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Managing Total Risk & Total Cost: Workers Compensation & Employee Benefits. Why Wellness, Why Now? . May 17, 2011 Joe Picone, Chief Claim Officer, Willis. Agenda . Cost of Workers Compensation and Employee Benefits Today’s Workforce Employee Benefits vs. Workers Compensation vs. Wellness

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managing total risk total cost workers compensation employee benefits

Managing Total Risk & Total Cost: Workers Compensation & Employee Benefits

Why Wellness, Why Now?

May 17, 2011

Joe Picone, Chief Claim Officer, Willis

agenda
Agenda
  • Cost of Workers Compensation and Employee Benefits
  • Today’s Workforce
  • Employee Benefits vs. Workers Compensation vs. Wellness
  • The Wellness Solution
wc lost time claims indemnity
WC Lost Time Claims: Indemnity

NCCI, WC Symposium 2010

wc lost time claims medical
WC Lost Time Claims: Medical

NCCI, WC Symposium 2010

wc medical costs rising
WC Medical Costs Rising

NCCI, WC Symposium 2010

presenteeism
“Presenteeism”
  • The measurable extent to which health symptoms, conditions and diseases adversely affect the productivity of individuals who choose to remain at work.
why is health care so expensive employee benefits version
Why is Health Care So Expensive? (Employee Benefits Version)
  • Rise in spending for treated diseases (37%)
        • Innovations / advances in technology
        • New / better medicines
        • New treatments
        • Delivery costs of newborns have increased 5X (1987-2002)
      • Rise in prevalence of disease (63%)
        • ¾ of all spending in US focused on patients who have one or more chronic conditions.
        • Chronically ill patients receive only 56% of clinically recommended preventive health services.
        • 27% of the rise in health care costs is associated with increased rates of obesity.
why is health care so expensive workers compensation version
Why is Health Care So Expensive? (Workers Compensation Version)
  • Increasing Severity – Decreasing Frequency
  • Attempts to maximize income by some
  • Failure to properly manage utilization
  • Wrong measures: savings vs. paid
  • Trends in our society:
        • Obesity
        • Age
        • Cultural
        • Mental Health
how much time do we take to research our own health decisions
How much time do we take to research our own health decisions?

Source: NBGH online survey, September 2007 N=1,558

why it s important to understand generational differences
Why It’s Important to Understand Generational Differences
  • Boomers are larger than two previous generations
  • One out of every three adults over 21 is a boomer
  • Boomers have tremendous work ethic
  • 10,000 Boomers per day are turning 50
  • 13,000 people will reach the age of 60 every day for the next 20 years
  • Boomers will work longer than in past
  • By 2050, the median age worldwide will be 38, up from 28 in 2000 and 24 in 1950.
  • In the US, the median age in 2050 will be 41, in Italy it will be 53!
fact we have an aging workforce that
Fact: We have an aging workforce that:
  • Likes to work hard - motivated
  • Independent
  • Will retire later
  • Will be dependent on dual incomes
  • Are entitlement dependent
  • Are generally optimistic about how long they will live and how they will live
  • Have been hit hard by recent recession in home values and savings for retirement
what we anticipate will happen to our workforce
What We Anticipate Will Happen To Our Workforce
  • Low claim frequency
  • High claim severity
  • Increased falls
  • Longer healing times
  • More severe musculoskeletal disorders
  • Certain claim types will increase
the years ahead could be the best for your workers
The years ahead could be the best for your workers…
  • Laura Ingalls Wilder wrote her first book at the age of 65.
  • Colonel Sanders took to franchising Kentucky Fried Chicken Restaurants, starting at age 65.
  • Orville Redenbacher launched famous popcorn at age of 63.
  • Ronald Wilson Reagan became President of United States at age of 70.
can we agree on one major point
Can we agree on one major point?
  • Our Workforce is Getting Older!
cost of obesity duke university medical center study
Cost of Obesity: Duke University Medical Center Study

Obese workers filed 2X the number of workers' compensation claims

Obese workers had 7X higher medical costs

Obese workers lost 13X more days of work from work injury or work illness than did non-obese workers.

The average medical claim costs per 100 employees were $51,019 for the obese and $7,503 for the non-obese.

John Hopkins and NCCI released similar studies

20

obesity workers compensation duke study
Obesity & Workers Compensation Duke Study

Claims Per 100 FTEs

Lost Work Days per 100 FTEs

Truls Østbye, MD, PhD; John M. Dement, PhD & Katrina M. Krause, MA (2007). Obesity and Workers' Compensation Results From the Duke Health and Safety Surveillance System, Arch Intern Med.167:766-773.

obesity workers comp
Obesity & Workers Comp
  • Claims most strongly affected by Body Mass Index (BMI):
    • Lower extremity
    • Wrist or hand
    • Back
    • Pain/inflammation
    • Sprain/strain
    • Contusion/bruise
    • Falls/slips
    • Lifting
    • Exertion

Truls Østbye, MD, PhD; John M. Dement, PhD & Katrina M. Krause, MA (2007). Obesity and Workers' Compensation Results From the Duke Health and Safety Surveillance System, Arch Intern Med.167:766-773.

can we agree on two major points
Can we agree on two major points?
  • Our current workforce is (1) older and, (2) more obese when compared to past years.
non english languages spoken at home
Non-English Languages Spoken at Home

“Ljestve moraju biti ispravno osiguran prije….” That was an important safety message but did you understand it?

33

can we now agree on three major points
Can we now agree on three major points?
  • Our current workforce is (1) older (2) more obese and (3) is experiencing an increase in cultural (fear) barriers.
slide36

What has the “Employee Benefits” Side Identified as the Top 2 Drivers of Overall Health Care Costs?

