1. INFORMATION SOLUTIONS The Business Case for Investing in Employee Health – The Economic Impact of Health and Productivity Management (HPM) European Network of Enterprise for Health 7-8 May 2007, Rouen, France Ron Z. Goetzel, Ph.D. Cornell University and Thomson Medstat ron.goetzel@thomson.com

2. Copyright 2005 Thomson Medstat 2 INFORMATION SOLUTIONS U.S. Business Concerns About Healthcare The United States spent $2.1 trillion in healthcare in 2006—$7,092 for every man, woman, and child. Employers pay over one-third of these costs. National health expenditure growth trends are expected to average about 7% per year through 2015. Health expenditures as percent of GDP: –15.3 percent in 2003 –15.9 percent in 2004 –16.0 percent in 2005 –16.0 percent in 2006 –19.6 percent in 2016 (est) Source: Poisal et al., Health Affairs, 21 February 2007

3. Copyright 2005 Thomson Medstat 3 INFORMATION SOLUTIONS Other business forces The new employee is a knowledge worker Productivity is at an all time high – holding steady after years of impressive gains

4. Copyright 2005 Thomson Medstat 4 INFORMATION SOLUTIONS A renewed emphasis on increasing worker productivity Introduce new technology Get workers to work more hours Make sure workers show up for work Make sure workers are mentally at work (presenteeism) Increase motivation to achieve at peak performance

5. Copyright 2005 Thomson Medstat 5 INFORMATION SOLUTIONS The fallout from a push for higher productivity Increased job demands Detachment and depersonalization Increased health care usage Increased absenteeism Low job morale Increased disability rates On the job accidents Work - life imbalance High stress

6. Copyright 2005 Thomson Medstat 6 INFORMATION SOLUTIONS Increased Health and Productivity Risks Medical Psychological Behavioral Organizational Chest/back pain, heart disease, GI disorders, headaches, dizziness, weakness, repetitive motion injuries Anxiety, aggression, irritability, apathy, boredom, depression, loneliness, fatigue, moodiness, insomnia Accidents, drug/alcohol abuse, eating disorders, smoking, tardiness, “exaggerated” diseases Absence, work relations, turnover, morale, job satisfaction, productivity

7. Copyright 2005 Thomson Medstat 7 INFORMATION SOLUTIONS What To Do? Manage disease Manage disability and absence Manage health and demand Manage stress Strengthen employee assistance programs Re-engineer Reorganize Create incentives Cut pharmacy benefits

8. Copyright 2005 Thomson Medstat 8 INFORMATION SOLUTIONS What about prevention and health promotion? It seems so logical… …if you improve the health and well being of your employees… …quality of life improves …health care utilization is reduced …disability is controlled …productivity is enhanced

9. Copyright 2005 Thomson Medstat 9 INFORMATION SOLUTIONS The Logic Flow:  A large proportion of diseases and disorders from which people suffer is preventable;  Modifiable health risk factors are precursors to many diseases and disorders, and premature death;  Many modifiable health risks are associated with increased health care costs within a relatively short time window;  Modifiable health risks can be improved through effective health promotion and disease prevention programs;  Improvements in the health risk profile of a population can lead to reductions in health costs and improvements in productivity;  Well-designed and well-implemented programs can be cost/beneficial – they can save more money than they cost, thus producing a positive return on investment (ROI).

10. Copyright 2005 Thomson Medstat 10 INFORMATION SOLUTIONS The Evidence  A large proportion of diseases and disorders is preventable. Modifiable health risk factors are precursors to a large number of diseases and disorders and to premature death (Healthy People 2000, 2010, Amler & Dull, 1987, Breslow, 1993, McGinnis & Foege, 1993, Mokdad et al., 2004).  Many modifiable health risks are associated with increased health care costs within a relatively short time window (Milliman & Robinson, 1987, Yen et al., 1992, Goetzel, et al., 1998, Anderson et al., 2000, Bertera, 1991, Pronk, 1999). Modifiable health risks can be improved through workplace sponsored health promotion and disease prevention programs (Wilson et al., 1996, Heaney & Goetzel, 1997, Pelletier, 1999). Improvements in the health risk profile of a population can lead to reductions in health costs (Edington et al., 2001, Goetzel et al., 1999). Worksite health promotion and disease prevention programs save companies money in health care expenditures and produce a positive ROI (Johnson & Johnson 2002, Citibank 1999-2000, Procter and Gamble 1998, Chevron 1998, California Public Retirement System 1994, Bank of America 1993, Dupont 1990).

