Scott MacStravic, PhD
The first trouble with employee health management results is that there have been so few published reports that even include them. Reports describing the extent to which employee health status and behaviors create added costs for employers have been common for over a decade, but examples of the consequences of efforts aimed at improving both are as rare as hen’s teeth, at least in the U.S. Fortunately, other countries, particularly the UK have produced a significant number of published results, which reinforce confidence in the potential of EHM, though vary widely in both how good results have been and what results are described.
Since government health insurance typically insulates employers from direct sickness care costs, even though developed western countries lagged behind the US in proactive and preventive health, they have focused far more on the overall performance impacts of their investments, rather than focusing mainly on reducing medical care costs. In consequence, they have produced and reported far more results that address broader dimensions of performance, including both cost reductions and revenue enhancements.
As much as ten years ago, Pacific Bell’s “FitWorks” program decreased absence days by 0.8%, saving $2 million in one year in replacement costs, while participants spent an average of 3.3 fewer days on disability, saving an additional $4.7 million. The DuPont Corporation’s comprehensive health promotion program reduced disability days by 14% among participants, where non-participants’ days declined only 5.8%, saving a total of 11,726 disability days. [“Worksite Health Promotion” (www.trale.com/resources/Worksite -- undated, but apparently from around 1997)]
Standard Life Healthcare, a UK insurance firm, offered a web-based EHM program for all its staff, including a health risk assessment with individual scores and recommendations for all participants, and tips for improving health based on particular problems identified, plus onsite general support such as healthier food in canteen, and subsidized massages. It reported a 29% improvement in staff nutrition levels, a 14% reduction in alcohol use, 9% in smoking, a 14% reduction in stress. These improvements yielded a 5% increase in productivity, along with a 25% reduction in turnover, and 9% in sickness absences. It now offers its program to clients. “Employer Health Management” Complinet (UK) Mar 4, 2004 (www.vlelife.com)
It has also reported a 13.3% improvement in employee health scores, a 3% improvement in their self-perceived effectiveness at work, and a reduction of 500 fewer sick absence days. And its CEO gave the EHM program partial credit for increasing revenue by 51% over 3 years. It cited an earlier Sears Roebuck finding that every 5-unit increase in employee satisfaction was linked to a 1.3 unit increase in customer satisfaction, with a 0.5% increase in revenue, as grounds for this attribution. [“Standard Life Healthcare” Vielife.com Case Study 2006]
While adding in such wide-ranging results potentially adds far more benefits to compare to the costs of EHM, and far greater financial returns to compare to investments, it also muddies the waters when attempting to generalize about EHM results. Almost every report of results seems to deal in different results, or at least different ways of measuring the same results. As soon as employers and the vendors they hire move past sickness care, workers compensation and disability costs, where objective measurement is easier, they diverge in terms of both what and how they measure other results.
Most of the US reports of impacts on employee health dimensions, for example, have relied on the popular SF-36 survey scores, addressing both physical and mental health. In the UK, many reports employed Vielife’s Health & Well Being survey. Moreover, there are a half dozen popular surveys for developing estimates of productivity impairment and the reductions therein related to EHM. And while most such estimator surveys have been validated in terms of demonstrated correlation with objective measures of productivity, there have been few cases where the conversion from survey scores to actual productivity impact, or the conversion from validated productivity impact to demonstrated cost savings, have been included.
There are a number of national institutes interested in and publishing EHM results – the Institute for Health and Productivity, the Institute for Health and Productivity Studies, the Integrated Benefits Institute, the Health as Human Capital Foundation and the National Business Group on Health in the US, for example. In the UK, the Confederation of British Industries as well as government agencies have addressed the employee health and productivity connection. It would be helpful if some agreement were reached regarding what results dimensions should be commonly used in EHM studies, and what measurement devices seem to best correlate with objective productivity or other performance data.
Until such a development, as is the case with measuring the results of disease management in the US, we will continue to deal with wide-ranging results dimensions and ways of measuring them, as well with conflicting conclusions based upon them. The potential for EHM to dramatically improve employees’ and their employers’ performance, as well as to reduce the growing threat of uncontrolled inflation in sickness care use and expenditures, should prompt concerted action toward improving the measurement and evaluation of EHM results.
MarieAnn North, MBA, FACMPEDirector, Navigant Consulting, Inc.
As I wrap Christmas gifts for my friends, it occurs to me how difficult I am to shop for. My house rule is “if it needs to be dusted, don’t bring it home”. I don’t collect anything, am not the least bit sentimental, and empty the trunk of my car at various charities on a regular basis. So it’s out of character that I own a little Hallmark plaque that I’ve kept since 1987. It’s very scratched up. It’s made several cross country moves, and still sits on my desk. The plaque reads:
EXCELLENCE can be attained if you...CARE more than others think is wiseRISK more than others think is safeDREAM more than others think is practicalEXPECT more than others think is possible
Twenty years later, these sentiments are as timely as when I first read them, and may in fact be one of the best pieces of career advice I’ve ever come across. So I pass these wishes along to you as well this holiday season.
I hope you CARE deeply about the impact you have in the lives of your patients and coworkers. I hope you still take RISKS with enthusiasm and a sense of adventure. I hope you still DREAM and bring creative and untried solutions to the problems in your workplace. I hope you have high EXPECTATIONS of yourself and of those around you and discover that your team surpasses your expectations. I hope you experience the joy of having achieved EXCELLENCE and in creating a culture (and an organization) where others may also excel.