Stress Mental Health

More workers are absent from work because of stress & anxiety than because of physical illness or injury

work related stress is a growing health concern
Work-related Stress is a Growing Health Concern
  • 33% of the 40.2 million workdays lost by illness and injury are from stress, anxiety, and depression.
  • Stress can be a hidden trigger behind cardiovascular problems, musculoskeletal disorders, obesity, depression, and violence.

National Safety Council - News Release September 21, 2005

impact of mental illness
Impact of Mental Illness
  • Recent economic trends have affected stress levels
  • Recession
        • Layoffs, foreclosures, loss of investments & savings
        • Impact on disposable income
      • Increased risk of stress-induced health concerns
        • Depression
        • Anxiety
        • Compulsive behaviors (over-eating, excessive gambling, spending)
        • Substance abuse

Substance Abuse and Mental Health Services Administration, April 2009

effect of single risk factors on sick leave absenteeism

Mental Health

Back Pain

Stressed

No Exercise

Obesity

0%

50%

100%

150%

Effect of Single Risk Factors on Sick Leave Absenteeism

150%

140%

131%

118%

116%

N = 35,451

Source: Serxner, S., et al., (2001). The impact of behavioral health risks on worker absenteeism. JOEM, 43(4), 347-354

can we agree on four major points
Can we agree on four major points?
  • Our workforce is (1) older (2) more obese (3) more chance of encountering a language barrier and, (4) has more mental health issues.
why wellness and wc have not mixed
Why Wellness and WC Have Not Mixed
  • Many employers haven’t seen correlation
  • Wellness typically focuses on Employee Benefits only
  • Some companies keep WC in Risk Management and Employee Benefits with HR…Wellness Message Not Shared
  • Carriers slow to make correlation
strongest force in universe resistance to change
Strongest Force in Universe – Resistance to Change
  • Why don’t people change?
  • Think of one “risk” factor you could eliminate:
    • Why don’t you eliminate it?
    • What are cons of not making change?
    • What are pros of making change?
    • What support can you get?
rate your driving skills
Rate Your Driving Skills
  • Excellent
  • Above Average
  • Average
  • Below Average
  • Poor
optimistic bias
Optimistic Bias
  • “An earthquake of 9.2 won’t hit here?”
  • “The Titanic is the greatest ship ever made, it’s unsinkable.”
  • “I’ll quit tomorrow or soon.”
  • “I don’t have the time to exercise.”
  • “It’s so hard to eat good when you’re traveling.”
health risks wc costs

Low OWS

Smoking

Poor Health

No Exercise

Low Life Satisfaction

Health Risks & WC Costs

1989%

1243%

836%

556%

255%

0%

500%

1000%

1500%

2000%

Source: Musich, S., et al., (2001, June). The Association of Health Risks with Workers’ Compensation Costs, JOEM, P. 534-541

N = 3,388 X 4 Years

slide47

Analysis of Risks, Age and Cost

Surviving the Perfect Storm; D.R. Anderson, PhD

Source: StayWell Data analyzed by University of MichiganN=43,687

the wellness solution
The Wellness Solution

Converging healthcare trends affecting employers:

  • Ballooning costs – demand for new solutions
  • Increased focus on productivity
  • Talent retention / competition
  • Consumerism, cost sharing
  • Aging workforce

Shifting costs does not always lead to lower costs or help address the problems causing increasing costs

why now
Why Now?
  • "There's no question that workplace wellness is worth it.  The only question is whether you're going to do it today or tomorrow.  If you keep saying you are going to do it tomorrow, you'll never do it.  You have to get on it today."
  • - Warren Buffett
          • Focus on productivity – doing more with less
          • Proactive cost-containment approach
          • Investment in human capital
          • Increased stress levels due to economic climate
wellness implementation barriers still remain
Wellness Implementation Barriers Still Remain
  • Willis Wellness Survey
  • The op three barriers to implementing a wellness program: 
    • Budget constraints 61%
    • Not enough time/staff to devote 42%
    • Employees in various geographic locations 25%

Think investment - not cost.

what are employers doing
What are Employers Doing?
  • Willis Wellness Survey

Weight management 64%

Physical activity 65%

Smoking cessation 71%

Medical screenings 49%

General health website 52%

Disease management 47%

Periodic health fairs 41%

Health risk assessments 50%

management s perspective
Management’s Perspective
  • Willis Wellness Survey
  • 94% of leadership is committed to improving employee health.
  • 94% of management believe that employee health can be directly linked to absenteeism and productivity.
  • 86% of management are committed to improving the work-life balance of employees.
willis wellness strategy
Willis – Wellness Strategy

Productivity

Moral

Employee

Engagement

Work-Life

Balance

Absenteeism

Turnover

Healthcare

Cost

Workplace

Accidents

Wellness Strategy Goals

worksite wellness
Worksite Wellness

A strategic business initiative designed to maximize the health of the workforce.

  • Policies & Cultural Support
  • Early Identification of Risk
  • Behavior Change
  • Ongoing Efforts to Maintain & Improve Health
  • More than a Vendor Relationship
conclusion
Conclusion
  • Do Homework: Analytics on Obesity, Aging, Mental Health Impact, Cultural Barriers
  • Know your Demographics: Risk Pool
  • Combine Disability, Medical and WC data
  • Bridge Gap: Joint Strategy with Workers Compensation and Employee Benefits
  • Wellness Strategic Risk Planning Session
  • Measure ROI
managing total risk total cost wc employee benefits

Managing Total Risk & Total Cost: WC & Employee Benefits

Why Wellness, Why Now?

April 12, 2011

Questions?