obese employee is more likely to have…
– Elevated heart rate
– Reduced lung function
– Slower reaction time
– Decreased joint range of motion
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A Changing America - Ageing The number of workers 55 years or older has risen, while other age groups have
declined or stayed the same, By 2015, it is projected that this group will comprise 20% of the workforce.
In the last decade, the 45 – 54 age group has increased 49%
How does this effect injuries in the workforce?
Physical Impacts of Aging on Function
– For males, spine strength:
• Remains steady into the 50’s
• Drops ~25% into the 70’s
– For females, spine strength:
• Remains steady into the 40’s
• Drops ~15% into the 50’s
• Drops ~25% into the 60’s
• Drops ~30% into the 70’s
• Drops ~40% into the 80’s
20s 30s 40s 50s 60s 70s
Men Women
Spinal Strength Rate of Decline
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More to Look Forward to …
Aging worker:
– Decreased strength
• Muscle fibers shrink with age
• Muscle mass reduces by ~20% from age 30 to age 70
– Reduced fitness level and aerobic capacity
• Body fat doubles from age 25 to age 75
– Poorer visual acuity
• Pupils at age 60 are 1/3 the size as in the 20’s
• Lenses lose flexibility
• Decreased peripheral vision
– Poorer auditory acuity
• One-third of those age 65-70 have significant hearing loss
– Slower cognitive speed and function
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What does our most recent look at the data tell us?
It’s in the Numbers
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Average Value of an Indemnity Claim
• In Aon’s 2012 study, the
Manufacturing Industry Group
ranked third highest in Average
Cost of Indemnity Claims
- Average = $21,459
- Range = $6,700 – $32,200
- Average >7 TTD Days = $33,000
32 The Era of Big Data
Percentage of WC Claims with Temporary Total
Disability Disability (TTD) Payments
• In Aon’s 2012 study, the
Manufacturing Industry Group
ranked third highest in the
% of Claims with TTD
- Average = 23.4%
- Range = 13.4% - 27.9%
Building a Healthy and High Performing Workforce
Tim McDonald
Senior Consultant, Aon Hewitt
34 The Era of Big Data
Moving Beyond “Managing the Plan”
35 The Era of Big Data
Focus on the few behaviors that will impact the many
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Move to a Healthy, High-Performing Workforce — Focus
Data and Evidence Drives Direction
Physical
Inactivity
Lack of
Health
Screening
Poor Eating
Behaviors
Examples
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Move to a Healthy, High-Performing Workforce — Strategy
3-5 Year Strategy
Tactical Program Design
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Excess Costs by Health Risk (Important New Study)
Risk
Factor
%
Excess
Costs
Excess
Annual
Spend
% Annual
Group
Costs
Additional
Costs Per
Capita
Depression 48% $2185 3.2% $128
Blood
Glucose
32% $1,653 2.6% $104
Blood
Pressure
31% $1,378 2.0% $81
Obesity 27% $1,090 8.8% $347
Tobacco
Use
16% $587 2.7% $106
Physical
Inactivity
15% $606 4.5% $179
Stress 9% $413 1.0% $38
Goetzel et al., “Ten Modifiable Health Risk Factors Are Linked To More Than One-Fifth Of
Employer-Employee Health Care Spending” Health Affairs, November 2012
A 3-year analysis of
7 employers with
92,486 employees
reveals 24.8% of
total annual spend
($983) was
attributed to these
six risk factors.
Heart disease risk
cluster (tobacco use,
high blood pressure,
high blood glucose,
high total cholesterol,
physical inactivity,
obesity, and high
stress) cost 213%
more.
39 The Era of Big Data
Standing, Walking
Meetings Vetted Health Apps
Assortment
Team Challenges
or Activities
One Fun, Inspiring
Campaign
Quick Ideas for 4 High-Impact Spotlights
40 The Era of Big Data
Actions Employers Can Take Today
Greater focus on value:
Quality + Cost • Reference-based pricing
• Cost transparency
• Patient-centered care
• Pay-for-Performance
• Funding and risk alternatives
Align with Employee
Engagement • Target programs and
interventions based on
segmentation results
• Aligned incentives
• Use behavioral economics
The Increasing Cost and Complexity of Absence
Sander VanderWerf
Vice President, Aon Hewett
42 The Era of Big Data
Increasing Cost and Complexity of Absence
Increasing use of non-occupational leaves (sick, short term disability and
Family Medical Leave)
Increasing severity of workers’ compensation injuries
Aging workforce
– Longer recover period, higher frequency of co-morbid condition
• e.g., obesity and diabetes
Poor relations between manager/supervisor and employee
Expanding regulated paid time off benefits
– Paid sick time
Employee awareness of FML and ADA job protection –
• Increased utilization, increased complaints, increased penalties/awards
43 The Era of Big Data
The Power of Data
What We Can Learn
What is the cost impact to the organization of medically related absence?