The main reason for healthcare organizations being interested in employee health management (EHM) should surely be for their own use. Many HCOs are already investing, including Mayo Clinic, Duke University Health System, Fairview Health Services, etc. The should also be extending their awareness of what EHM can accomplish past the obvious and easily measured medical care, WC and disability costs to include at least absence and presenteeism effects on productivity. At the outside, they should add effects such as employee tenure, clinical and service quality, customer satisfaction and loyalty, and the revenue impacts that can also be gained.
But while they stretch their vision to these wider effects, they might also consider EHM as a revenue-generating option for themselves. The capital costs of keeping up with sickness care technology are enormously greater than the relatively simple and inexpensive approaches to EHM that are available. And employers seem very willing to pay good money for good results.
A recent survey, reported at the 2006 Annual Conference of the Society for Human Resources Management, found that the brokers and consultants that advise employers are fairly bullish on EHM. 85% of them said their clients were interested in purchasing services to improve employee health and productivity. And virtually all reported their clients would pay for effective solutions, knowing they want the potential realized, but that they are not the best source of EHM.
Employers would surely meet employee concerns and some distrust, for example, if they collected all the information needed about individual employee health and productivity. How many employees could be fully open and honest in reporting health effects on their productivity, for example? And without total honesty and comprehensive information on employees’ motivations and readiness to change, for example, EHM efforts cannot be fully effective.
Moreover, employers seem willing to pay a decent price for effective solutions. Over 50% of respondents in the survey agreed that their clients would pay up to $30 per pay period, and 42% said their clients would pay up to $40. Even it the “pay period” is biweekly or twice a month, this means potential annual payments of $720 at least, up to $1040, though that will surely require getting returns that justify that much payment. [“Ceridian Survey Finds Employers Want Better, More Ways to Improve their Employees’ Health and Productivity” Ceridian.com June 26, 2006]
At a minimum, these figures should suggest what kinds of results employees expect, and therefore what kinds of savings HCOs, themselves might expect from EHM investments with their own employees. Reports by HCOs of actual results they have achieved are rare, and often are limited to reductions in sickness care costs, which would greatly understate the potential. And at best, HCOs should be able to devise or use their own EHM programs to achieve results that will make employers happy to pay more than their costs. Surely, a new profitable revenue source would be welcome.
The current popularity of “Consumer-Directed Health Plans”, with high deductibles and spending accounts may be due simply to their clear cost-shifting effects and demonstrated effects on reducing health care/insurance spending. The idea is simple enough to be simplistic – give consumers more skin in the game, and they will not demand unnecessary or wasteful medical or hospital care, and they will take better care of their own health. Given the fact, well known to marketers for decades, that consumers do not rely on rationality for their behavior and purchase choices, the idea that that is all it takes is surely optimistic at best.
But there may also be a hidden agenda at work. Arguably, it has always been the case that prudent employers should want to recruit and hire the healthiest employees possible, even when the only hope was that such a practice would reduce sickness care costs. The problem has always been at least in two complications: 1) employees tend to get older, with their health declining, as they also become wiser and more valuable with experience and development; and 2) there are laws against discrimination based on age, for example, and even health conditions that qualify as disabilities.
Hundreds of employers already refuse to hire smokers, for example, though refusing to hire people who are overweight/obese, have sleep problems, low levels of physical activity, etc. is more problematic. But CDHPs may actually help employers promote what amounts to “pro-selection” by healthier prospects, both in terms of who applies for employment and who accepts offers made.
It is commonly argued that CDHPs favor the younger and healthier, for example, since they are likely to see the high deductibles and “donut holes” common in HSA arrangements as of little concern to them, and like the idea of tax-free, interest-bearing savings accounts for future use, while figuring to have lots of time to save up before their account will have to be tapped. By contrast, people who know themselves to be at high risk, and certainly those with risk conditions and chronic diseases that already cause high health care spending, will certainly not like these elements of the CDHP approach.
Most current employers that offer CDHPs offer a more traditional health insurance plan as well, given the fact that consumers are still a bit skeptical about CDHPs. Moreover, about half of those who choose them seem to wish to switch back. But employers who choose to offer nothing but a CDHP plan, switching all coverage to that in one step, or gradually switching to a single option over time, can expect to see at least some effect on “anti-selection”, i.e. on risky and unhealthy prospects seeking and accepting employment with them.
Employers who went “smoke-free” usually gave their employees who smoked a set period of time in which to quit, while offering them free smoking cessation support to help. But once the time limit was reached, they terminated those who had not quit. The gradual adoption of CDHPs might have a similar effect. Just as the prospect of losing one’s job can be a strong motivation for smokers to quit, so the prospect of CDHP-type coverage may motivate current employees who are at high risk or have unmanaged chronic conditions to either reform their lifestyles or leave.
If it serves as an effective motivation for lifestyle reform, there may be no objections to the idea. But if a widespread movement toward exclusive CDHP coverage results in large numbers of unhealthy people being added to the unemployment rolls, it may also add to lawsuits for discrimination. Moreover, employers have the strongest motivation to promote the health and well-being of their employees, far more than do government programs such as Medicare and Medicaid, which logically do not consider the far greater impact that employee unhealth has on employers’ performance than members’ unhealth has on their healthcare expenditures.
Even simultaneous offering of CDHPs and traditional health insurance may have “pro-selection” effects that employers desire or would welcome. Should CDHPs become far more popular among the young and healthy, this will mean traditional plans will suffer from “anti-selection” by those who are neither. This will raise the premiums of the traditional plans, thereby pricing them beyond affordability for many unhealthy employees, which may also either force them to become healthy or leave.
It is probably impossible to tell which employers might be looking at CDHPs and which ways, but the potential for using it as a tool to switch costs to other employers and to taxpayers should be something every employer and citizen might want to think about.
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