11. Copyright 2005 Thomson Medstat 11 INFORMATION SOLUTIONS

12. Copyright 2005 Thomson Medstat 12 INFORMATION SOLUTIONS Risk factors for 10 leading causes of death in the United States Causes of DeathRisk factors Heart Diseasesmoking, hypertension, hypercholesterolemia, lack of exercise, diabetes mellitus, obesity, stress Cancersmoking, alcohol, diet, environmental carcinogens, obesity Strokehypertension Accidentsalcohol, failure to use seatbelts Chronic obstructed lung diseasesmoking Pneumonia and influenzasmoking, alcohol Diabetes mellitusobesity Suicidestress, alcohol, drug use Cirrhosisalcohol Atherosclerosissmoking, hypercholesterolemia Source: National Center for Health Statistics. “Annual Summary of Births, Deaths, Marriage, and Divorces: United States, 1983.” NCHS Monthly Vital Statistics, Sept. 1984

13. Copyright 2005 Thomson Medstat 13 INFORMATION SOLUTIONS Actual Causes of Death in the U.S. (2000) Source: Mokdad et al., 2004

14. Copyright 2005 Thomson Medstat 14 INFORMATION SOLUTIONS Poor Health Costs Money Drill down… Medical Absence/work loss Presenteeism Risk factors

15. Copyright 2005 Thomson Medstat 15 INFORMATION SOLUTIONS Top 10 High-Cost Physical Health Conditions 1.Coronary artery disease 2.GI disorders 3.Hypertension 4.Vaginal deliveries 5.Osteoarthritis Ref: Goetzel RZ, Ozminkowski RJ, Meneades L, Stewart M, Schutt DC. Journal of Occupational and Environmental Medicine 42(4) (2000): 338–351. Source: 1996 MEDSTAT MarketScan Fee-for-Service Database, N=4,106,124 lives 6.Back disorders 7.ENT disorders 8.Diabetes 9.Cerebrovascular disease 10.Gall bladder disease

16. Copyright 2005 Thomson Medstat 16 INFORMATION SOLUTIONS Medical, Drug, Absence, STD Expenditures (1999 annual $ per eligible), by Component Top 10 Physical Health Conditions Source: Goetzel, Hawkins, Ozminkowski, Wang, JOEM 45:1, 5–14, January 2003.

17. Copyright 2005 Thomson Medstat 17 INFORMATION SOLUTIONS The Big Picture: Overall Burden of Illness by Condition Using Average Impairment and Prevalence Rates for Presenteeism ($23.15/hour wage estimate) Source: Goetzel, Long, Ozminkowski, et al. JOEM 46:4, April, 2004)

18. Copyright 2005 Thomson Medstat 18 INFORMATION SOLUTIONS Percent Difference in Medical Expenditures: High-Risk versus Lower-Risk Employees Independent effects after adjustment N = 46,026 70.2 46.3 34.8 21.4 19.7 14.5 11.7 10.4 -9.3-3.0 -0.8 -50 -25 0 25 50 75 100 Percent Depression Stress Glucose Weight Tobacco-Past Tobacco Blood pressure Exercise Cholesterol Alcohol Eating Incremental Impact of Ten Modifiable Risk Factors on Medical Expenditures Goetzel RZ, Anderson DR, Whitmer RW, Ozminkowski RJ, et al., Journal of Occupational and Environmental Medicine 40 (10) (1998): 843–854.