What are the characteristics of the employee using the program?
What are the behaviors and health conditions that drive absence?
What is the “total” cost of benefits paid?
What is the impact to productivity?
What is the cost impact of not acting?
Where should we target our efforts?
What type of interventions will have the desired impact?
How do we know anything has changed?
4
3
How many employees are not at work today and why?
44 The Era of Big Data
Return on Investment and Timing* Cost Factors Project Savings ($8,502,000)
Number of eligible Ees 10,000
Average Annual Salary $45,000
Daily Wage Rate $173 Phases: Timing
Benefit Load (excl. time-off) 20% PTO redesign 90 days
Daily Wages and Benefit $208 RTW program 90 days
STD Benefit % 60% Outsource FMLA 120 days
Worker Replacement Factor* Factor Ratio Market STD/LTD 120 days
Nurse/Skilled Worker 1.46 50% *Based on estimates only.
All Others 1.28 50%
Combined 1.37
% of employees needing replacement 80%
*Source: Cornell Study
Estimated Current Lost Time Liability
Typical Employer Absence Program
Maximum # of Days
Allotted
Assumed
incidence rate
Assumed Days
of Absence
(1)Employee
Absence Pay
and Benefits
(2)Worker
Replacement
Cost
(3)Total Cost of
Absence
Sick time 5 80% 4 $6,646,000 $6,070,000 $12,716,000
Personal days 2 100% 2 $4,154,000 $2,769,000 $6,923,000
Vacation 15 100% 15 $31,154,000 $20,769,000 $51,923,000
Total TTO 22 21 $41,954,000 $29,608,000 $71,562,000
ER Paid STD (5 day elim) 180 (Calendar) 7% 45 $4,362,000 $5,975,000 $10,337,000
FMLA (assumes concurrency w STD) 80 20% 40 $0 $9,105,000 $9,105,000
Employer Cost of Typical Absence Program* $46,316,000 $44,688,000 $91,004,000
Managed Absence Costs
Managed Absence Program*
Maximum # of Days
Allotted
Assumed
incidence rate
Assumed Days
of Absence
(1)Employee
Absence Pay
and Benefits
(2)Worker
Replacement
Cost
(3)Total Cost of
Absence Savings
PTO 22 95% 21 $41,633,000 $28,733,000 $70,366,000 -$1,196,000
ER Paid STD (5 day elim) 180 (Calendar) 7% 35 $3,392,000 $4,647,000 $8,039,000 -$2,298,000
FMLA (assumes concurrency w STD) 80 18% 20 $0 $4,097,000 $4,097,000 -$5,008,000
Employer Cost of Managed Absence Program $45,025,000 $37,477,000 $82,502,000 -$8,502,000
*Managed Absence Program Enhancements:
Implemented PTO over Traditional Time Off (TTO). Achieved 22% savings on worker replacement costs (1) (2) (3)
Improved STD clinical claims management will reduce average duration by 5 days -$1,291,000 -$7,211,000 -$8,502,000
Formal Return to Work policies and practices reduce time away form work by 5 days -3% -16% -9%FMLA incidence rate reduced by 2% by aggressively managing FMLA
FMLA durations reduced by 5 days by leveraging 2009 FMLA regulations
Aon Proprietary: For Internal Use Only
Lost Time Calculator Example: Health System
Impact
Absence Costs Quantified: HeLP Dashboard
45 The Era of Big Data
HIOD: Absence as Tied to Medical Spend
Normal (92.3%)
1,458 lost days
0.1 lost days/TM
$2,360 med&Rx/TM
Moderate (4.5%)
15,185 lost days
23.1 lost days/TM
$13,799 med&Rx/TM
High (3.2%)
36,016 lost days
78.1 lost days/TM
$26,870 med&Rx/TM
Normal (92.7%)
2,212 lost days
0.2 lost days/TM
$2,217 med&Rx/TM
Moderate (5.0%)
16,296 lost days
22.3 lost days/TM
$12,297 med&Rx/TM
High (2.3%)
24,422 lost days
73.1 lost days/TM
$22,822 med&Rx/TM
46 The Era of Big Data
Actionable and Measurable Initiatives
Improving workforce productivity “more cheeks in seats”
Engaging employee’s to be responsible for their behaviors
Using carrot/stick approaches to reinforce the intent
Improving the health of the workforce
Designing absence benefits that align with workforce health goals
Aligning safety and wellness initiatives
Supporting transitional return to work efforts
Managing absence programs – day one
Demonstrating commitment through leadership
It begins with developing the current state dashboard to quantify cost,
