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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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Health Management as a Serious Business Strategy

Dee. W. Edington



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

New way to do Health and Productivity Management

In the United States and Throughout the World

UM-HMRC Ann Arbor


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)

  • Agenda Trend

  • 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

Why are You Here? Trend

Health Management as a Business Strategy

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

Health or Economics?

Healthy People or Productive People?

  • Two Questions Trend

  • Why do I have Health Insurance?

  • 2. Who is in the center of the Healthcare Industry?

Moving the Paradigm TrendFrom

“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

Section I Trend

The Do-Nothing Strategy

The Natural Flow Trend

of Health Risks and Behaviors

Health Risk Measure Trend


Blood Pressure

Body Weight


Existing Medical Problem


Illness Days

Life Satisfaction

Perception of Health

Physical Activity

Safety Belt Usage



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


Health Risks and Behaviors


Low Risk 0 to 2 high risks

Medium Risk 3 to 4 high risk

High Risk 5 or more high risks

2,373 (50.6%) Trend

4,691 (10.8%)

1,961 (18.4%)

5,226 (12.1%)





10,670 (24.6%)

1640 (35.0%)



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

The Natural Flow Trend

of Health Care Costs

37,701 (55.7%) Trend

High Cost


67,680 (19.0%)

26,288 (20.6%)

73,427 (20.6%)

Medium Cost






127,644 (35.8%)

23,043 (34.0%)



130,785 (36.7%)

32,242 (20.0%)

25,856 (20.3%)

160,951 (45.2%)

152,063 (42.7%)

Low Cost


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

Total Medical and Pharmacy Costs Trend

Paid by Quarter for Three Groups

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

- Trend




Costs Associated with Risks

Medical Paid Amount x Age x Risk

High Risk

Medium Risk

Low Risk

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

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?

Section II 60 Years

Key Business Concepts

To Build the Business Case

Business Concept 60 Years

Total Value of Health Status

Relative costs of poor health total value of health
Relative Costs of Poor Health: 60 YearsTotal Value of Health

Direct Costs:

Medical & Pharmacy

Indirect Costs:

Worker’s Compensation






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

Same Risk and Behavior Factors 60 Years


All the Outcome Measures

Medical/Drug Cost Comparison by Risk Status 60 Years


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

Total Disability Cost by Risk Status 60 Years

1998-2000 Mean Annual Costs

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

Estimated Loss of Productivity by Risk Status 60 Years

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

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

Business Concept 60 Years

Excess Costs follow Excess Risks

Excess Medical Costs due to Excess Risks 60 Years





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

Excess Disability Costs due to Excess Risks 60 Years





36% of Absence, STD, Worker’s Comp

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

Excess On-The-Job Loss due to Excess Risks 60 Years


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

Business Concept 60 Years

Total Value of Health Status to an Organization

Association of risk levels with corporate cost measures
Association of Risk Levels with Corporate Cost Measures 60 Years

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

Business Concept 60 Years

Stratification of the Population

for Intervention

Stratification In the Health Promotion Opportunity 60 Years

Health Promotion Opportunity

0.9 60 Years

Low intervention (71%)



High Intervention (29%)








































Predictability to be at High Cost

Business Concept 60 Years

Change in Costs

Follow Change in Risks

Change in Costs follow Change in Risks 60 Years

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.

Change in Presenteeism follows Change in Risks 60 Years

percent increased

Percent reduced

Risks Reduced

Risks Increased

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

Business Concept 60 Years

Change in Costs

Follow Engagement

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): to 1995

Participants: 2.4

Non-Participants: 3.6

1.2 Work Days




Work Day





2,596 participants


Yearly Average Disability Absence Days by Participation


Program Years

Schultz, Musich, McDonald,


JOEM 44(8):776-780, 2002

Section III to 1995

Health Management as a Serious Business Strategy

Next Generation Program

Healthy Companies

Zero Trend

  • Three Key Business Beliefs to 1995

  • 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

Strategies for to 1995

Population Management

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 Management?

  • 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

Health Management as a Serious Business Strategy Management?

Worksite Environment

Values and Beliefs

Workplace Policies

Benefit Design



Health Policies

Special Promotions

Employee Assistance

Risk Reduction Activities

Low-Risk Maintenance

Know Your Numbers

Physical Activity

Nutrition Awareness

Medical Facility


(Stratification by


Coaching Sessions

Low-Risk Maintenance

Disease Management

High-Risk Reduction

Health Advocate

Triage to Resources

Health Risk Appraisals



Environment interventions physical psycho socio

Management and Leadership of the Company and Unions Management?

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


Environment Interventions(Physical, Psycho/Socio)

Next Generation Benefit Design to Promote Consumerism Management?

  • 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

Next Generation of Management?

Individual Based Programs

Individual Stratification and Coaching Management?

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,…)

Coaching Strategy for Individual Intervention Management?

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

Next Generation of Management?

Population Based Programs

Population based programs

Population Programs Orientation Management?

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 Management?


Hats and T-Shirts Management?

Cash, debit cards

($25 to $200)

Premium Reductions/Premium Plan

($600 to $2000)

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


Measurement: Proof of Concept Management?(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 Management?

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

Summary Management?

Health management next generation programs a serious business strategy

Outcome Measures Management?

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,


Population -


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

Thank you for your attention. Management?

Please contact us if you have any questions.

Phone: (734) 763 – 2462

Fax: (734) 763 – 2206

Email: [email protected]


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

25 Years of Key Learnings Management?

from the

University of Michigan

Health Management Research Center

(1980 to 2006)

Key Research Learnings from HMRC Management?

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


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

Key Research Learnings (Continued)` Management?

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

Key Research Learnings (Continued) Management?

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


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~