Transcript Slide 1
Connecting Health Risk, Absence & Lost
Productivity
Michael Klachefsky
© 2010 Standard Insurance Company
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?
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Health Care Reform and
Absence/Disability Management
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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.,
o Disability plans
o Sick leave
o 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
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Connecting Health Risk and Absence
Health risks impact absence and productivity
Percentage of time lost
due to health problems
30%
25.9%
25%
20%
13.5%
15%
Absence
14.5%
Presenteeism
8.5%
10%
6.9%
4.8%
5%
2.8%
3.2%
6.3%
1.3%
0%
0.0%
4.0%
0.8%
0.8% 1.7%
1.6%
Source: Boles et al. (2004)
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2.3%
2.9%
What is Productivity?
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Definition of Productivity
Rate at which goods and services are
produced with targeted high or
acceptable quality
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How Does Productivity Get Lost?
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30%
Personal Health Costs
70%
70%
Medical Care
Pharmaceutical costs
2
Iceberg of Full costs
Iceberg of full costs
from poor health
from poor
employee health
Productivity Costs
Productivity
Costs
Absenteeism
Short
term Disability
1
ShortLong
term term
disability
Disability
Long term disability
Presenteeism Overtime
Presenteeism
Absenteeism Turnover
Overtime Staffing
Temporary
Turnover
Administrative
Costs
Temporary
staffing
Replacement Training
Working
slowfor Care
Off-Site
Travel
Late deliveries
Customer
Dissatisfaction
Replacement
training
Variable Product
Quality
Customer dissatisfaction
Variable product quality
(2,3): Loeppke, R., et al., "Health and Productivity as a Business Strategy: A Multi-Employer Study", JOEM.2009; 51(4):411-428. and Edington DW, Burton WN. Health and
Productivity.
RJ, Editor.
A PracticalasApproach
to Occupational
and Environmental
Medicine.3rd
edition.
Philadelphia,
PA. Lippincott, Williams and Wilkens; 2003:
Loeppke,In
R.,McCunney
et al., "Health
and Productivity
a Business
Strategy: A Multi-Employer
Study",
JOEM.2009;
51(4):411-428.
140-152
40-152s
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Annual Costs: Top 10 Health Conditions*
Medical
Drug
Absenteeism
Presenteeism
Depression
Obesity
Arthritis
Back/Neck pain
10 companies
144,400 Employees
•Manufacturers
•Telecoms
•Hospitality
•Energy
•Consulting
•Insurance
Anxiety
GERD
Allergy
Other Cancer
Cost/1000 FTEs
Other Chronic Pain
Hypertension
0
100,000
200,000
300,000
400,000
*Health and Productivity as a business strategy: A multiemployer study, Journal of Occupational and Environmental Medicine, Volume 51, No.4, April 2009
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Productivity Loss Through Absence/Disability
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The Direct Cost of Absence
Planned
Incidental
14%
Extended
0.9%
12%
0.6%
0.5%
0.6%
1.9%
2.2%
2.8%
10%
1.5%
2.0%
9.6%
9.6%
9.6%
9.6%
9.6%
Exempt
11.7%
Nonexempt
Salaried
12.0%
Nonunion Hourly
12.4%
Union Hourly
13.3%
0.6%
8%
6%
4%
2%
0%
Source: Kronos/Mercer survey report on The Total Financial Impact of Employee Absences, 2010
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All
13.2%
The Indirect Cost of Absence
Planned
Incidental
30%
2.5%
25%
2.1%
20%
4.0%
15%
3.1%
2.3%
4.8%
1.9%
5.2%
3.8%
16.5%
16.4%
2.3%
10%
5%
Extended
18.3%
19.4%
Nonexempt
Salaried
24%
Nonunion Hourly
27%
12.6%
0%
Exempt
17%
Union Hourly
25%
Source: Kronos/Mercer survey report on The Total Financial Impact of Employee Absences, 2010
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All
22%
The Total Cost of Absence
Planned
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Incidental
3.0%
2.6%
2.4%
Extended
7.1%
5.9%
4.0%
2.9%
8.0%
5.8%
26.1%
26.0%
3.8%
27.9%
29.1%
Nonexempt
Salaried
36%
Nonunion Hourly
39%
22.2%
Exempt
29%
Union Hourly
38%
Source: Kronos/Mercer survey report on The Total Financial Impact of Employee Absences, 2010
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All
35%
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
Jane absent:
Extended disability
absence: This is
where Workplace
Possibilities has
most effect
50%
$200
21%
production
loss
27%
$158
$115
$144
Jane absent:
Unplanned
incidental absence
9%
29%
production
loss
$142
19%
$115
$144
Kronos/Mercer Survey on The Total Financial Impact of Employee Absences, 2010
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-1.4%
Productivity Loss Through Presenteeism
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What is Presenteeism?
• Definition:
Decreased on-the-job performance due to the presence of
health problems
Measures:
o The decrease in productivity for the much larger group of employees whose
health problems have not necessarily led to absenteeism
o 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, 17:547-579
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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 1.32
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, 1234-1246
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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
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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
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What Can Brokers, Consultants and
their Clients Do?
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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
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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: 547-579
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