19. Copyright 2005 Thomson Medstat 19 INFORMATION SOLUTIONS Quiz: How many Americans lead healthy lifestyles? 1.Non-smokers 2.Healthy weight (BMI of 18.5-25.0) 3.Consume 5+ fruits/vegetable per day 4.Exercise regularly (30 min – 5 days/week) Bottom Line: practice healthy lifestyle across all four categories

20. Copyright 2005 Thomson Medstat 20 INFORMATION SOLUTIONS Health and Risk Reduction Outcomes of Multi-Component Worksite Health Promotion Programs – Literature Review Purpose: Critically review evaluation studies of multi-component worksite health promotion programs. Methods: Comprehensive review of 47 CDC and author generated studies covering the period of 1978-1996. Findings:  Programs vary tremendously in comprehensiveness, intensity & duration.  Providing opportunities for individualized risk reduction counseling, within the context of comprehensive programming, may be the critical component of effective programs., Ref: Heaney & Goetzel, 1997, American Journal of Health Promotion, 11:3, January/February, 1997

21. INFORMATION SOLUTIONS The Assessment of Health Risks with Feedback (AHRF) in Combination with Other Interventions February 2007 Analysis Worksite Health Promotion Team Robin Soler, PhD David Hopkins, MD, MPH Sima Razi, MPH Kimberly Leeks, PhD, MPH Matt Griffith, MPH Community Guide

22. Copyright 2005 Thomson Medstat 22 INFORMATION SOLUTIONS Summary Results and Team Consensus Outcome Body of Evidence Consistent Results Magnitude of EffectFinding Alcohol Use7YesVariableSufficient Fruits & Vegetables % Fat Intake 7 11 No Yes 0.16 serving +8% Insufficient Strong % Change in Those Physically Active 17Yes+12.7%Sufficient Tobacco Use Prevalence Cessation 22 23 (9) Yes –2.2 pct pt 3.5 pct pt Strong Seat Belt Non-Use10Yes–35.4%Sufficient

23. Copyright 2005 Thomson Medstat 23 INFORMATION SOLUTIONS Summary Results and Team Consensus Outcome Body of Evidence Consistent ResultsMagnitude of EffectFinding Diastolic blood pressure Systolic blood pressure Risk prevalence 16 18 11 Yes Diastolic:–1.9 mm Hq Systolic:–3.0 mm Hg –3.4 pct pt Strong BMI Weight % body fat Risk prevalence 6 12 4 5 Yes No Yes No –0.5 pt BMI –0.56 pounds –2.2% body fat –2.2% at risk Insufficient Total Cholesterol HDL Cholesterol Risk prevalence 18 7 11 Yes No Yes –5.0 mg/dL (total) +1.1 mg/dL –6.6 pct pt Strong Fitness5YesSmallInsufficient

24. Copyright 2005 Thomson Medstat 24 INFORMATION SOLUTIONS Summary Results and Team Consensus Outcome Body of Evidence Consistent Results Magnitude of EffectFinding Estimated Risk15YesModerateSufficient Healthcare Use6YesModerateSufficient Worker Productivity10YesModerateStrong

25. Copyright 2005 Thomson Medstat 25 INFORMATION SOLUTIONS Phase II: Strategic and Tactical Planning Projecting ROI – Dow Chemical Company Source: Goetzel, Ozminkowski, Baase, Billotti. Journal of Occupational and Environmental Medicine. August, 2005.

26. Copyright 2005 Thomson Medstat 26 INFORMATION SOLUTIONS Basic Framework for ROI Calculation Prospective in nature Will estimate ROI based upon employer entered data: Employee Demographic Characteristics Prevalence of Risk Factors Medical and Related Expenditures ROI Effects Program Investments

27. Copyright 2005 Thomson Medstat 27 INFORMATION SOLUTIONS Dow Econometric Forecast Model: Modeling different risk reduction scenarios – based on the organization’s ability to reduce employee health risks: 1. No program in place – demographics drive risk profile 2. Program lowers risk.1% per year (1% over ten years) 3. Program lowers risk 1% per year (10% over ten years)

28. Copyright 2005 Thomson Medstat 28 INFORMATION SOLUTIONS Methods 1 of 5 Step 1: Estimate Dow’s Demographic Profile: 2001 - 2011 Start with Dow’s demographics for 2001:  Population: 25,828 employees*  Mean Age: 43  Male: 75%  White: 82%  Professional/Managerial: 44% Project 2002 – 2011

