Maximizing Employee Health and Productivity Disease Management Colloquium

Maximizing Employee Health and Productivity Disease Management Colloquium May 11, 2006 Ron Loeppke, MD, MPH

Integrated Health and Productivity Enhancement • Converging Trends in the Market (When) • Clinical/Financial Business Case (Why) • Integrated H&P Solutions (What) • Employer Case Studies (How)

Converging Healthcare Trends Affecting Employers Spiraling costs driven by: • Epidemiologic Trends (aging workforce, BOI/BOR) • Significant quality gaps • Rising unit costs • Complex benefit designs Disconnected/fragmented control levers • Providers, employers, health plans, patients • Current “non-system” too fragmented and uncoordinated Simultaneous Demand side and Supply side opportunities • Employer appetite for more engagement of total population • Consumer movement and Physician Pay for Performance

Corporate Profits vs. Rising Health Benefit Costs $ Billions All U. S. Corporations Source: The National Data Book and IRS Data Reports

The Real Problem: The Full Cost of Employee Illness 33% Medical & Pharmacy Costs Personal Health Costs *$6, 020 PEPY Medical Costs Salary Continuation Overtime Health-related Productivity Costs Total PEPY = $18, 020 Workers’ Comp Productivity Costs *2003 PEPY Avg. Absenteeism 66% $12, 000 PEPY Medical Care Pharmacy Hospitalization Behavioral Health Presenteeism STD LTD Turnover Temporary Staffing Administrative Costs Replacement Training Off-Site Travel for Care Employee Dissatisfaction Customer Dissatisfaction Variable Product Quality Sources: Loeppke, et. al. , JOEM, 2003; 45: 349 -359 and Brady, et. al. , JOEM, 1997; 39: 224 -231

Health and Human Capital “Just as we have a corporate priority on enhancing our financial capital and economic assets of our company, we must have a corporate priority on enhancing the human capital and health assets of our company. ” “The health of our workforce is inextricably linked to the productivity of our workforce and therefore the health of our bottom line. ”

CFO’s Concern Over Rising Healthcare Costs IBI CFO Study 2005

Linking Health, Productivity & the Bottom Line Source: IBI CFO Study 2005

Ballooning Total Health Costs Tinkering with the peripheral financial transactions of healthcare does not lower Total Costs—it only shifts costs Costs However… Improving the clinical transactions of healthcare by better managing the burden of illness and reducing health risks does lower Total Costs as well as improves the health and productivity of the workforce. The International Value Proposition

Transforming the System Old Way New Way § Medical Cost Mgt § Quantity/Cost of Service § Illness & Injury § Unaligned Incentives § Total Cost Mgt § Quality/Value of Service § Health and Productivity § Aligned Incentives Approach § Permission to Drs & Pts § Health Benefit Mgt § Fragmentation § Patients are passive recipients § § Results § Lacks Patient/MD Rewards for Clinical Results § EEs “Use it or Lose it” § Drs not rewarded for Quality § Employers “Pay for Volume” § Shared Patient/MD Rewards for Clinical Results § EEs “Use Wisely & Save” § Dr. rewarded for Quality Care § Employers “Buy Value” Focus Empowerment of Drs & Pts Health Care Mgt Integration / Coordination Patients are active participants

Integrated Solutions Must Address the Health Continuum Population Health Management 15% members = 85% cost Well At Risk • Prevention • Screenings • Health Risk Assessment • Lifestyle Modification Programs Acute—Self Limiting • Nurse Advice Line • Web Tools Disabling 85% members = 15% cost Chronic Illness • Disease Management • Empowering Education and Support Conditions Complex Care • Complex Case Management • Predictive Modeling

Integration With Quality Focus Fragmented - Uncoordinated Health Mgt Demand Mgt Case Mgt Employee-Patient Disease Mgt Disability Mgt Integrated - Aligned Integrated Care Disease Health Mgt. Patient Mgt. RN/MD EE-Patient RN/MD Demand Mgt. Disability Mgt. RX Case Mgt.

Example Percentages of Integrated Health & Productivity Solution % of Population 1% Example of 100, 000 People in a Population 1000 Lives Complex Case Management 25% 14, 000 Lives Disease/Demand Management 15% 15, 000 Lives Health 70% 70, 000 Lives % of Claims Cost Mgmt 50% 15% 10%

Prevention An investment to be leveraged… Rather than a cost to be justified.

Mortality Risk Factors in the United States

Obesity Trends* Among U. S. Adults BRFSS, 1991, 1996, 2003 1996 1991 2003 (*BMI 30, or about 30 lbs overweight for 5’ 4” person) No Data <10% 10%– 14% 15%– 19% 20%– 24% Center for Disease Control and Prevention-- 2005 Data ≥ 25%

Full Costs of Poor Health: Total Value of Health Medical & Pharmacy Presenteeism LTD STD Absenteeism Edington, Burton. A Practical Approach to Occupational and Environmental Medicine (Mc. Cunney). 140 -152. 2003

Health Risk and Absenteeism Work Days Lost/Person/Year 12. 6 Days 9. 3 Days 6. 4 Days 1 Risks 3 Risks 4+ Risks Tsai, et al. JOEM: Vol. 47, No. 8, August, 2005

Health Risk and Disability STD Days/Yr 13. 16 Days 5. 28 Days 2. 45 Days 0 -1 Risks 2 -3 Risks 4+ Risks Source: Wayne Burton, MD, IHPM North American Summit Meeting 2000

Health Risk and Presenteeism % of Workplace Productivity Loss 26. 9% 20. 9% 14. 7% 0 -2 Risks 3 -4 Risks 5+ Risks Source: Burton, et al, JOEM: Vol. 47. No. 8, August, 2005

Health Risks and Behaviors: X hours lost Source: Burton, Conti, Chen, Schultz, Edington. JOEM. 41, 863 -877, 1999.

