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Health and Productivity Bottom Line for Employers. Sean Sullivan President & CEO. NDEP Diabetes at Work Workshop Spokane, WA ~ March 25, 2004. Mission. To establish the vital relationship of employee health to workplace productivity and, thereby, to organizational performance.

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Health and ProductivityBottom Line for Employers

Sean Sullivan

President & CEO

NDEP Diabetes at Work Workshop

Spokane, WA ~ March 25, 2004

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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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Average Hours Lost Per Week cost savingsBecause of Health Problems


Digestive Disease 6.24 9.72 15.96

Mental Health 9.57 3.72 13.19


Respiratory Disease 3.40 5.85 9.25

Injury 2.38 6.05 8.43

Musculoskeletal 6.86 1.38 8.24


Source: Dr. Wayne Burton, Bank One, Published in JOEM

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Measuring Performance Loss on the Job cost savings

  • 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)

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Frequency of Disease Management Programs cost savings

  • Cardiovascular (5)

  • Diabetes (5)

  • Respiratory (4)

  • Disability Management (3)

  • Weight Management (3)

  • Musculoskeletal (2)

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The New Value Model: Health and Productivity cost savings

  • 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

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Integrating Disease Management into cost savingsHealth & 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.

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Health & Productivity Management is cost savings

  • 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

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The Importance of Diabetes to Employers cost savings

  • 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

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Defining the Problem Correctly cost savingsto 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

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Obesity – the Twin Epidemic to Diabetes cost savings

  • 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

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IHPM’s Agenda for Diabetes cost savingsand 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