29. Copyright 2005 Thomson Medstat 29 INFORMATION SOLUTIONS Step 2: Estimate the Risk Profile of Dow Employees: 2001 – 2011 Methods 2 of 5

30. Copyright 2005 Thomson Medstat 30 INFORMATION SOLUTIONS Step 3: Estimate Healthcare Expenditures: 2001 - 2011

31. Copyright 2005 Thomson Medstat 31 INFORMATION SOLUTIONS Step 4: Simulate the Impact of Alternative Population Risk Profiles: 2001 - 2011

32. Copyright 2005 Thomson Medstat 32 INFORMATION SOLUTIONS Results Obtained from Dow Application Year Reference Case: Total Expenditures with demographics and risk shifting as forecasted (i.e., pre- existing trends remain) Scenario 2: Total Expenditures with 10% decrease in risk over 10 years (1% per year) and demographic s change as forecasted Scenario 3: Total Expenditure s with 1% decrease in risk over 10 years (0.1% per year) and demographi cs change as forecasted Scenario 4: Break- Even (Reduce Risks by 0.17% per Year) Increase in Expenditures From 2001 - 2011$17,094,174.26$6,608,877.16$14,324,879.51$13,434,028.14 Percent change between first and last years35.4813.7229.7327.88 Sum of Total Expend.$617,074,003.89$556,469,544.50$602,640,734.47$598,059,428.40 Potential Benefits of Risk Management (with a 3% discount rate) Not applicable -- base case$49,512,590.66$11,705,745.61$15,426,727.88 Dow investment (also with a 3% discount rate)$15,426,671.88 Return on Investment $3.21$0.76$1.00 Return on Investment is calculated relative to scenario in which demographics and risk shift as according to pre-existing trends. Dow investment based on $70.02 per person per year for 10 years, all in 2001 Year Dollar Equivalents, then discounted by 3% per year to adjust for the changing value of money over time

33. Copyright 2005 Thomson Medstat 33 INFORMATION SOLUTIONS Awareness Participation Increased knowledge Improved attitudes Behavior change Risk reduction Reduced utilization Financial Impact/ROI Program Evaluation What are the critical steps to success?

34. Copyright 2005 Thomson Medstat 34 INFORMATION SOLUTIONS Case Studies

35. Copyright 2005 Thomson Medstat 35 INFORMATION SOLUTIONS Citibank, N.A. Health Management Program Evaluation Title: Citibank Health Management Program (HMP) Industry: Banking/Finance Target Population: 47,838 active employees eligible for medical benefits Description: –A comprehensive multi-component health management program –Aims to help employees improve health behaviors, better manage chronic conditions, and reduce demand for unnecessary and inappropriate health services, –And, in turn, reduce prevalence of preventable diseases, show significant cost savings, and achieve a positive ROI. Citations: Ozminkowski, R.J., Goetzel, R.Z., Smith, M.W., Cantor, R.I., Shaunghnessy, A., & Harrison, M. (2000). The Impact of the Citibank, N.A., Health Management Program on Changes in Employee Health Risks Over Time. JOEM, 42(5), 502-511. Ozminkowski, R.J., Dunn, R.L., Goetzel, R.Z., Cantor, R.I., Murnane, J., & Harrison, M. (1999). A Return on Investment Evaluation of the Citibank, N.A., Health Management Program. AJHP, 44(1), 31-43.

36. Copyright 2005 Thomson Medstat 36 INFORMATION SOLUTIONS Program Participation All 47,838 active employees were eligible to participate. The participation rate was 54.3 percent. Participants received a $10 credit toward Citibank’s Choices benefit plan enrollment for the following year. Approximately 3,000 employees participated in the high risk program each year it was offered.

