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Health Management as a Serious Business Strategy. Dee. W. Edington. THE UNIVERSITY OF MICHIGAN HEALTH MANAGEMENT RESEARCH CENTER. UM-HMRC Corporate Consortium. Kellogg JPM Chase Progressive We Energies General Motors Foote Health System Medical Mutual of Ohio St Luke’s Health System

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slide1

Health Management as a Serious Business Strategy

Dee. W. Edington

THE UNIVERSITY OF MICHIGAN

HEALTH MANAGEMENT RESEARCH CENTER

slide2

UM-HMRC Corporate Consortium

  • Kellogg
  • JPM Chase
  • Progressive
  • We Energies
  • General Motors
  • Foote Health System
  • Medical Mutual of Ohio
  • St Luke’s Health System
  • Cuyahoga Community College
  • Blue Cross Blue Shield Rhode Island
  • United Auto Workers-General Motors
  • Wisconsin Education Association Trust
  • Southwest Michigan Healthcare Coalition
  • Australian Health Management Corporation
  • Crown Equipment
  • Delphi Automotive
  • Southern Company
  • Florida Power & Light
  • Affinity Health System

*The consortium members provide health care insurance for over two million Americans. Data are available from eight to 18 years.

Meet on First Wednesday of each December in Ann Arbor

slide4

New way to do Health and Productivity Management

In the United States and Throughout the World

UM-HMRC Ann Arbor

X

slide5

Next Generation Health Management, Champion Companies, Zero Trend

  • Total Case: Research to Business Case to Application Workshop
    • -Eight hours of presentation and interactive discussion
  • Total Case: Business Case to Application Workshop
    • -Four hours of presentation and interactive discussion
  • Business Application Seminar: (120 minutes)
  • Business Application Presentation: (75 minutes)
  • Business Application Presentation: (60 minutes)
  • Executive Summary Presentation: (30 minutes)
slide6

Agenda

  • Health Management as a Serious Business Strategy
  • Michigan PHA: September 21, 2006
  • Introductory Comments
  • Do-Nothing Strategy
  • Business Concepts to Build the Business Case
  • Next Generation Programming
  • Slides available via e-mail attachment
slide8

Why are You Here?

Health Management as a Business Strategy

Along the way, “…someone moved the cheese…”

Health or Economics?

Healthy People or Productive People?

slide9

Two Questions

  • Why do I have Health Insurance?
  • 2. Who is in the center of the Healthcare Industry?
slide10

Moving the Paradigm From

“The Cost of Healthcare” (Treating disease) To

“The Total Value of Healthcare” (Managing health status) To

“Health is Free” (Healthcare Costs < Total Benefits)

Adopt the Quality Strategy: Fix the Systems

slide11

Section I

The Do-Nothing Strategy

slide12

The Natural Flow

of Health Risks and Behaviors

slide13

Health Risk Measure

Alcohol

Blood Pressure

Body Weight

Cholesterol

Existing Medical Problem

HDL

Illness Days

Life Satisfaction

Perception of Health

Physical Activity

Safety Belt Usage

Smoking

Stress

High Risk Criteria

More than 14 drinks/week

Systolic >139 or Diastolic >89 mmHg

BMI 27.5

Greater than 239 mg/dl

Heart, Cancer, Diabetes, Stroke

Less than 35 mg/dl

>5 days last year

Partly or not satisfied

Fair or poor

Less than one time/week

Using safety belt less than 100% of time

Current smoker

High

Health Risks and Behaviors

OVERALL RISK LEVELS

Low Risk 0 to 2 high risks

Medium Risk 3 to 4 high risk

High Risk 5 or more high risks

slide14

2,373 (50.6%)

4,691 (10.8%)

1,961 (18.4%)

5,226 (12.1%)

892

(3.2%)

4,546

(42.6%)

10,670 (24.6%)

1640 (35.0%)

678

(14.4%)

11,495 (26.5%)

5,309 (19.0%)

4,163 (39.0%)

27,951 (64.5%)

26,591 (61.4%)

21,750 (77.8%)

Risk Transitions

Time 1 – Time 2

High Risk

(>4 risks)

Medium Risk

(3 - 4 risks)

Low Risk

(0 - 2 risks)

Mean of three years between measures

Modified from Edington, AJHP. 15(5):341-349, 2001

slide15

The Natural Flow

of Health Care Costs

slide16

37,701 (55.7%)

