1. Connecting Health Risk, Absence & Lost Productivity Michael Klachefsky
September 21, 2018
Connecting Health Risk, Absence & Lost Productivity Michael Klachefsky

2. September 21, 2018
Agenda
Health care reform and its connection to absence/disability management
What is productivity?
How does productivity get lost?
Absence
Presenteeism
What can employers do about it?
9/21/2018

3. Health Care Reform and Absence/Disability Management
September 21, 2018
Health Care Reform and Absence/Disability Management

4. Health Care Reform Changing the role of employers
September 21, 2018
Health Care Reform Changing the role of employers
As health care reform is implemented, employer sponsored health care is certain to change
Regardless of the strategy employers choose, there is no way to avoid the impact of workforce health on company costs
Employees with high health care costs drive increases in absence
High rates of absence result in high income replacement benefit costs, e.g.,
Disability plans
Sick leave
Salary continuance
For some employers, the direct and indirect costs of absence may rival health care costs
Dropping employer-sponsored health care in 2014 and beyond doesn’t immunize a company from health care costs
9/21/2018

5. September 21, 2018
Connecting Health Risk and Absence Health risks impact absence and productivity
Percentage of time lost
due to health problems
Source: Boles et al. (2004)
9/21/2018

6. September 21, 2018
What is Productivity?

7. Definition of Productivity
September 21, 2018
Definition of Productivity
Rate at which goods and services are produced with targeted high or acceptable quality
9/21/2018

8. How Does Productivity Get Lost?
September 21, 2018
How Does Productivity Get Lost?
9/21/2018

9. 30% 70% 70% Personal Health Costs Productivity Costs
September 21, 2018
Personal Health Costs
Medical Care
Pharmaceutical costs
30%
Productivity Costs
Absenteeism Short term Disability
Long term Disability
Presenteeism Overtime
Turnover
Temporary Staffing
Administrative Costs
Replacement Training
Off-Site Travel for Care
Customer Dissatisfaction
Variable Product Quality
Productivity Costs
Short term disability
Long term disability
Presenteeism
Absenteeism
Overtime
Turnover
Temporary staffing
Working slow
Late deliveries
Replacement training
Customer dissatisfaction
Variable product quality
70%
70% 1 2
Iceberg of Full costs
from poor health
Iceberg of full costs
from poor
employee health
(2,3): Loeppke, R., et al., "Health and Productivity as a Business Strategy: A Multi-Employer Study", JOEM.2009; 51(4): and 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: s
Loeppke, R., et al., "Health and Productivity as a Business Strategy: A Multi-Employer Study", JOEM.2009; 51(4):

10. Annual Costs: Top 10 Health Conditions*
September 21, 2018
Annual Costs: Top 10 Health Conditions*
*Health and Productivity as a business strategy: A multiemployer study, Journal of Occupational and Environmental Medicine, Volume 51, No.4, April 2009
9/21/2018

11. Productivity Loss Through Absence/Disability
September 21, 2018
Productivity Loss Through Absence/Disability
9/21/2018

12. The Direct Cost of Absence
September 21, 2018
The Direct Cost of Absence
11.7%
12.4%
13.3%
13.2%
12.0%
Source: Kronos/Mercer survey report on The Total Financial Impact of Employee Absences, 2010
9/21/2018

13. The Indirect Cost of Absence
September 21, 2018
The Indirect Cost of Absence
17%
27%
25%
22%
24%
Source: Kronos/Mercer survey report on The Total Financial Impact of Employee Absences, 2010
9/21/2018

14. The Total Cost of Absence
September 21, 2018
The Total Cost of Absence
29%
39%
38%
35%
36%
Source: Kronos/Mercer survey report on The Total Financial Impact of Employee Absences, 2010
9/21/2018

15. Higher Cost & Lower Productivity = Lost Profit
September 21, 2018
Higher Cost & Lower Productivity = Lost Profit
Regular production cost
Value of goods produced
Production cost 15% higher
Production cost 44% higher
Gross profit
Jane at work
$100
$200
50%
Jane absent: Extended disability absence: This is where Workplace Possibilities has most effect
21% production loss
27%
$158
$115
$144 9%
Jane absent: Unplanned incidental absence
29% production loss
19%
$142
$115
$144
-1.4%
Kronos/Mercer Survey on The Total Financial Impact of Employee Absences, 2010