37. Copyright 2005 Thomson Medstat 37 INFORMATION SOLUTIONS Percentages represent the proportion of total participants for whom data are available, by category. * Statistically significant at the p<0.05 level (McNemar Chi-square). 19 15 169 125 195 1009 1732 1326 2565 8325 25 238 114 316 1058 1654 1906 2506 2775 8575 2023 12 0100020003000400050006000700080009000 Alcohol Diastolic BP* Salt* Cholesterol Fat* Cigarettes* BMI* Seatbelt* Exercise* Stress* Fiber* First HRA Last HRA (93%) (95%) (33%) (31%) (32%) (26%) (21%) (15%) (18%) (19%) (12%) (4%) (2%) (18%) (20%) (3%) (2%) (1%) (0%) Ozminkowski, R.J., Goetzel, R.Z., et al., Journal of Occupational and Environmental Medicine 42: 5, May, 2000, 502–511. Citibank Results: Number and Percent of Program Participants at High Risk at First and Last HRA by Risk Category (N=9,234 employees tracked over an average of two years)

38. Copyright 2005 Thomson Medstat 38 INFORMATION SOLUTIONS Citibank Results: Impact of Improvement in Risk Categories on Medical Expenditures per Month *Net Improvement refers to the number of categories in which risk improved minus number of categories in which risk stayed the same or worsened. **Impact = change in expenditures for net improvers minus change for others. Negative values imply program savings, since expenditures did not increase as much over time for those who improved, compared to all others † p < 0.05, ‡ p < 0.01 Unadjusted Impact** Adjusted Impact** Net improvement* of at least 1 category versus others (N = 1,706) -$1.86†-$1.91 Net improvement* of at least 2 categories versus others (N = 391) -$5.34-$3.06 Net improvement* of at least 3 categories versus others (N = 62) -$146.87†-$145.77 ‡

39. Copyright 2005 Thomson Medstat 39 INFORMATION SOLUTIONS Citibank: Medical Savings-Adjusted Mean Net Payments Total savings associated with program participation for 11,219 participants over an averageof 23 months post-HRA is $8,901,413** Based on $34.03 savings and 23.31054 months post-HRA for 11,219 participants Citibank Medical Population Adjusted Mean Net Payments for the Pre- and Post-HRA periods

40. Copyright 2005 Thomson Medstat 40 INFORMATION SOLUTIONS Citibank Health Management Program ROI Program costs = $1.9 million* Program benefits = $8.9 million* Program savings = $7.0 million* ROI = $4.7 in benefits for every $1 in costs Notes: 1996 dollars @ 0 percent discount Slightly lower ROI estimates after discounting by either 3% or 5% per year. Results very similar to RCT conducted of same Healthtrac program, by Fries, et al.

41. Copyright 2005 Thomson Medstat 41 INFORMATION SOLUTIONS Johnson & Johnson Health and Wellness Program Evaluation Title: J & J Health and Wellness Program (H & W) Industry: Healthcare Target Population: 43,000 U.S. based employees Description: –Comprehensive, multi-component worksite health promotion program –Evolved from LIVE FOR LIFE in 1979 Citations: Goetzel, R.Z., Ozminkowski, R.J., Bruno, J.A., Rutter, K.R., Isaac, F., & Wang, S. (2002). The Long-term Impact of Johnson & Johnson’s Health & Wellness Program on Employee Health Risks. JOEM, 44(5), 417-424. Ozminkowski, R.J., Ling, D., Goetzel, R.Z., Bruno, J.A., Rutter, K.R., Isaac, F., & Wang, S. (2002). Long-term Impact of Johnson & Johnson’s Health & Wellness Program on Health Care Utilization and Expenditures. JOEM, 44(1), 21-29.

42. Copyright 2005 Thomson Medstat 42 INFORMATION SOLUTIONS Health & Wellness Program Impact on Employee Health Risks (N=4,586) % Identified at Risk High Risk Group After an average of 2¾ years, risks were reduced in eight categories but increased in four related categories: body weight, dietary fat consumption, risk for diabetes, and cigar use.

