Allied HR Consulting

Health Pays

(The following was published in Northwest Business Monthly Magazine, December 2006)

Is your business scrambling to cover lost productivity while your employees are absent due to health issues?   Productivity losses due to employee illness have been well and frequently documented.  Now several studies have confirmed and revealed the breadth of the problem.  According to Partnership for Prevention, a member organization of businesses, nonprofits, and government agencies which advances policies and practices to prevent disease and improve health, these studies show that the indirect costs (absenteeism, etc) of poor health can be two to three times the direct medical costs.  And, productivity losses due to personal and family health problems cost U.S. employers $1,685 per employee per year, or $225.8 billion annually.  As an employer, how much did you lose? 

When employees are healthy, they use less sick time and require less medical care.  Employers, including governmental employers, pay nearly all - private health insurance.  Cost of health care has increased, and employers bear the burden of paying these increased costs unless they choose to pass the costs along to employees, or, worse yet, decide not to provide insurance coverage at all.  How do employers know whether they are getting the biggest return on their health insurance investment?  Research shows that purchasing very specific preventive services, along with coordinated policies and communications, can be effective in improving the health of employees.  Interestingly, for all the insurance provided, many employers do not cover the preventive services known to provide a cost savings and to keep employees healthy.

Why should employers put health care dollars into prevention?  A business case, supporting the essential role employers have in helping manage our nation’s health issues, has been made by Jeff Harris, M.D., MPH, MBA, Associate Director of the University of Washington Health Promotion Research Center, with support by the Centers for Disease Control  and Prevention (CDC) and the National Cancer Institute.  Dr. Harris has extensively studied health research, including our own state’s health issues. 

Harris has summarized the research in the published document titled “Employment-Based Prevention of Chronic Disease in Washington State, 2005,” Harris states that chronic diseases, including cancer, diabetes, heart disease, lung disease and stroke, make up 40 percent of total health expenditures, 70 percent of deaths, and are the leading cause of missed days of work and poor performance.  More importantly, these diseases are increasingly attributed to lifestyle behaviors and are, therefore, preventable.  Some of the key behaviors that contribute to death are tobacco and poor diet/inactivity.  So it makes sense for employers to provide preventive services that focus on these key behaviors and common chronic ailments whether they offer a group insurance benefit plan or not.

Employers who do provide group insurance plans generally underpurchase key clinical preventive services that offer the greatest value.  In addition, Harris says Washington State data reveal that insured workers themselves are underusing those same key, high-value clinical preventive services and are not engaging in health-related lifestyles that could prevent, delay, or manage chronic disease.  For example, only 30% of employed 50- to 64-year olds in Washington State had a flu shot in the past year.

According to Harris, those preventive services that provide high value include helping employees to stop smoking, providing flu shots, and providing screenings for breast, cervical, and colon cancer, as well as high blood pressure, and high cholesterol.  Smoking cessation and flu shots reduce claims/medical costs.  They also save more than they cost, when productivity gains are taken into account. 

Together, employer practices and policies along with change in employee behaviors can result in improved employee health.  Dr. Harris has developed a comprehensive list of those effective measures that employers can take to help reduce chronic disease and their own medical costs.  He recommends three actions employers can take: 

First, buy, adopt, and implement benefits, policies, and programs proven to work:

• Smoking cessation counseling along with medications, including over-the-counter nicotine replacement therapy
• Influenza vaccinations
• Breast, cervical, and colorectal cancer screening, and blood pressure and cholesterol screening and treatment.
• Physical activity and healthy eating promotions, with emphasis on weight control.  Improve the availability of healthy food choices on-site and install point-of-decision reminders regarding food content.
• Smoking bans and reminders to use the stairs. 

Second, align employee incentives toward receiving services and participating in programs:

• Reduce or eliminate cost sharing for effective and cost-effective prevention.  Reducing employee out-of-pocket costs has been proven to increase use of breast cancer screening, tobacco cessation treatment, and vaccinations.  Reducing or eliminating employee costs for other known high-value services— such as screens for blood pressure, cervical cancer, cholesterol, and colorectal cancer—should increase their use as well.

• Provide easy access and use of benefits.  Reducing structural barriers, by increasingly close-by locations, expanded hours of operation, and availability of child care—has been shown to increase use of breast and colorectal cancer screening.  Creating or improving access to places for physical activity, including walking, also increases the potential for employees to participate.

Third, communicate “Why” and “How” information and track results:

• Market health-promoting insurance benefits and programs to your employees as you would your products to your customers.  Offer compelling insight, rationales, and guidance for using health promotion services and activities.  Use standard marketing and communication principles to help motivate employee participation, and communicate about why and how to use the benefits offered through insurance plans as well as company policies and programs.
• Assess employee needs, track results, and make adjustments.  Anonymously measure employee behaviors, such as smoking and cancer screening, to determine whether your current benefits, policies, and programs are working and make adjustments as needed.

Researchers have studied the financial impact of worksite health promotion programs.  Partnership for Prevention states that out of 73 published studies, there is an average $3.50-to-$1 savings-to-cost ratio in reduced absenteeism and health care costs.  Also a statistical review of 42 published studies of similar programs show an average 28% reduction in sick leave absenteeism, 26% reduction in health costs, 30% reduction in workers’ compensation and disability management claims costs, and an average $5.93-to-$1 savings to cost ratio.

Taking charge of your employee’s health, and therefore your business health, is one place to start.  However, the United States Task Force on Community Preventive Services reminds employers that the community your employees live in affects their health and productivity as well. To promote the health of employees, businesses can partner with city councils, school boards, and other local and state organizations as well. At the community level, for example, businesses can support community water fluoridation and school vaccination programs or promote school-based physical education programs and higher tobacco taxes.

To consider implementing changes that will improve your productivity and return on health dollars spent, consult the following organizations: 

• U.S. Preventive Service Task Force.  Website:  www.ahrq.gov
• Partnership for Prevention:  Website.  www.prevent.org.
• Task Force on Community Preventive Services.  Website:  www.thecommunityguide.org

These organizations provide free “employer ready” programs and communications.