Occupational Medicine and Corporate Productivity A Unique Resource In Building the Competitive Edge

The Problem: Rising Medical Costs/Eroding Profits Source: The National Data Book and IRS Data Reports Developed by R. Loeppke

The Real Problem: The Full Cost of Employee Poor Health Medical & Pharmacy Costs Personal care costs 25% Medical Care Pharmacy $3,376 PEPY Productivity costs STD LTD Absenteeism Presenteeism Overtime Health-related Productivity Costs Turnover Temporary staffing $10,128 PEPY 75% Administrative costs Replacement training Total: $13, 504 PEPY Off-site travel for care Customer dissatisfaction Variable product quality Sources: Edington DW, Burton WN. Health and Productivity. In McCunney RJ, Editor. A Practical Approach to Occupational and Environmental Medicine. 3rd edition. Philadelphia, PA. Lippincott, Williams and Wilkens; 2003: 40-152. Loeppke, et.al., JOEM, 2003; 45:349-359 and Brady, et.al., JOEM, 1997; 39:224-231

Health Related Productivity Costs 3x > Medical and Pharmacy Costs Significant business value to good health Health enhancement initiatives will impact the bottom line significantly Employers benefit from evaluating the broader cost impact of health condition in the workforce rather than singling out only the costs of medical and pharmaceutical costs (3)

Elements of Total Health-Related Costs: Medical/Pharmacy Medical Expenses Pharmacy Expenses The two most frequently measured elements, since they are claims based They are important, but not sufficient in addressing the Total Health-Related Costs for employers Only capture costs of employees seeking care, do not provide perspective on those with health risks not seeking care or losing productive time due to health conditions

Elements of Total Health-related Costs: Productivity Absenteeism Workers’ compensation Short-term disability Long-term disability Sickness/incidental absence Family medical leave Unpaid leave Lost to workforce Substitute workers Overtime Team dysfunction Leads to

Elements of Total Health-related Costs: Productivity Presenteeism On-the-job performance Time not on task Quality of work Quantity of work Employee turnover Team morale Health risk information

Top 10 Medical Conditions Total Cost Annual Total Cost Per 1,000 FTEs Average from all Four Employers (N=15,380) $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Outpatient Inpatient Drug Absenteeism Presenteeism Sleeping Problem Back/Neck Depression High Cholesterol Arthritis Hypertension Obesity Fatigue Chronic Pain Anxiety Source: Loeppke R, et.al., “Health and Productivity as a Business Strategy”, J Occup Environ Med. Vol 49, No. 7, July, 2007. Pages 712-721.

Ballooning Costs of Poor Health Dealing only with the financial transactions of healthcare does not lower total costs—it tends to only shift them Health Enhancement programs can reduce the Burden of Illness and Burden of Health Risks leading to healthier population and measurable total cost DECREASES © R Loeppke, MD – Reprinted with Permission

THE SOLUTION: Managing Health As a Component of Business Success Employee Centric Data Medical Employment History Workers Comp Absence LTD STD Pharmacy Performance at work Quantify value Find net value for health investment Understand “total” cost Build integrated solutions Define business outcomes Set “best practice benchmarks” Set performance objectives

Health and Productivity Management Health and productivity management (HPM) is a systematic approach designed to quantify, evaluate and optimize a company’s investment in its workforce. HPM addresses corporate competitiveness as a human capital investment versus a necessary cost to be reduced.

Trends Driving an HPM Philosophy Escalating cost of health care Demography is destiny Prevalence of chronic conditions Changing role of employer-sponsored health benefits/consumerism

Leading by Example Yesterday’s assumption: Health is a cost driver. Initiatives to improve employee heath are primarily a strategy for controlling a top-line expense. Today’s reality: Health is a performance driver. Investing in health not only controls expenses, but also protects, supports, and enhances human capital. It is fundamental to a healthier bottom line.

Transition to Corporate Health Industrial Medicine Occupational Medicine Occupational Health Corporate Health Urgent care focus Efficient follow-up Physical exams Workers’ Comp. Industrial hygiene services Examinations (pre-placement, medical surveil-lance) Hazard communication, toxic exposures Hearing conservation OSHA/NIOSH/EPA/ADA regulatory compliance Wellness/health promotion Ergonomics Case management Disability management Individual and organizational health assessment Integration of: Health management Disease management Absence management Pharmaceutical management Health care quality/cost management Chief health officer managing the health assets and human capital of the workforce Adapted from R. Loeppke, MD, JOEM 1995; reprinted with permission of R. Loeppke, MD

It’s An Effective Collaboration Occupational Medicine and Integrated HR Benefit Programs: Models where they are not integrated – HR programs tend to become administrative in focus – may not fully support the accomplishment of “big picture” goals that are important for the health of both employees and the company. Models where they are integrated – HR programs lend strength to each other. The success of one moves forward the success of the others. The data from one drives the direction of others. There is a clear focus on common goals that make a real (measurable) difference to the employees and the company. Reprinted with permission of P. Hymel, MD

Integrated Structure Vice President HR, Medical Director Vice President of HR, Medical Director Employee Benefits Applicable Data Utilization Wellness Initiatives Disability Management Reprinted with permission of P. Hymel, MD

How to Begin Identify problem Identify stakeholders Propose change Analyze absenteeism, claims, short and long term disability data Identify high cost centers, reasons for absenteeism Identify Health risk within the population Review and discuss problem areas Identify stakeholders Propose change Identify programs for change Chart proposed benefits with potential ROI Select metric to guide State null hypothesis and study design

How to Begin Implement Monitor metrics continuously Educate stakeholders Educate employees Implement program Monitor metrics continuously i.e., graph-on-the-wall or “watch the dashboard” Evaluate/Judge value Identify costs to implement Identify lower absenteeism or lower claims costs Improved Health Risks Presenteeism Improvement

HPM In Practice What characterizes HPM programming? General Philosophy Organizational Structure Goals and Metrics Intervention and Outcomes Integration and Trends Incentives

Health Promotion Reduces Corporate Medical Costs General Electric's 18-month study of fitness program members showed a 38% decrease in health care spending versus a 21% increase for nonmembers. Annual costs were $757 for participants and $941 for non-participants, saving the company an estimated $1 million in medical expenses. Adolph Coors' wellness center produced estimated health care cost savings of $1.4 million over 6 years and reported a return on investment from $1.24 to $8.33 for every dollar spent on its wellness program. Medical claims for Steelcase were 55% lower for employees who used fitness services. Costs over a 6-year period averaged $478.61 for participants versus $869.98 for nonparticipants.

Increased Productivity In a world where corporate profitability is measured through optimally streamlining resources, employee productivity is a crucial variable in the equation. Research demonstrates that health promotion programs will positively improve employee effectiveness and productivity. A NASA study reported a 12.5% increase in productivity for exercisers vs. non-exercisers. Exercisers worked at full efficiency for the entire day and non-exercisers lost 50% efficiency for the final two hours. Exercisers also showed greater stamina, performance, concentration, and decision-making abilities. The Dallas Police Department noted a 39% increase in commendations after a fitness lifestyle program was introduced to officers.

Workers’ Compensation Pursue the Bigger Picture, Broader Solution! Occupational Medicine & Integrated Benefit Programs Human Resources Short Term Disability Long Term Disability Health Benefits Workers’ Compensation The New Horizon - Pursuing opportunities across plans that affect change in health-related productivity - The resource of Occupational Medicine can be the key to activate your integrated benefits programs. Reprinted with permission of P. Hymel, MD