43. Copyright 2005 Thomson Medstat 43 INFORMATION SOLUTIONS Johnson & Johnson (N=18,331 – Ozminkowski et al, 2002) Health & Wellness Program Impact on Medical Costs Annual Savings for Johnson & Johnson -- $8.6 - $8.8 Million $225 Annual Medical Savings/ Employee/Year since 1995 Utilization Type

44. Copyright 2005 Thomson Medstat 44 INFORMATION SOLUTIONS Inflation-Adjusted, Discounted Health and Wellness Program Cumulative Savings Per Employee Per Year, 1995 – 1999 -- Weighted by sample sizes that range from N = 8,927 – 18,331, depending upon years analyzed Years Post Implementation

45. Copyright 2005 Thomson Medstat 45 INFORMATION SOLUTIONS Procter & Gamble: Total Annual Medical Costs For Participants and Non-Participants In Health Check (1990 - 1992) (N=8,334) Adjusted for age and gender; Significant at p <.05 *In year 3 participant costs were 29% lower producing an ROI of 1.49 to 1.00 Ref: Goetzel, R.Z., Jacobson, B.H., Aldana, S.G., Vardell, K., and Yee, L. Journal of Occupational and Environmental Medicine, 40:4, April, 1998.

46. Copyright 2005 Thomson Medstat 46 INFORMATION SOLUTIONS Literature Reviews

47. Copyright 2005 Thomson Medstat 47 INFORMATION SOLUTIONS Health Promotion Program Studies  ROI studies of health management programs at: –Canada and North American Life –Chevron Corporation –City of Mesa, Arizona –General Mills –General Motors –Johnson & Johnson –Pacific Bell –Procter and Gamble –Tenneco  ROI estimates in these nine studies ranged from $1.40 - $4.90 in savings per dollar spent on these programs.  Median ROI was $3 in benefits per dollar spent on program.  Sample sizes ranged from 500 - 50,000 subjects in these studies. Source: Goetzel, Juday, Ozminkowski. AWHP’s Worksite Health, Summer 1999, pp. 12-21

48. Copyright 2005 Thomson Medstat 48 INFORMATION SOLUTIONS Financial Impact – Literature Review – Steven G. Aldana, Ph.D. American Journal of Health Promotion, May/June, 2001, 15:5. Focus: Peer reviewed journals (English Language) – 196 studies pared down to 72 studies meeting inclusion criteria for review Scoring Criteria: –A (experimental design) –B (quasi-experimental – well controlled) –C (pre-experimental, well-designed, cohort, case-controlled) –D (trend, correlational, regression designs) –E (expert opinion, descriptive studies, case studies) Health promotion program impact on health care costs:  32 evaluation studies examined – Grades: A (4), B (11), other (17)  Average duration of intervention: 3.25 years  Positive impact: 28 studies  No impact: 4 studies (none with randomized designs)  Average ROI: 3.48 to 1.00 (7 studies)

49. Copyright 2005 Thomson Medstat 49 INFORMATION SOLUTIONS Meta Evaluation of Worksite Health Promotion Economic Return Studies: 2005 Update – Larry Chapman (Art of Health Promotion, July/August, 2005) Analysis includes a review of 56 peer reviewed studies Study methods are scored using 10 criteria Median year of publication – 1994 Number of combined subjects in all studies – 483,232 Average study duration- 3.66 years Primary outcomes examined: health care utilization/cost (28 studies) and absenteeism (25 studies) Results: –Average reduction in health care costs – 26% –Average reduction in absenteeism – 27% –Average ROI – 5.81 : 1.00 (22 studies)

50. Copyright 2005 Thomson Medstat 50 INFORMATION SOLUTIONS So, what is important to U.S. employers? Financial outcomes –Cost savings, return on investment (ROI) and net present value (NPV) –Where to find savings: Medical costs Absenteeism Short term disability (STD) Presenteeism Health outcomes –Adherence to evidence based medicine –Behavior change, risk reduction, health improvement Humanistic outcomes –Improvement in quality of life –Improved “functioning”

51. Copyright 2005 Thomson Medstat 51 INFORMATION SOLUTIONS Vision l Focusing on improving the health and quality of people’s lives will improve the productivity and competitiveness of our workers and citizens. l A growing body of scientific literature suggests that well-designed, evidence-based Health Promotion/Disease Prevention and Health and Productivity Management Programs can l Improve the health of workers; l Lower their risk for disease; l Save businesses money by reducing health-related losses and limiting absence and disability; l Heighten worker morale and work relations; l Improve worker productivity; and l Improve the financial performance of organizations instituting these programs.