Scott MacStravic, PhD
During my last position before retiring, as VP for Strategy and Marketing at a hospital system in Denver, I had the opportunity to initiate and incremental approach to employee health management (EHM) as a new revenue strategy for the system. We began by marketing “health fairs” that assessed worker health problems for employers, with a fairly sizable number involved by the time I left. But that was as far as we got, as new management came in, and neither the system, nor the larger system it belonged to, evidenced any interest in EHM.
I have since advised a number of hospitals individually, as well as written a number of articles advising hospitals generally, to invest in EHM. Whether I have had any influence on what is happening or not, it is clear that many hospitals are putting their toes in the water, at least, with examples at dozens, if not hundreds of institutions. Some focus primarily, even solely, on their own workforce, while others market EHM services to other employers, such as the Mayo Clinic, whose “Health Solutions” include a wide range of programs aimed at improving employees’ self-management of their own health, and serves at least 70 employers in the U.S. (www.mayoclinichealthsolutions.com)
Knowing that hospitals are bound to recognize the “conflict of interest” involved in engaging in EHM, since it reduces the incidence and prevalence of the very sickness that drives almost all their revenue, it may make sense to approach such a threatening idea on an incremental basis. This is easily done, though it automatically lengthens the time it will take to develop a comprehensive strategy and program compared to jumping in with both feet.
The first step can be to analyze the current state of the hospital employees’ own health, and the degree of their self-reported productivity and performance impairment related to health issues. EHM differs from the population health management (PHM) efforts of insurance plans in recognizing the far greater economic impact of employee health on overall labor costs and revenue, not merely sickness care costs, it also recognizes a far greater array of “health problems”.
For example, once hospitals look at productivity/performance impairment, they should make sure that to include “impairment factors” such as: lack of sleep and hydration; poor diet and nutrition; inadequate fitness and physical activity; emotional problems such as depressed and anxious feelings; stress; chronic pain of all kinds; allergies, etc., regardless of whether or not they cause a lot of sickness care costs. And they should analyze the impairment effects of sickness and health risks, including: chronic diseases; overweight/obesity; high blood pressure, sugar or cholesterol: smoking; unsafe behaviors’ etc.
There are a number of thoroughly validated estimators of productivity impairment, based on self-reported impairment, which can be translated into actual productivity/performance losses. These should usually be modified to reflect the full value of employee productivity and performance, not merely its cost (annual compensation), as well. Armed with such information, hospitals can at least appreciate the extent of the damage to their financial performance already being done by the current workforce health and impairment levels.
Armed with such information, hospitals should be able to identify which sickness categories drive the most sickness care costs, and which impairment factors drive the most impairment costs, to identify the problem areas with the best potential for savings. If they select or create a first-rate problem assessment tool, it will also identify employees’ probability of changing to healthier behaviors, based on factors such as readiness to change, internal vs. external locus of control, motivation and self-efficacy, etc. By combining economic potential with individual probability of changing, the probable dollar value of each individual can be calculated.
Given this calculation, hospitals can then decide which are the most promising investments, based on their estimates of the cost of internal EHM efforts, or the prices offered by EHM suppliers. Mayo Clinic, for example, posts its pricing guide online, though since some of its prices are based on the number of employees in the workforce, while others are based on the numbers that participate in particular programs, it will not be easy to estimate what the hospital’s costs will be. Other suppliers, such as HealthMedia, Inc. in Ann Arbor, Michigan, charge entirely on a population basis, so overall costs can easily be quoted upfront. Still others charge entirely on a per participant basis, including Healthways, Inc. in Nashville, so prediction is more complicated.
Most vendors can at least quote prices for their health risk assessments, though not all include productivity impairment in their HRA. Once the HRA has revealed the probable programs to be included in the EHM strategy, and the probable targets for participation, a more informed prediction of total costs, and total benefits, becomes more possible. Suppliers will be able to at least describe what their average success rates have been, though predicting what will be the case with a new client will always be problematic.
Once hospitals have initiated their own EHM strategy, they can rely on the results of their investments to guide their future efforts. They may try EHM on a pilot basis, as many employers have, to minimize their risk at the beginning, though this typically delays by a year or more the initiation of an organization-wide strategy. On the other hand, early results may be sufficiently promising, at 90 or 180 days, for example, to enable confidence in a full roll out of the EHM strategy, thereby saving time.
Only if hospitals develop their own “homegrown” EHM programs can they move on to another incremental step of offering services to other employers. Once they have their own experience with EHM techniques, costs, and results, they will be in a better position to both set prices for employers, and offer “proof” of the efficacy and economic value of their methods. But since few employers currently are able even to measure the ROI from their EHM efforts, the hospitals that master this challenging element of EHM strategy will be in an excellent position to become at least one of the options considered by other employers for their own investment.
The potential for measuring the full range of EHM problems, its full potential and probabilities, and ifs full economic benefit has not been fully realized by any EHM supplier to my knowledge, nor any EHM client, so far. By focusing enough attention at the outset on the measurement (or credible estimation) challenge, hospitals can achieve the apex of EHM performance and ability to demonstrate value, which should place them in the best possible position, whether they choose internal or external applications, or both.