High Cost

($5000+)

67,680 (19.0%)

26,288 (20.6%)

73,427 (20.6%)

Medium Cost

($1000-$4999)

9,438

(5.9%)

75,500

(59.1%)

127,644 (35.8%)

23,043 (34.0%)

6,936

(10.2%)

130,785 (36.7%)

32,242 (20.0%)

25,856 (20.3%)

160,951 (45.2%)

152,063 (42.7%)

Low Cost

(<$1000)

119,271 (74.1%)

Cost Transitions

Time 1 – Time 2

N=356,275 Non-Medicare Trad/PPO

Modified from Edington, AJHP. 15(5):341-349, 2001

slide17

Total Medical and Pharmacy Costs

Paid by Quarter for Three Groups

Musich,Schultz, Burton, Edington. DM&HO. 12(5):299-326,2004

slide18

-

-

Non

Participant

Costs Associated with Risks

Medical Paid Amount x Age x Risk

High Risk

Medium Risk

Low Risk

Edington. AJHP. 15(5):341-349, 2001

slide19

This is the Way Americans Have been Living their Lives for 60 Years

Are We Willing to Accept the Consequences of the Do-Nothing Strategy?

slide20

Section II

Key Business Concepts

To Build the Business Case

slide21

Business Concept

Total Value of Health Status

relative costs of poor health total value of health
Relative Costs of Poor Health: Total Value of Health

Direct Costs:

Medical & Pharmacy

Indirect Costs:

Worker’s Compensation

Presenteeism

LTD

STD

Absenteeism

Time-Away-from-Work

Edington, Burton. A Practical Approach to Occupational and Environmental Medicine (McCunney). 140-152. 2003

slide23

Same Risk and Behavior Factors

Drive

All the Outcome Measures

slide24

Medical/Drug Cost Comparison by Risk Status

*p<.05.

Yen, Witting, Edington. AJHP. 6:46-54, 1991

slide25

Total Disability Cost by Risk Status

1998-2000 Mean Annual Costs

Wright, Beard, Edington. JOEM. 44(12):1126-1134, 2002

slide26

Estimated Loss of Productivity by Risk Status

Burton, Chen, Conti, Schultz, Pransky, Edington. JOEM. 47(8):769-777. 2005

*p<.05, **p<.01

slide27

Business Concept

Excess Costs follow Excess Risks

slide28

Excess Medical Costs due to Excess Risks

$5,520

$3,460

$3,039

$2,199

Edington, AJHP. 15(5):341-349, 2001

slide29

Excess Disability Costs due to Excess Risks

$1,248

$783

$666

$491

36% of Absence, STD, Worker’s Comp

Wright, Beard, Edington. JOEM. 44(12):1126-1134, 2002

slide30

Excess On-The-Job Loss due to Excess Risks

14.7%

Burton, Chen, Conti, Schultz, Pransky, Edington. JOEM. 47(8):769-777. 2005

slide31

Business Concept

Total Value of Health Status to an Organization

association of risk levels with corporate cost measures
Association of Risk Levels with Corporate Cost Measures

Wright, Beard, Edington. JOEM. 44(12):1126-1134, 2002

slide33

Business Concept

Stratification of the Population

for Intervention

slide35

0.9

Low intervention (71%)

Se=0.83

0.83

High Intervention (29%)

Se=0.79

0.8

0.79

0.75

Se=0.75

0.7

0.64

0.6

0.57

0.54

0.52

0.5

%

0.4

0.3

0.2

0.19

Sp=(1-0.10)=0.90

0.18

0.18

Sp=(1-0.07)=0.93

0.10

0.14

0.1

0.07

Sp=(1-0.14)=0.86

0.08

Sp=(1-0.08)=0.92

0

base

t1

t2

t3

t4

t5

t6

Se=Sensitivity

Sp=Specificity

Time

Predictability to be at High Cost

slide36

Business Concept

Change in Costs

Follow Change in Risks

slide37

Change in Costs follow Change in Risks

Cost increased

Cost reduced

Risks Reduced

Risks Increased

Overall: Cost per risk reduced: $215; Cost per risk avoided: $304 Actives: Cost per risk reduced: $231; Cost per risk avoided: $320 Retirees<65: Cost per risk reduced: $192; Cost per risk avoided: $621 Retirees>65: Cost per risk reduced: $214; Cost per risk avoided: $264

Updated from Edington, AJHP. 15(5):341-349, 2001.

