Workforce Health -- From Cost to Value -- Thomas Parry, Ph.D. President Integrated Benefits Institute Michigan Purchasers Health Alliance September, 2006

Today’s Discussion What’s the issue? Does senior management get it? What are the real costs of health? Emerging ER strategies to manage health and productivity

What’s the Real Issue?

This?

National Healthcare Expenditures Source: CMS, Office of the Actuary, National Health Statistics Group. Actual Projected

Plan Design Healthcare Costs Then, The Solution

Or This?

Leveraging Human Capital Company

Demonstrating Healthcare Value Health Status Business Impacts Black Box

About IBI National, non-profit 400+ corporate sponsors Programs – Research – Health & productivity measurement – Benchmarking – Education

Can Senior Management be Change Agents? IBI’s CFO Research

Linking Health, Productivity & the Bottom Line

The Impact of Ill-Health 96% 90% 86% 84% 71% 47%

How Much Absence?

How Much Presenteeism?

Lost Worktime Criticality

CFO’s Role in Benefit Decisions

Measuring the Impact Absence –Overtime pay –Lost revenue –Temporary help –Quality lapses –Wage replacement Presenteeism –Overtime pay –Temporary help –Quality lapses –Lost revenue –Additional staff

Are CFOs Being Informed? Absence –44% never get reports on occurrence –72% never get reports on financial impact Presenteeism –83% never get reports on occurrence –84% never get reports on financial impact

Healthcare Management Objectives for Next Two Years

Quantifying Health-Related Lost Productivity

Translating to the Business

How CFOs Would Use Productivity Information

Then, the Solution Health Status AbsencePresenteeism Healthcare Costs Lost Productivity Business Impacts

The Real Costs of Health

Perceived Costs/Program 2002 Benefit Data $3,090 $172 $762 $6 * Mid-point of lost productivity estimate used $435 $387

What is the real cost of people being away from work? The Opportunity Cost of Absence

Responding to Work Absence Employer Strategy Lost Revenue Staffing Costs Do Nothing X Temp Help/ Overtime XX Additional Staff X

The Range of Lost Productivity Costs 2002 Benefit Data

Full Costs/Program 2002 Benefit Data $3,090 $675 $1,890 $178 $2,621 $418

Top 15 Health Conditions

Top 15 Causes of Lost Work Time

How are Employers Responding?

Employers Abandoning Silos 21% 44% 17% 18% IBI 2004 Employer Survey

“Most Important” Strategies Today IBI 2004 Employer Survey

Be Careful of This

Managing the Economic Burden of Ill Health IBI 2004 Employer Survey

Approaches to Offering Health Benefits Longer Term IBI 2004 Employer Survey

The Health-Related Data Solution IBI 2004 Employer Survey

For More Information