Health and Productivity Bottom Line for Employers

1. Health and ProductivityBottom Line for Employers Sean Sullivan President & CEO NDEP Diabetes at Work Workshop Spokane, WA ~ March 25, 2004

2. Mission To establish the vital relationship of employee health to workplace productivity and, thereby, to organizational performance

3. What do we do? • Serve as a global resource on health and productivity management with database analysis, business case studies and implementation tools • Champion health and productivity management internationally as a strategy for improving organizational performance • Organize and manage pilot projects to produce the evidence that investing in employee’s health produces large returns • Develop and make available better methods and tools to employers, providers, health plans and employees for managing health and productivity

4. What Do We Do? (continued) • Hold education forums with leading practitioners of health and productivity management to advance the knowledge and skills of all stakeholders • Establish and maintain communication vehicles to get the best current information on health and productivity management to decision-makers and practitioners – such as our national conference and the publication Health and Productivity Management

5. Employers Need a New Value Model in Health Care • The old cost/quality model is inadequate • Cost and quality are not correctly defined • As a result, they are not properly measured and managed to produce true value • The definitions of cost and quality must be expanded • And the measurement of cost and quality must be improved

6. The New Value Model: Health and Productivity • The old model was confined to a medical view of cost and quality • Direct medical costs of care • Quality defined clinically and by patient satisfaction • The new model gets outside the “medical box” to look at the workplace for value • The value of health benefits-and health care- for employers is seen in healthy employees who are productive

7. The New Value Model: Health and Productivity • Cost-savings opportunities in the new value model are much larger • Medical cost offsets • Reduced absence from work • Reduced productivity loss while at work • Enhanced quality of goods and services • Thus employee health becomes a big contributor to business performance • No longer just an expense to be controlled • But an investment with a return to be gained

8. ROI and BOI (Burden of Illness) • Employers want a return on their “investment” in their employees’ health • But ROI cannot be calculated on “health” basis alone • Need to know the BOI first • Workplace cost including ripple effects • Care giver burden for family members • Without knowing these costs employers cannot determine the true cost, or value, of their health costs

9. Top Ten Conditions by Total Payments (1996 MarketScan Database for 4.1 mil. Lives) • Coronary Artery Disease $467 mil. • Disorders of Gastrointestinal tract 173 • Essential Hypertension 155 • Vaginal Delivery 146 • Osteoarthritis 145 • Back Disorders 144 • Disease of Ear, Nose, & Throat 135 • Diabetes Mellitus 131 • Cerebrovascular Disease 114 • Cholecystitis & Cholelithiasis 110 Source: MEDSTAT Study for IHPM

10. Top Ten Most Prevalent Conditions (1996 Number of Patients) Ear, Nose, & Throat 628,000 Sinusitis 376,000 Skin Disorders 339,000 Essential Hypertension 328,000 Pharyngitis 327,000 Gastrointestinal 307,000 Back Disorders 285,000 Immune and Metabolic 259,000 Otitis Media 248,000 Spinal Trauma 220,000 Source: MEDSTAT Study for IHPM

11. Producing bigger outcomes requires measuring “indirect” cost savingsas well as medical cost offsets • Absence from work • Incidental absences or sick leave are not easy to obtain any more • Short-Term disability is the common “proxy” for productivity loss due to absence • “Presenteeism” is the new frontier of health and productivity measurement • Data are self-reported via survey tools designed and tested to produce valid results

12. Average Hours Lost Per WeekBecause of Health Problems Absence/STD“Presenteeism”Total Digestive Disease 6.24 9.72 15.96 Mental Health 9.57 3.72 13.19 Disorders Respiratory Disease 3.40 5.85 9.25 Injury 2.38 6.05 8.43 Musculoskeletal 6.86 1.38 8.24 Conditions Source: Dr. Wayne Burton, Bank One, Published in JOEM

13. Measuring Performance Loss on the Job • Presenteeism is the new frontier of health and productivity measurement • More important than absence in an economy producing more ideas than things • Not found in any corporate databases • Created by using psychometrically designed self-report survey tools • Validating self-reported data where “objective”data exist (e.g., call centers)

14. Frequency of Disease Management Programs • Cardiovascular (5) • Diabetes (5) • Respiratory (4) • Disability Management (3) • Weight Management (3) • Musculoskeletal (2)

15. The New Value Model: Health and Productivity • The new model views employee health as the outcome of an integrated system of: • Health management -Keeping the population mostly healthy most of the time to avoid all the direct and indirect costs of illness • Disease management -Managing increasingly prevalent chronic conditions in an aging workforce to optimize the health, functionality, and productivity of these employees • Demand management -Engaging employees in health and disease management

16. Integrating Disease Management intoHealth & Productivity • Integrating data on health-related costs • “Busting” the “silos” inside corporations • Analyzing employee demographics/cost/risks • Targeting intervention for the best returns • Integrating prevention and care management • Preventing risks from becoming serious events or chronic conditions • Managing chronic conditions • Measuring the impact on workplace performance and total health-related costs.

17. Health & Productivity Management is • Integrated collection of data and delivery of services • Across the “silos” of • Health promotion / disease prevention • Disease state management • Workers comp / disability case management • To measurably improve total health and • Reduce total health-related costs – including lost productivity / performance

18. The Importance of Diabetes to Employers • Type-II diabetes is an incipient “epidemic" in the U.S. • Incidence has increased by 6 percent annually for the past decade • The largest part of the increase among adults is in the working-age population • More than 700,000 new cases were diagnosed in adults aged 20-65 in the Year 2000 • This is about 70 percent of the total increase in total population age 20 and older • A study of one large employer found combined medical and lost productivity costs were $4,000 higher for workers with diabetes

19. Defining the Problem Correctly to Address it Effectively • The problem is not just diabetes per se • It is a complex of factors increasingly going by the name of “metabolic syndrome” • Critical factors include obesity, hypertension, and coronary artery disease along with Type-II diabetes • The costs of these “co-morbidities” are huge for employers • One-third of diabetics also have hypertension or coronary artery disease • They incur direct medical costs 4 to 5 times greater than diabetics without these conditions -- $10 billion annually • And the “indirect” costs of these conditions are unknown

20. Obesity – the Twin Epidemic to Diabetes • Employers – and society – must address obesity to address diabetes • More than $60 billion of direct medical and “indirect” other costs of diabetes have been attributed to obesity • This is nearly half the total estimated cost of diabetes • Employers increasingly have recognized the importance of diabetes as a workplace issue • They are just beginning to understand the importance of obesity • As linked with hypertension, coronary artery disease, osteoarthritis, and depression, as well • Disease management of diabetes must include obesity – and the other parts of metabolic syndrome

21. IHPM’s Agenda for Diabetes and its Fellow Travelers • Field research project with Intermountain Health Care • Analyzing impact of improved management of diabetes as measured by impact on self-reported productivity • Also analyzing impact on direct medical costs • Other study partners are Healthy Utah (state employees), Aventis, and Harris Allen Associates • Establishing new Center for the Study of Metabolic Syndrome in the Workplace • Disease Management session on Metabolic Syndrome at 4Ps Leadership Forum April 16 in Orlando (w/Abbott Labs) • Special issue of Health & Productivity Management magazine on obesity this fall with Mayo Clinic