2013 Voluntary Benefits Special Report
The business case for better health management programs
IBI offers tools to identify causes and solutions for presenteeism
By Michael J. Moody, MBA, ARM
Despite the fact that the cost of health care is a worldwide problem, much of the discussion about it is occurring in the United States. The reason for this is simple; we are paying much more than any other country and, by most accounts, receiving less for it. This topic has frequently been the most popular at risk management and human resource conferences, seminars and Webinars. However, at this point, while the interest is high, businesses have been having difficulty justifying the cost associated with controlling these costs. An inordinate amount of time and effort has been spent in the hopes of finding some financial justification for aggressive loss mitigation. To date, however, this search has proven quite futile. But recent research may help to strengthen a more aggressive position.
One of the keys that any business needs to consider in this important justification phase is to document the entire cost aspects. A movement to a more holistic approach is helping businesses zero in on the true cost of the effect of poor health on a company's workforce.
Taking a broader view
Part of the problem with documenting the cost of poor health is that businesses frequently limit the view only to the direct cost of health care. While most people who follow this topic for any length of time realize that there are many aspects of the ultimate cost of poor employee health, there have been few, if any, authoritative approaches to determining this impact. This changed, however, when the Integrated Benefits Institute (IBI), a nonprofit health and productivity research organization, announced that they had developed a methodology that could provide this type of information. The information that they uncovered shocked some industry experts.
IBI has indicated that in total, the national impact of poor health in the United States is $576 billion per year. This is an attention-grabbing number and was one of the first attempts to view the total loss that results from poor health. The institute notes that many American corporations have publicly stated that their workforce was their greatest asset. If this is the case, U.S. employers must begin to consider just how devastating ill health can be on an organization and the impact it has on their greatest asset. IBI also notes that investing in a healthy workforce can have a profound impact on the bottom line of most companies.
Estimates from IBI have been broken down into several broad categories of costs that are as follows:
• Wage replacement, including incidental absence due to illness, workers compensation, short-term disability and long-term disability = $117 billion.
• Medical and pharmacy, including workers compensation, employee groups medical treatments, and employee group health pharmacy treatments = $232 billion.
• Lost productivity, including absence due to accident and illness, and presenteeism = $227 billion.
In addition to providing a total U.S. estimate, IBI has taken the extra step of providing the tools so that employers can demonstrate the full return on anticipated investments needed to make necessary changes. The institute has developed what it is calling "ALPHA tools," which are proprietary measurement and modeling tools to assist employers in assessing benefit program performance as well as the health and productivity of their workforce.
IBI currently has four tools that they are making available to the general public via membership in the IBI.
Current ALPHA tools include the IBI ACE (absence cost estimators), which predicts absence-related loss productivity costs for a company, occupation group or even a pool of claimants. Another tool is known as IBI Health & Productivity Snapshot, which requires only minimal amounts of data in order to provide the estimated impact of chronic conditions on your workforce and the resulting financial results. Also included in IBI's tool chest is the Benefit Intelligence, which allows employers to benchmark the performance of their disability and absence programs against their peers. The final tool is known as IBI HPQ-Select, which helps employers expand their insight into the chronic conditions that drive health care costs and productivity losses for their company's workforce. By using the HPQ-Select tool, IBI believes that they can help an employer focus its health interventions for the greatest bottom-line returns. Taken together, the four new tools that are available at IBI can help employers better determine the current state of their programs as well as the most cost-effective method to improve them.
All present and accounted for
The new information from IBI should be an excellent addition to the body of knowledge regarding productivity of the U.S. workforce; however, there were several surprising results in the information—not the least of which was that 39% of the costs were allocated to overall loss of productivity. Most industry experts will quickly see how this relates to loss of productivity due to accidents and illnesses, but the issues surrounding presenteeism are much less understood. Presenteeism as used by IBI is "when employees are at work but not performing at their peak." Most people can relate this definition to the employee who has the flu, but decides to come to work anyway. However, this type of presenteeism is just the tip of the iceberg. In reality it is much more complex.
Research that had been completed prior to the IBI information shows just how complicated this matter is. Prior to the IBI research, a much more common definition for presenteeism was "on-the-job productivity loss attributed to poor health or other personal issues." Typically, it is quite easy to see the effects of poor health in contributing to presenteeism. However, the "other personal issues" is much more difficult to get one's arms around; yet, it may account for the lion's share of the cost of lost productivity. According to a 2010 study by The Health Enhancement Research Organization, personal problems and financial concerns had a substantial contribution to presenteeism. Highest among those factors that were most often sighted was stress.
While there is much more to learn about presenteeism, some of the recent findings can prove helpful to all employers. For example, presenteeism is the greatest for those ages 30 to 49, women, separated/divorced/widowed employees, and those with a high school degree or some college. Clerical/office workers and service workers had the highest degree of presenteeism. Some experts have suggested that lowering presenteeism will require the employers to have more realistic expectations of workers, help employees prioritize, and provide sufficient technological support. In addition, financial stress and concerns may warrant additional financial planning services be made available to employees.
U.S. employers need to take a fresh look at the cost of poor employee health and the overall effect on their business. For many years, it has not been a priority for most employers due in large part to the fact that, while there were mountains of anecdotal evidence, it was difficult to develop a compelling business case for allocating needed resources to resolve these issues. However, now that IBI has made available not only compelling research, but also the tools for companies to begin to establish a compelling business case, employers should begin to develop more aggressive health management programs.
In today's world economy, every organization needs to be doing everything in its power to increase the productivity of its staff. And improving the overall health of its employees is one of the best ways to do this. Continued efforts must be undertaken to assure that U.S. employees are among the most productive in the world. Emphasis on healthy workers is one of the best methods to assure that this productivity drain is reduced, thus providing a long-term, sustainable platform for continued improvement.