Disease States: X hours lost Source: Burton, Conti, Chen, Schultz, Edington. JOEM. 41, 863 -877, 1999

Change in Productivity follows Change in Risk

Cost reduced Cost increased Change in Costs follow Change in 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 Source: Updated from Edington, AJHP. 15(5): 341 -349, 2001.

Health-Related Productivity Loss vs. Net Income

Profitability Through Health-Related Productivity Enhancement

Employer Case Study Integrated Health & Productivity Enhancement

Who Is Incurring the Medical Costs? % of Population 1% 15% 30% 100% $12, 001, 184 Medical/Rx Costs Site 40 Members 606 Members $2, 921, 075 $ 9, 131, 472 1212 Members $ 10, 767, 963 4039 Mbrs % of Claims $ 24% 75% 89% 100%

Top Medical Conditions by Total Medical/Pharmacy Costs Musculoskeletal Normal Delivery Pregnancy complications Fetal Immaturity Gynecological disorders Gallbladder disease Abdominal Pain Obesity Procedure complications Headaches (incl Migraine)

Corporate Wide vs Site Prevalence of Claims by Medical Condition Company Wide Boise Back Pain 2. 8% 5. 0% Headaches/ Migraines 2. 0% 4. 8% Diabetes 1. 4% 2. 8 Asthma 1. 9% 2. 6% Fetal Immaturity . 07% 1. 4%

Company-wide vs. Boise Site Disability Experience Site 2002 1034 Average Length of Disability and Days per 100 Employees h ALOD = Average Days Absent - from date of disability to claim end date h Baseline = 1999 Full Year Results h Data has been annualized h STD closed claims only h 2002 ALOD is 14% higher than baseline h Days per 100 employees is 26% higher than baseline Site 2002 56. 5 Claims Closed: 01/01/2001 to 09/30/2001 01/01/2002 to 09/30/2002

Medical and Disability Costs* Related to Medical Conditions ٭ Includes direct disability costs, but does related absenteeism, presenteeism and productivity notinclude costs/losses (per employee per year) Dollars PEPY *Disability Medical

Aligning Incentives Increased Participation from 22% to 65% On-site Biometric Screening and Health Risk Assessment Incentives: § Initial = $15 Gift Certificate § $300 off next year’s annual health plan premiums To receive the ultimate incentives, the member: § If moderate or high risk, must participate in Lifestyle Management program § Engage in quality EBM initiatives with their physicians for better Care Management of current medical conditions § Or in Low Risk category

HRA Risk Stratification of DIRECTV Population Corporate vs. Boise Health Risk Factors Corporate (Excluding Site) (276 High Risk EEs out of 1281 EEs taking HRA) #High Risk % of Population High Risk Site (445 High Risk EEs out of 817 EEs taking HRA) #High Risk % of Population High Risk Blood pressure (>150/90) 61 5% 117 14% Pre-diabetes (FBS > 110) 5 <1% 7 <1% Cholesterol (>240; >190; >40) 134 10% 172 21% Stress management 5 <1% 26 3% 63 5% 178 22% 54 4% 153 19% Smoking Weight management (M-BMI >36; F-BMI >35)

Health & Productivity Survey Results Corporate Wide Average Per Ill Worker/Year Medical Condition Allergies Obesity Depression Pain Total for all 1, 864 Workers/Year Prevalence % in Treatment Total Days Lost Total Dollars Lost 38. 5% 30% 4 $1, 275 3, 151 $916, 161 7. 0% 36% 20 $5330 2, 496 $703, 840 10. 4% 34% 10 $2, 473 1, 875 $479, 675 8. 6% 35% 10 $2, 879 1, 626 $466, 544

Health and Productivity HPQ Survey Results § Data cross-matched with objective supervisor performance data from workplace § Results showed: • *HPQ presenteeism scale significantly predicts supervisor ratings of performance • About 10% of workforce has complex co-morbidity issues driving significant productivity losses due to presenteeism • Multiple conditions correlated to lower productivity Source: Kessler, Hymel, Loeppke, etal. JOEM. Vol 46 (6). June, 2004.

HRA related to Cost Trends Relative Increase in Medical/Pharmacy Costs in 2005 4 X 2 X 1 X 0 HRAs 1 HRA 2 HRAs

Integrated Health & Productivity Enhancement In the Workplace Centers for Disease Control (CDC) Grant • Three year research study by Cor. Solutions and Cornell University to develop and implement new method of valuing an employer’s investment in the health of its workers • Determine whether DM and health risk reduction programs generate substantial ROI by reducing spending and absence, improving productivity • Job-specific presenteeism/absenteeism multipliers

The Bottom Line Good Health is Good Business