16. Productivity Loss Through Presenteeism
September 21, 2018
Productivity Loss Through Presenteeism
9/21/2018

17. What is Presenteeism? Definition:
Decreased on-the-job performance due to the presence of health problems
Measures:
The decrease in productivity for the much larger group of employees whose health problems have not necessarily led to absenteeism
The decrease in productivity for the disabled group before and after the absence period*
Research is less advanced than research on absenteeism & health management
*Schultz, A. B., Edington, D. W., (2007) Presenteeism A Systematic Review, Journal of Occupational Rehabilitation, 17:
9/21/2018

18. Big Picture Cost Estimates
Costs American businesses $150 billion in decreased productivity*
On the job losses from presenteeism are 60% of the total cost of worker illnesses** ……..exceeds what companies are spending on medical, disability, and absenteeism
American businesses lose 1,228 days/100 full-time equivalents to presenteeism for employees with two to five chronic health conditions***
Survey of 29,000 workers: presenteeism accounted for hours/week (66%) of lost time……absenteeism accounted for the rest****
*Zengerle, J. (2004, December 12) Presenteeism, The New York Times
**(2004, April 20) Economists Coin New Word, ”Presenteeism” to Describe Worker Slowdowns That Account for Up to 60% of Employer Health Costs, Cornell University Press
***Parry, T. (2008, August), Diseases vs. Populations, The Impact of Chronic Conditions, IBI Research Insights
****Stewart, W.F.,et al, (2003), Lost productive work time costs from health conditions in the United States: Results from the American Productivity audit, Journal of Occupational and Environmental Medicine, 45,
9/21/2018

19. Cost of Presenteeism – Health Risks
For employees with at least one health risk (high biometric, smoking and alcohol, emotional health):
0.73 to1.65 lost days/employee/year*
For employees with two or more chronic conditions:
12 to 14 lost work days/employee/year**
For employees with single condition clusters (socio-emotional, metabolic, arthritis, headache, digestive, heart, pulmonary, cancer):
0.6 to 9.6 lost days/employee/year, depending on cluster***
*Goetzel, R., et al, (2009) The Relationship Between Modifiable Health Risk Factors and Medical Expenditures, Absenteeism, Short Term Disability, and Presenteeism Among Employees at Novartis, Journal of Occupational and Environmental Medicine, p. 495
**Parry, T., (2008) Diseases vs. Population – The Impact of Chronic Conditions, IBI Research Insights
***2009, The Impact of Chronic Conditions and Co-Morbidity on Lost Work Time, IBI Quick Study
9/21/2018

20. The Cost of Presenteeism – Behavioral Health Conditions
Socio-emotional (depression, anxiety, fatigue, sleeping problems, etc.):
9.6 lost days/employee/year*
For employees with treated or untreated depression:
7.5 lost days/employee/year
63% of total lost productivity from depression is from presenteeism**
For employees with mental illness:
$247.11/employee/year***
*(2009) The Impact of Chronic Conditions and Co-Morbidity on Lost Work time, IBI Quick Study
**Gifford, B., et al (2009), Full Costs of Depression in the Workforce, Research by the Integrated Benefits Institute (IBI), p.15
***Goetzel, et al, (2006) Estimating Money at Risk, American College of Occupational and Environmental Medicine, Health and Productivity Tool Kit, p. 35
9/21/2018

21. What Can Brokers, Consultants and their Clients Do?
September 21, 2018
What Can Brokers, Consultants and their Clients Do?

22. What Should Brokers & Consultants Do?
September 21, 2018
What Should Brokers & Consultants Do?
Advise your clients that focusing on only health care/pharmacy only addresses part of the problem.
Help clients understand that merely obtaining disability policies, does not automatically solve workplace problems
Advise your clients that issues of absence and presenteeism require a pro-active disability management provider
Absence and presenteeism are best addressed through:
RTW
Stay at work
Integration with health management programs

23. Partner with Carriers Who Offer:
On-site assistance
Education to employees on health to ensure proper diagnoses and treatment:
Wellness programs
Disease management
Improved pharmacy programs:
Decrease employee cost for drugs
Research demonstrates significant improvements in productivity with appropriate drug treatments*
Target both high risk and low-medium risk workers for health management programs
Disability management programs that feature RTW, absence/disability prevention, integration with health management
*Schultz, A. B., Eddington, D. W., (2007), Employee Health and Presenteeism; A Systematic Review, Journal of Occupational Rehabilitation, 17:
9/21/2018