The Productivity Costs of Low Prevalence Diseases
-- Expanding the View beyond Healthcare --
Thomas Parry, Ph.D.PresidentIntegrated Benefits Institute
New Employer Realities• ACA: from implementation tactics to healthcare
strategy
• Show the C-suite the value of improved workforce health
• 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 and impact business
• Limited data, time and dollars
Today’s Agenda
• Where are employers headed in health benefit design?
• How broadly do they need to think to have the “value” conversation?
• Can CFOs get anything more than healthcare cost?
• How can employers address the productivity loss of low prevalence, high-cost chronic health conditions?
Where Employers Started: Health as Cost of Doing Business
Health Costs
Where Employers Started: Cost Shifting
Health CostsPlan Design
Trying to Get on the Front End of Cost
Treatment
Health CostsPlan Design
Chronic Health
Conditions
Health Risks
Including Business-Relevant Outcomes
Treatment
Health CostsPlan Design
Chronic Health
Conditions
Health Risks
Work Absence/Disabilit
y
Work Performance
Lost Productivity
Encompassing the Broadest View of Health
Treatment
Health CostsPlan Design
Chronic Health
Conditions
Health Risks
Work Absence/Disabilit
y
Work Performance
Lost Productivity
EE Health Behaviors & Engagement
Corporate Culture & Structure
Business PerformanceWellbein
g
The True Costs of Health
• 10,000 life hospital system
• 81% female
• 46% between 35-54
• 44% professionals
Distribution of Costs (Employees Only)
Distribution of Costs (Employees Only)
Distribution of Costs (Employees Only)
Distribution of Costs (Employees Only)
Translating Lost Time into Lost Productivity
• Degree of difficulty in replacing workers
• Time-value of output
• Degree of working in teams
** Source: Sean Nicholson, Mark Pauly, et al., "Measuring the Effects of Work Loss on Productivity with Team Production," Health Economics 15: 111-123 (2006).
The Opportunity Costs of Absence
Can CFO’s Get It?
MGM Mirage Case Study
IBI Health & Productivity Snapshot Results
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
Going Beyond the Medical and Pharmacy View
Health Conditions Evaluated• Urinary and bladder conditions• Diabetes• Ulcers• Cancer• Skin cancer• Coronary artery disease• COPD• Osteoporosis• Congestive heart failure• Rheumatoid arthritis• Viral hepatitis
Short-Term Lost Time Costs
Ave. STD costs = $4,800
When Does Short-Term Become Long Term?
% reaching maximum STD benefits
Ave. conversion rate = 4.8%
The Cost of Long-Term Absence
The Whole Picture of Lost Time
$27,837
$21,812
$19,956$19,17
9$15,678$14,14
6$13,164$11,78
2$11,356$8,81
8$5,867
Ave. total costs = $12,200
What’s Important Depends on Where You LookPrevalence
Urinary & bladder
Diabetes
Ulcer
Cancer
Skin cancer
Coronary artery disease
COPD
Osteoporosis
Congestive heart failure
Rheumatoid arthritis
Viral hepatitis
What’s Important Depends on Where You LookPrevalence STD Cost
Urinary & bladder Cancer
Diabetes Viral hepatitis
Ulcer Rheumatoid arthritis
Cancer Congestive heart failure
Skin cancer Osteoporosis
Coronary artery disease
Coronary artery disease
COPD Diabetes
Osteoporosis Ulcer
Congestive heart failure
Skin cancer
Rheumatoid arthritis COPD
Viral hepatitis Urinary & bladder
What’s Important Depends on Where You LookPrevalence STD Cost LTD Cost
Urinary & bladder Cancer Rheumatoid arthritis
Diabetes Viral hepatitis Diabetes
Ulcer Rheumatoid arthritis Coronary artery disease
Cancer Congestive heart failure
Osteoporosis
Skin cancer Osteoporosis Viral hepatitis
Coronary artery disease
Coronary artery disease
Congestive heart failure
COPD Diabetes COPD
Osteoporosis Ulcer Urinary & bladder
Congestive heart failure
Skin cancer Skin cancer
Rheumatoid arthritis COPD Cancer
Viral hepatitis Urinary & bladder Ulcer
What’s Important Depends on Where You LookPrevalence STD Cost LTD Cost Total Cost
Urinary & bladder Cancer Rheumatoid arthritis Rheumatoid arthritis
Diabetes Viral hepatitis Diabetes Viral hepatitis
Ulcer Rheumatoid arthritis Coronary artery disease Congestive heart failure
Cancer Congestive heart failure
Osteoporosis Cancer
Skin cancer Osteoporosis Viral hepatitis Diabetes
Coronary artery disease
Coronary artery disease
Congestive heart failure Osteoporosis
COPD Diabetes COPD Coronary artery disease
Osteoporosis Ulcer Urinary & bladder COPD
Congestive heart failure
Skin cancer Skin cancer Ulcer
Rheumatoid arthritis COPD Cancer Skin cancer
Viral hepatitis Urinary & bladder Ulcer Urinary & bladder
The Challenge of Population Health Data
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
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
The Temporal DimensionLeading 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
Thinking about Metrics as Hierarchically
Dashboard metrics
Component metrics
Contributing metrics
Key ER Issues & IBI Resources• Key employer issues
Narrow networks ERs as advocates for prevention and adherence Value-based designs High deductible plans
• IBI available resources A Broader Reach for Pharmacy Plan Design Synergies at Work – Realizing the Full Value of Health Investments Consumer-Directed Health Plans – Challenges to Managing Healthy and
Productivity Avoiding the Traps of Consumer-Driven Health Strategies – How Cummins
and Kraft Foods Approach Health, Performance and Productivity
Guidance for Employers• Work with your health plan/TPA to profile the
medical & pharmacy costs for the full range of your workforce’s health conditions
• Ask your disability insurer/TPA to provide incidence, costs and duration in their reports for these conditions
• Bring the lost productivity discussion into internal conversations based on how your organization typically responds to long-term absence, and estimate reasonable costs for those responses
• Develop a plan to integrate data at the employee level across all health-related programs