University of Michigan Health Management Research Center Health Management as a Serious Business Strategy THE UNIVERSITY OF MICHIGAN HEALTH MANAGEMENT RESEARCH CENTER THE UNIVERSITY OF MICHIGAN HEALTH MANAGEMENT RESEARCH CENTER Dee. W. Edington

University of Michigan Health Management Research Center UM-HMRC Corporate Consortium Kellogg JPM Chase Progressive We Energies General Motors Foote Health System Medical Mutual of Ohio St Luke’s Health System Cuyahoga Community College Blue Cross Blue Shield Rhode Island United Auto Workers-General Motors Wisconsin Education Association Trust Southwest Michigan Healthcare Coalition Australian Health Management Corporation Crown Equipment Delphi Automotive Southern Company Florida Power & Light Affinity Health System *The consortium members provide health care insurance for over two million Americans. Data are available from eight to 18 years. Meet on First Wednesday of each December in Ann Arbor

University of Michigan Health Management Research Center

New way to do Health and Productivity Management In the United States and Throughout the World X UM-HMRC Ann Arbor

University of Michigan Health Management Research Center 1.Total Case: Research to Business Case to Application Workshop -Eight hours of presentation and interactive discussion 2.Total Case: Business Case to Application Workshop -Four hours of presentation and interactive discussion 3.Business Application Seminar: (120 minutes) 4.Business Application Presentation: (75 minutes) 5.Business Application Presentation: (60 minutes) 6.Executive Summary Presentation: (30 minutes) Next Generation Health Management, Champion Companies, Zero Trend

University of Michigan Health Management Research Center Agenda Health Management as a Serious Business Strategy Michigan PHA: September 21, 2006 Introductory Comments Do-Nothing StrategyDo-Nothing Strategy Business Concepts to Build the Business CaseBusiness Concepts to Build the Business Case Next Generation ProgrammingNext Generation Programming Slides available via attachment

University of Michigan Health Management Research Center Introductory Comments

University of Michigan Health Management Research Center Health Management as a Business Strategy Along the way, “…someone moved the cheese…” Health or Economics? Healthy People or Productive People? Why are You Here?

University of Michigan Health Management Research Center Two Questions 1. Why do I have Health Insurance? 2. Who is in the center of the Healthcare Industry?

University of Michigan Health Management Research Center “The Total Value of Healthcare” (Managing health status) To “The Cost of Healthcare” (Treating disease) To Moving the Paradigm From “Health is Free” (Healthcare Costs < Total Benefits) Adopt the Quality Strategy: Fix the Systems

University of Michigan Health Management Research Center Section I The Do-Nothing Strategy

University of Michigan Health Management Research Center The Natural Flow of Health Risks and Behaviors

University of Michigan Health Management Research Center Health Risks and Behaviors Health Risk Measure Alcohol Blood Pressure Body Weight Cholesterol Existing Medical Problem HDL Illness Days Life Satisfaction Perception of Health Physical Activity Safety Belt Usage Smoking Stress High Risk Criteria More than 14 drinks/week Systolic >139 or Diastolic >89 mmHg BMI  27.5 Greater than 239 mg/dl Heart, Cancer, Diabetes, Stroke Less than 35 mg/dl >5 days last year Partly or not satisfied Fair or poor Less than one time/week Using safety belt less than 100% of time Current smoker High OVERALL RISK LEVELS Low Risk 0 to 2 high risks Medium Risk 3 to 4 high risk High Risk 5 or more high risks

University of Michigan Health Management Research Center 1640 (35.0%) 4,163 (39.0%) 678 (14.4%) Risk Transitions Time 1 – Time 2 Risk Transitions Time 1 – Time 2 High Risk (>4 risks) High Risk (>4 risks) Low Risk (0 - 2 risks) Medium Risk (3 - 4 risks) 2,373 (50.6%) 21,750 (77.8%) 4,546 (42.6%) 10,670 (24.6%) 4,691 (10.8%) 27,951 (64.5%) 11,495 (26.5%) 5,226 (12.1%) 26,591 (61.4%) 892 (3.2%) 1,961 (18.4%) 5,309 (19.0%) Modified from Edington, AJHP. 15(5): , 2001 Mean of three years between measures

University of Michigan Health Management Research Center The Natural Flow of Health Care Costs

