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

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

3. 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: Loeppke, et.al., JOEM, 2003; 45: and Brady, et.al., JOEM, 1997; 39:

4. 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)

5. 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

6. 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

7. 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

9. 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, Pages

10. 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

11. 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

12. 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.

13. 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

14. 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.

15. 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

16. 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

17. 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

18. 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

19. 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

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

21. 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 $ for participants versus $ for nonparticipants.

22. 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.

23. 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