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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