University of Michigan Health Management Research Center 23,043 (34.0%) 25,856 (20.3%) 6,936 (10.2%) Cost Transitions Time 1 – Time 2 High Cost ($5000+) High Cost ($5000+) Low Cost (<$1000) Medium Cost ($1000-$4999) 37,701 (55.7%) 119,271 (74.1%) 75,500 (59.1%) 127,644 (35.8%) 67,680 (19.0%) 160,951 (45.2%) 130,785 (36.7%) 73,427 (20.6%) 152,063 (42.7%) 9,438(5.9%) 26,288 (20.6%) 32,242 (20.0%) N=356,275 Non-Medicare Trad/PPO Modified from Edington, AJHP. 15(5): , 2001

University of Michigan Health Management Research Center Total Medical and Pharmacy Costs Paid by Quarter for Three Groups Musich,Schultz, Burton, Edington. DM&HO. 12(5): ,2004

University of Michigan Health Management Research Center Associated with Risks Costs Associated with Risks Medical Paid x Age x Risk Medical Paid Amount x Age x Risk Low Risk Medium Risk High Risk Non - - Participant Edington. AJHP. 15(5): , 2001

University of Michigan Health Management Research Center Are We Willing to Accept the Consequences of the Do-Nothing Strategy? This is the Way Americans Have been Living their Lives for 60 Years

University of Michigan Health Management Research Center Section II Key Business Concepts To Build the Business Case

University of Michigan Health Management Research Center Business Concept Total Value of Health Status

University of Michigan Health Management Research Center Relative Costs of Poor Health: Total Value of Health PresenteeismAbsenteeismSTDLTD Direct Costs: Medical & Pharmacy Indirect Costs: Edington, Burton. A Practical Approach to Occupational and Environmental Medicine (McCunney) Worker’s Compensation Time-Away-from-Work

University of Michigan Health Management Research Center Same Risk and Behavior Factors Drive All the Outcome Measures

University of Michigan Health Management Research Center Medical/Drug Cost Comparison by Risk Status *p<.05. Yen, Witting, Edington. AJHP. 6:46-54, 1991

University of Michigan Health Management Research Center Total Disability Cost by Risk Status Mean Annual Costs Wright, Beard, Edington. JOEM. 44(12): , 2002

University of Michigan Health Management Research Center Estimated Loss of Productivity by Risk Status *p<.05, **p<.01 Burton, Chen, Conti, Schultz, Pransky, Edington. JOEM. 47(8):

University of Michigan Health Management Research Center Business Concept Excess Costs follow Excess Risks

University of Michigan Health Management Research Center Excess Medical Costs due to Excess Risks $2,199 $3,039 $3,460 $5,520 Edington, AJHP. 15(5): , 2001

University of Michigan Health Management Research Center Excess Disability Costs due to Excess Risks $491 $666 $783 $1,248 Wright, Beard, Edington. JOEM. 44(12): , % of Absence, STD, Worker’s Comp

University of Michigan Health Management Research Center Excess On-The-Job Loss due to Excess Risks Burton, Chen, Conti, Schultz, Pransky, Edington. JOEM. 47(8): %

University of Michigan Health Management Research Center Business Concept Total Value of Health Status to an Organization

University of Michigan Health Management Research Center Association of Risk Levels with Corporate Cost Measures Outcome Measure Low- Risk (N=671) Medium- Risk (N=504) High- Risk (N=396) Excess Cost Percentage Short-term Disability $ 120$ 216$ 33341% Worker’s Compensation $ 228$ 244$ 49624% Absence $ 245$ 341$ 52729% Medical & Pharmacy $1,158$1,487$3,69638% Total $1,751$2,288$5,05236% Wright, Beard, Edington. JOEM. 44(12): , 2002

University of Michigan Health Management Research Center Business Concept Stratification of the Population for Intervention

University of Michigan Health Management Research Center Stratification In the Health Promotion Opportunity Health Promotion Opportunity

University of Michigan Health Management Research Center Predictability to be at High Cost baset1t2t3t4t5t6 Time % Low intervention (71%) High Intervention (29%) Sp=(1-0.10)=0.90 Sp=(1-0.07)=0.93 Sp=(1-0.08)=0.92 Sp=(1-0.14)=0.86 Se=0.75 Se=0.83 Se=0.79 Se=Sensitivity Sp=Specificity

University of Michigan Health Management Research Center Business Concept Change in Costs Follow Change in Risks

University of Michigan Health Management Research Center Change in Costs follow Change in Risks Cost reduced Cost increased Risks ReducedRisks Increased Updated from Edington, AJHP. 15(5): , Overall: Cost per risk reduced: $215; Cost per risk avoided: $304 Actives: Cost per risk reduced: $231; Cost per risk avoided: $320 Retirees 65: Cost per risk reduced: $214; Cost per risk avoided: $264

University of Michigan Health Management Research Center Change in Presenteeism follows Change in Risks Percent reduced percent increased Risks ReducedRisks Increased Burton, Chen, Schultz, Edington 48: , 2006.