slide38

Change in Presenteeism follows Change in Risks

percent increased

Percent reduced

Risks Reduced

Risks Increased

Burton, Chen, Schultz, Edington 48:252-263, 2006.

slide39

Business Concept

Change in Costs

Follow Engagement

slide40

Cost Savings Associated with Program Involvement from 1985 to 1995

Annual Increase = 12.6%

Annual Increase = 4.2%

Zero or One HRA (N=804)

Two or More HRAs (N=522)

Programming Year

yearly average disability absence days by participation

The average annual increase in absence days (1995 – 2000):

Participants: 2.4

Non-Participants: 3.6

1.2 Work Days

Participant

Year

$200

Work Day

$623,040

Year

X

X

2,596 participants

=

Yearly Average Disability Absence Days by Participation

Pre-Program

Program Years

Schultz, Musich, McDonald,

Hirschland,Edington.

JOEM 44(8):776-780, 2002

slide42

Section III

Health Management as a Serious Business Strategy

Next Generation Program

Healthy Companies

Zero Trend

slide43

Three Key Business Beliefs

  • Individuals Can Maintain Low-Risk Health Status even as they Age
  • An Employer and a Health Plan can Help its Members Maintain Low-Risk Health Status
  • The Major Economic Benefit is in Paying Attention to Individuals with Low-Risk Health Status
slide44

Strategies for

Population Management

slide45

Where are the Opportunities for Population Health Management?

Medical & Care Management Opportunity

Disease Management Opportunity

Health Promotion Opportunity

Medical and Drug Costs only

create an integrated and sustainable approach

Health Advocate

  • Provide Direction
  • Get the Care You Need
  • Coaching & Outreach

Health Plan Design

Environmental Design

  • Behavioral Health
  • Work/Family
  • Work Life Plus
  • Disease Management
  • High Acuity (identified high cost disease)
  • Low Acuity (identified lower cost disease; lifestyle behavior focus)
  • Health Portal
  • Stay healthy
  • Health information
  • Make informed choices

Total Health & ProductivityManagement

  • Health Risk Assessment
  • Assess and track health behaviors
  • Maintain health
  • Address health risks

Case Management

  • STD, LTD
  • Workers’ Compensation
  • Scattered Absence
  • Fitness Centers
  • Low risk maintenance
  • High risk reduction

Absence Management

  • Wellness Programs
  • Active expansion
  • Retiree communications/awareness program
  • On-site Medical
  • Diabetes education pilot
  • Injury and medical management
Create an Integrated and Sustainable Approach

Long Term Strategy—Short Term Solutions

slide47

Health Management as a Serious Business Strategy

Worksite Environment

Values and Beliefs

Workplace Policies

Benefit Design

Population

Website

Health Policies

Special Promotions

Employee Assistance

Risk Reduction Activities

Low-Risk Maintenance

Know Your Numbers

Physical Activity

Nutrition Awareness

Medical Facility

Individual

(Stratification by

Individual)

Coaching Sessions

Low-Risk Maintenance

Disease Management

High-Risk Reduction

Health Advocate

Triage to Resources

Health Risk Appraisals

Incentives

Measurement

environment interventions physical psycho socio
Management and Leadership of the Company and Unions

Mission and Values Aligned with a Healthy and Productive Culture

Policies and Procedures Aligned with Healthy and Productive Culture

Vending Machines Job Design

Cafeteria Flexible Working Hours

Stairwells Smoking Policies

Other

Environment Interventions(Physical, Psycho/Socio)
slide49

Next Generation Benefit Design to Promote Consumerism

  • Values, Mission,… “What’s the Point
  • Move from Entitlement to Consumer
    • Incentives follow Actionable Behaviors
  • Provide Transparency
    • Appropriate Physicians
    • Appropriate Health Systems
    • Appropriate Pharmaceutical Solutions
  • Promote Maintenance of Health Status
slide50

Next Generation of

Individual Based Programs

slide51
Individual Stratification and Coaching

Trend Management System

Prioritized Risks

Probability of being High-Cost

Cluster Technology

Coaching for all People: Low-Risk, High-Risk and Conditions

Develop Self-Leaders; Intrinsic Coaching

Health Advocate with triage to other resources

(Behavioral Health, EAP, Family Physician,…)

slide52

Coaching Strategy for Individual Intervention

Contact each individual

Unlimited contacts (one-on-one, web, telephonic) By level of probability of being high cost