identify opportunities and measure impact
Leveraging Data to Manage Total Cost of Risk
Joe Galusha
Managing Director, Aon Global Risk Consulting
48 The Era of Big Data
Leveraging Data - The Opportunity
Embrace the fact that the world
around us is evolving
Leveraging Data will be the key to
identifying cost drivers and creating
more effective and sustainable loss
prevention and claims management
efforts
Data is more available than it has
ever been;
• Increased Utilization and
Improved RIMIS Systems
• Emphasis on Better and More
Consistent Reporting
• Groups like IRI and Aon are
pushing the envelope of data
gathering
49 The Era of Big Data
Move away from the Traditional Approach – The very tired “Pie Chart”
The Traditional approach to Total
Cost of Risk has been on how to
“measure” the total costs instead of
“identifying” and “managing” the
cost drivers…
Casualty Total Cost of Risk
Premiums
Losses
Administrative
50 The Era of Big Data
Challenges of Traditional Benchmarking
Right data:
• Valuation Date
• Jurisdiction
Right time
• Age of Benchmarking Sources
Right Comparison
• Are the Companies you
Benchmark Against Really Like
You?
Use External Benchmarking Data for Directional Purposes
External Benchmarking May Not Paint an Accurate Picture
51 The Era of Big Data
Re-thinking Benchmarking
Gaining an understanding of your cost
drivers
• Identification of Cost Driving Elements
• Benchmarking (Internal and External)
Establishing Baselines or KPIs for
Processes Using Your Own Data
Creating a Process of Monitoring or
Casualty Dashboarding
52 The Era of Big Data
Managing Total Cost of Risk
Evolve your risk profile from three broad categories to 14 Cost Driving Elements
Absenteeism Laser in on Cost Drivers
Collatera
l
Medical
Strategy
Prevention
Information
Management
Litigation
Management Disability
Management
Actuarial
Claims
Proces
s
Hiring
Practices
Program
Structur
e
Coverage
Premium
s
State
Pass-
Throughs
Traditional Casualty Total Cost of Risk
Premiums
Losses
Administrative
53 The Era of Big Data
Leverage Carriers, TPAs and
Brokers for Information on each
Cost Driving Element
Examples;
• Claims Closure Rates
• Medical to Indemnity
• Conversion Rates
• Litigation Rates
• % of Medical to Total Cost
• Report Lag Time
Do an Initial Assessment of Your
Program
The Next Step - Establishing KPIs
The Pieces of the TCOR Puzzle that Drive Your Costs
54 The Era of Big Data
Sample Executive Summary Dashboard
An Initial Analysis will:
• Establish Your Own KPIs
• Identify Areas of Focus
• Create Foundation for Dashboarding
55 The Era of Big Data
The Next Step – Casualty Dashboarding
Identify KPIs for measuring Ongoing Program Performance
Measure on a Monthly or Quarterly Basis
More Advanced RIMIS Systems can Create Dashboards with Drill Down
Capabilities
56 The Era of Big Data
Dashboards can Depict Information by Organizational Layer
57 The Era of Big Data
When Designed Correctly, RIMIS Systems can Provide Dynamic Analysis of KPIs
58 The Era of Big Data
In Summary
The environment is changing, the challenges are getting more complex
Data Remains the Key to Managing Toal Cost of Risk
Process Benchmarking and Establishing KPIs will help Direct Resources to Cost Drivers
Leveraging RIMIS Systems and Dashboarding will Result in Focused Sustainable Management of Total Cost of Risk
Q & A
60 The Era of Big Data
Contact Information for Today’s Presenters
Mike Stankard
Industrial & Materials Practice Leader
Aon Risk Solutions
+1.248.936.5353
Tom Parry, Ph.D.
President
Integrated Benefits Institute
+1.415.222.7280
Joe Galusha
Managing Director, National Casualty
Risk Control Team Leader
Aon Global Risk Consulting
+1.248.936.5215
Tim McDonald
Senior Consultant, National Clinical
and Health Improvement Solution Team
Aon Hewitt
+1.847.771.4362
Sander VanderWerf
Vice President, National Absence
Management Consulting Practice
Aon Hewitt
+1.908.803.4281