University of Michigan Health Management Research Center Business Concept Change in Costs Follow Engagement

University of Michigan Health Management Research Center Cost Savings Associated with Program Involvement from 1985 to 1995 Programming Year Zero or One HRA (N=804) Two or More HRAs (N=522) Annual Increase = 12.6% Annual Increase = 4.2%

University of Michigan Health Management Research Center Yearly Average Disability Absence Days by Participation Pre-ProgramProgram Years $200 Work Day X 1.2 Work Days Participant Year X2,596 participants= $623,040 Year The average annual increase in absence days (1995 – 2000): Participants: 2.4 Non-Participants: 3.6 Schultz, Musich, McDonald, Hirschland,Edington. JOEM 44(8): , 2002

University of Michigan Health Management Research Center Section III Health Management as a Serious Business Strategy Next Generation Program Healthy Companies Zero Trend

University of Michigan Health Management Research Center Three Key Business Beliefs 1.Individuals Can Maintain Low-Risk Health Status even as they Age 2.An Employer and a Health Plan can Help its Members Maintain Low-Risk Health Status 3.The Major Economic Benefit is in Paying Attention to Individuals with Low-Risk Health Status

University of Michigan Health Management Research Center Strategies for Population Management

University of Michigan Health Management Research Center Where are the Opportunities for Population Health Management? Health Promotion Opportunity Disease Management Opportunity Medical & Care Management Opportunity Medical and Drug Costs only

University of Michigan Health Management Research Center Total Health & Productivity Management Create an Integrated and Sustainable Approach On-site Medical Diabetes education pilot Injury and medical management Health Advocate Provide Direction Get the Care You Need Coaching & Outreach Health Plan Design Environmental Design Behavioral Health Work/Family Work Life Plus Health Portal Stay healthy Health information Make informed choices Health Risk Assessment Assess and track health behaviors Maintain health Address health risks Fitness Centers Low risk maintenance High risk reduction Wellness Programs Active expansion Retiree communications/awareness program Disease Management High Acuity (identified high cost disease) Low Acuity (identified lower cost disease; lifestyle behavior focus) Case Management STD, LTD Workers’ Compensation Scattered Absence Absence Management Long Term Strategy— Short Term Solutions

University of Michigan Health Management Research Center Health Management as a Serious Business Strategy Worksite Environment Values and Beliefs Workplace Policies Benefit Design Population Website Health Policies Special Promotions Employee Assistance Risk Reduction Activities Low-Risk Maintenance Know Your Numbers Physical Activity Nutrition Awareness Medical Facility Individual (Stratification by Individual) Coaching Sessions Low-Risk Maintenance Disease Management High-Risk Reduction Health Advocate Triage to Resources Health Risk Appraisals Incentives Measurement

University of Michigan Health Management Research Center Environment Interventions (Physical, Psycho/Socio)  Management and Leadership of the Company and Unions  Mission and Values Aligned with a Healthy and Productive Culture  Policies and Procedures Aligned with Healthy and Productive Culture  Vending MachinesJob Design  CafeteriaFlexible Working Hours  StairwellsSmoking Policies  Other

University of Michigan Health Management Research Center Next Generation Benefit Design to Promote Consumerism Values, Mission,… “What’s the Point Move from Entitlement to Consumer Incentives follow Actionable Behaviors Provide Transparency Appropriate Physicians Appropriate Health Systems Appropriate Pharmaceutical Solutions Promote Maintenance of Health Status

University of Michigan Health Management Research Center Next Generation of Individual Based Programs

University of Michigan Health Management Research Center Individual Stratification and Coaching  Trend Management System  Prioritized Risks  Probability of being High-Cost  Cluster Technology  Coaching for all People: Low-Risk, High-Risk and Conditions  Develop Self-Leaders; Intrinsic Coaching  Health Advocate with triage to other resources (Behavioral Health, EAP, Family Physician,…)

University of Michigan Health Management Research Center Coaching Strategy for Individual Intervention Contact each individual Unlimited contacts (one-on-one, web, telephonic) By level of probability of being high cost Pay attention to cluster and prioritized risks Use variety of contacts (one on one, telephone and for sustainable engagement * Frequent evaluation of coach/client participation and satisfaction Use situational and whole person approach Engage individual in positive actions. Ask but don’t tell. Use triage, health advocate strategies, develop self- leaders and available resources