Pay attention to cluster and prioritized risks

Use variety of contacts (one on one, telephone and e-mail for sustainable engagement

Use situational and whole person approach

Engage individual in positive actions. Ask but don’t tell. Use triage, health advocate strategies, develop self-leaders and available resources

* Frequent evaluation of coach/client participation and satisfaction

slide53

Next Generation of

Population Based Programs

population based programs
Population Programs Orientation

Pedometers, know your numbers, no weight gain

Human Resource Orientation

People skills/Communications

Health Communications

Written materials, Online portal, etc

Environmental Orientation

Stairwells/Vending, Food Services, Other

Population-Based Programs
incentives
Hats and T-Shirts

Cash, debit cards

($25 to $200)

Premium Reductions/Premium Plan

($600 to $2000)

Benefit Options (Co-pays, Deductibles, HSA contributions, …)

Incentives
slide57

Measurement: Proof of Concept (Necessary and Sufficient)

1. Improve Health Status Transitions

2. Decrease Healthcare Cost Trend

3. Decrease Productivity Loss

4. Improve Overall Trends for all Outcomes

Business Case is pretty good but not yet perfect. We need Champion Companies!!!!

measurement evaluation and decision support
Participation and Employee Satisfaction

Reduction in Health Risks

Return on Investment

Decisions Based upon Program Results

Total Value of Health (Health Care Cost/Productivity Measures)

Proof of Concept (Beat Natural Flow/Bend the Trend Lines)

Shareholder Value

Measurement, Evaluation and Decision Support
health management next generation programs a serious business strategy

Outcome Measures

Effective Programs Equal Benefits

Health Management: Next Generation Programs, A Serious Business Strategy

Total Population Management

Environmental –

Policies, Procedures,

Benefits Aligned

Individual –

Low-Risk Maintenance,

Risk Reduction, Referral,

Follow-up

Population -

Engagement

Other –

Incentives, Measurement

Risk & Disease Identification

Know Target Population

Key Strategies

Success Scorecard

Participation: 80%-95%%

Low Risk Population: 75+%

Manage the Person, Not the Risk or the Disease

slide61

Thank you for your attention.

Please contact us if you have any questions.

Phone: (734) 763 – 2462

Fax: (734) 763 – 2206

Email: [email protected]

Website: www.hmrc.umich.edu

Dee W. Edington, Ph.D. , Director Health Management Research Center University of Michigan 1027 E. Huron St. Ann Arbor MI 48104-1688

slide62

25 Years of Key Learnings

from the

University of Michigan

Health Management Research Center

(1980 to 2006)

slide63

Key Research Learnings from HMRC

1980 HRA-Implement and disseminate HRA from CDC/Carter Center

to

Outcomes measure -Move from mortality outcomes to medical, pharmacy and time away from work as our primary outcome measures

1990Consult and implement -Wellness Programs in 20+ companies

1991High risk persons are high cost –(prospective data)

a.) Individual risks

b.) Cumulative risks (0-2, 3-4, 5 or more)

1993Absenteeism -shows the same relationships to risks as medical costs

1993Excess costs are related to excess risks

1994Cost changes follow risk changes (medical and pharmacy)

1995Risk combinations - the most dangerous predictors of cost

1996Low risk maintenance -an important program strategy

slide64

Key Research Learnings (Continued)`

1996Resource optimization -Changes in risk drive changes in cost when targeted according to specific risk combinations:

1997Benchmarking-By wellness score and company health score

1998Participation –Relates torisk and cost moderation

1998Program opportunities -In preventive services, low-risk maintenance, high-risk intervention and disease management

1999Presenteeism -Introduced as a measure of productivity and influenced by risks and disease

2000Total value of health -Define to the organization

2001 Natural flow –Established for risks and costs

2002Focus on the person – Primary and not the risk or the disease

slide65

Key Research Learnings (Continued)

2002 Cost changes follow risk changes -Time away from work

2003 Improved population health status-Resultfrom Employer sponsored programs

2004Proof of Concept -Must bend the cost trends

2004Percent participation and percent low-risk -Proposed as the important elements of a Health Management Scorecard

2005 Pre-retirement participation -Influences post-retirement

participation

2005 Presenteeism -Changes in costs follow changes in risks

2005 Interventions -Susceptible to severe “step down” participation

2006 and beyond

~Health Management -A Key Component in Health Consumerism~

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