Scott MacStravic, PhD
On Sep 18, it was announced that the Cleveland Clinic had selected HealthMedia, Inc. as supplier for a comprehensive health and wellness campaign for its 48,000 employees and their dependents. HealthMedia has already been working with Kaiser Permanente on health and wellness for Kaiser health plan members as part of Kaiser’s “Thrive” campaign.
After all, HCOs are employers, as well as providers, so have similar ambitions for cutting their operating costs through improving employee and dependent health. Traditionally, health and wellness efforts have focused on reducing employers’ sickness care, workers compensation and disability costs, since these are easy to measure and attribute to such efforts. And HCOs have these same costs, along with as much pressure as any other organizations to cut their costs.
But “productivity health management,” which is health/wellness and disease management efforts applied to productivity improvement as well as traditional cost reductions, is only beginning to be recognized as another way to cut costs even more. Worker absence and “presenteeism” (reduced output while at work) related to health risks and chronic diseases can be significantly more expensive for employers than sickness, disability and workers compensation expense.
In some cases, with conditions such as depression, migraine headaches, allergies and arthritis, indirect labor costs (abs/presenteeism) can amount to five or ten times as much as the more easily measured direct costs. Hence the savings to employers can often be far greater as well. The problem has long been the difficulty of measuring these indirect cost savings, since except in “piecework” industries, productivity is not routinely monitored.
But HealthMedia has become one of the first proactive health vendors to include productivity in its evaluation of savings to clients. It just announced results of this inclusion in wellness and disease management programs delivered to over 175,000 participants, across insured and employed populations. These reflect efforts aimed at obesity, smoking, stress, depression and chronic illnesses, with ROI ratios as high as $10:1. [“HealthMedia Announces Productivity Improvements from Wellness and Disease Management Programming Using the Work Productivity and Activity Impairment (WPAI) Questionnaire.” PRNewswire.com Sep 27, 2006]
It reported that its disease management program alone was responsible for a 4% improvement in productivity at six months, with cost savings of $760,000 per year for a population of 10,000 workers. These workers had an average salary of $50,000 per year, which would seem comparable to hospitals and other HCOs, and the savings were achieved with only modest participation in PHM programs. Health and wellness programs achieved comparable results.
Clearly, PHM could be a boon to HCOs, particularly if results such as HealthMedia reported can be achieved or improved upon. But there remains the question as to whether HCOs should buy PHM services from firms such as HealthMedia, or, since they are in the “healthcare” business, add such services to their service lines.
When productivity, and potentially quality, customer satisfaction, and similar cost or revenue effects are considered, the total economic impact on employers could be dramatic. Dow Chemical Co., for example, estimated that its abs/presenteeism costs from ten chronic conditions alone amounted to an added burden equal to $5989 for every one of its employees per year, as contrasted to only $1227 in direct medical care costs for these same conditions. If as little as half such an amount, or $3000 per employee per year could be saved in HCOs, that would significantly improve their bottom lines.
So why are HCOs not avidly engaged in PHM already? Why are they buying PHM services from vendors, rather than developing their own, and even marketing their own to employers in their markets? Duke University Health System is one of the few HCOs I know of that is investing in its own program, though it is looking for savings only in reduced sickness care costs, so far at least. [L. Landro “Preventive Medicine Gets More Aggressive: The ‘Health Coach’” Wall Street Journal Feb 12, 2004 (www.wsj.com)]
Instead of paying others to deliver PHM services and benefits, HCOs might gain the added competency of PHM in their set of solutions, and enjoy the full benefits of cost savings achieved, as well as the rapidly growing potential revenue and profits in PHM for fellow employers. If HCOs do not act soon on this potential, however, they are likely to find well-entrenched and proven vendors like HealthMedia have captured the best customers, and will have far more limited choices in this matter.
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