University of Michigan Health Management Research Center Next Generation of Population Based Programs

University of Michigan Health Management Research Center Population-Based Programs Population Programs Orientation Pedometers, know your numbers, no weight gain Human Resource Orientation People skills/Communications Health Communications Written materials, Online portal, etc Environmental Orientation Stairwells/Vending, Food Services, Other

University of Michigan Health Management Research Center Incentives

University of Michigan Health Management Research Center Incentives Hats and T-Shirts Cash, debit cards ($25 to $200) Premium Reductions/Premium Plan ($600 to $2000) Benefit Options (Co-pays, Deductibles, HSA contributions, …)

University of Michigan Health Management Research Center Measurement: Proof of Concept (Necessary and Sufficient) 1. Improve Health Status Transitions 2. Decrease Healthcare Cost Trend 3. Decrease Productivity Loss 4. Improve Overall Trends for all Outcomes Business Case is pretty good but not yet perfect. We need Champion Companies!!!!

University of Michigan Health Management Research Center Measurement, Evaluation and Decision Support 1. Participation and Employee Satisfaction 2. Reduction in Health Risks 3. Return on Investment 4. Decisions Based upon Program Results 5. Total Value of Health ( Health Care Cost/Productivity Measures ) 6. Proof of Concept (Beat Natural Flow/Bend the Trend Lines) 7. Shareholder Value

University of Michigan Health Management Research Center Summary

University of Michigan Health Management Research Center Health Management: Next Generation Programs, A Serious Business Strategy Risk & Disease Identification Know Target Population Success Scorecard Participation: 80%-95% Low Risk Population: 75+% Outcome Measures Effective Programs Equal Benefits Manage the Person, Not the Risk or the Disease Key Strategies Total Population Management Environmental – Policies, Procedures, Benefits Aligned Individual – Low-Risk Maintenance, Risk Reduction, Referral, Follow-up Population - Engagement Other – Incentives, Measurement

University of Michigan Health Management Research Center Thank you for your attention. Please contact us if you have any questions. Phone:(734) 763 – 2462 Fax:(734) 763 – 2206 Website: Phone:(734) 763 – 2462 Fax:(734) 763 – 2206 Website: Dee W. Edington, Ph.D., Director Health Management Research Center University of Michigan 1027 E. Huron St. Ann Arbor MI

University of Michigan Health Management Research Center 25 Years of Key Learnings from the University of Michigan Health Management Research Center (1980 to 2006)

University of Michigan Health Management Research Center Key Research Learnings from HMRC HRA -Implement and disseminate HRA from CDC/Carter Center to Outcomes measure -Move from mortality outcomes to medical, pharmacy and time away from work as our primary outcome measures 1990 Consult and implement -Wellness Programs in 20+ companies 1996 Low risk maintenance -an important program strategy 1995 Risk combinations - the most dangerous predictors of cost 1994 Cost changes follow risk changes (medical and pharmacy) 1993 Excess costs are related to excess risks 1993 Absenteeism - shows the same relationships to risks as medical costs High risk persons are high cost –(prospective data) a.) Individual risks b.) Cumulative risks (0-2, 3-4, 5 or more)

University of Michigan Health Management Research Center Key Research Learnings (Continued)` 1996 Resource optimization - Changes in risk drive changes in cost when targeted according to specific risk combinations: 1997 Benchmarking - By wellness score and company health score 1998 Participation – Relates to risk and cost moderation 1998 Program opportunities - In preventive services, low-risk maintenance, high-risk intervention and disease management 1999 Presenteeism - Introduced as a measure of productivity and influenced by risks and disease 2000 Total value of health - Define to the organization 2001 Natural flow – Established for risks and costs 2002 Focus on the person – Primary and not the risk or the disease

University of Michigan Health Management Research Center Key Research Learnings (Continued) 2002 Cost changes follow risk changes - Time away from work 2003 Improved population health status - Result from Employer sponsored programs 2004 Percent participation and percent low-risk - Proposed as the important elements of a Health Management Scorecard 2004 Proof of Concept - Must bend the cost trends 2005 Pre-retirement participation - Influences post-retirement participation 2005 Interventions - Susceptible to severe “step down” participation 2005 Presenteeism - Changes in costs follow changes in risks 2006 and beyond ~ Health Management -A Key Component in Health Consumerism ~