Measuring the Productivity Impact of Health Thomas Parry, Ph.D. President

1. Measuring the Productivity Impact of Health Thomas Parry, Ph.D. President Integrated Benefits Institute

2. Today’s Agenda • What is health-related productivity? • How do you measure it pragmatically? • How do CFOs see it? • Is it big enough to care about? • What do you do it you don’t have all the data?

3. About IBI • National, not-for-profit corporation • 670 corporate sponsors • Employers: 90% of IBI’s members • IBI’s mission. Demonstrate the business value of a healthy workforce through: • Independent HPM research • Measurement and modeling tools • Forum for sharing ideas and experience • Visit www.ibiweb.org

4. Operational definition:“the financial impact on the company when employees are not at work and fully function due to their health”

5. Quantifying Financial Lost Productivity* • Two components: absence and decrements in job performance (“presenteeism”) • The Financial Impact of Absence • Wage replacement payments • “Opportunity costs” of ER’s response • The Financial Impact of Presenteeism • Wage and benefit “overpayments” • Opportunity costs of resulting lost time

6. Translating Lost Time into Lost Productivity* • Ease in replacing workers • Time-value of output • Degree of working in teams *Source: Sean Nicholson, Mark Pauly, et al., "Measuring the Effects of Work Loss on Productivity with Team Production," Health Economics 15: 111-123 (2006).

7. How Big is It?

8. The Full Costs of EE Health-- Auto Manufacturers • Estimates based on IBI’s new FCE modeling tool • 171,250 employees • Employer-paid claims costs only • Published as IBI Quick Study in February 2011

9. Health Costs – The Traditional View

10. Health Costs – Adding Pharmacy Total = $623 MM

11. Health Costs – Adding Lost-Time Pay

12. Health Costs – Adding Absence Impact Total = $923 MM

13. Health Costs – Adding Performance Impact

14. Full Cost Components 28% 48% 16%

15. Health and Productivity as a Business Strategy: A Multiemployer Study* * JOEM Vol. 51, No. 4, April 2009

16. Full Costs – Medical, Pharmacy, Absence and Presenteeism

17. Co-Morbidity and Lost Time

18. The View from the C-Suite

19. Linking Health, Productivity & the Bottom Line CFO Survey, IBI, 2002

20. The Impact of Ill-Health 96% 90% 86% 84% 71% 47% Source: The Business Value of Health: Linking CFOs to Health and Productivity, IBI, 2006

21. Workforce Productivity’s Impact on Financials A big deal for 79% 21 CFO Survey, IBI, 2002

22. Are CFOs Getting Information? • Absence • 51% ever get reports on occurrence • 22% get reports on financial impact • Presenteeism • 22% ever get reports on occurrence • 8% get reports on financial impact Source: The Business Value of Health: Linking CFOs to Health and Productivity, IBI, 2006

23. Sources of Information

24. Absence • Components • Sick leave • Short-term disability • Long-term disability • Family and medical leave • Workers’ comp • Company experience • Industry information • Modeled information

26. Performance • Self-reported • Company surveys • Health-risk assessments • Modeled information

28. Contact IBI Thomas Parry, Ph.D., President tparry@ibiweb.org www.ibiweb.org