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Making the Wellness Case to the CFO

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  • 1. Connecting Health to BusinessThomas Parry, Ph.D.President Integrated Benefits Institute
  • 2. About IBI• National, not-for-profit corporation• 700+ corporate sponsors• Employers: 90% of IBI’s members• Liberty Mutual IBI Board member• IBI’s mission. Demonstrate the business value of a healthy workforce through: – Independent HPM research – Measurement and modeling tools – Forum for sharing ideas and experience
  • 3. New Employer Realities• Show the C-suite the value of improved workforce health• Healthcare reform: the value of a healthy workforce or the cost of healthcare?• Dead end: attempting to control claims costs in separate program silos• Looking for best strategies to improve workforce health, reduce lost time and enhance productivity• Limited data, time and dollars
  • 4. What’s at Risk for Employers?
  • 5. The Full Costs of EE Health -- Auto Manufacturers• Estimates based on IBI’s new FCE modeling tool• 171,250 employees• Employer-paid claims costs only• Published as IBI Quick Study in February 2011
  • 6. Health Costs – The Traditional View Medical$500 Total = $509 MM$400$300$200$100 $0 Medical (EE) Medical (family)
  • 7. Health Costs – Adding Pharmacy Medical Pharmacy$500 Total = $623 MM$400$300$200$100 $0 Medical (EE) Medical (family)
  • 8. Health Costs – Adding Lost-Time Pay Medical Pharmacy Wage replacements$500 Total = $824 MM$400$300$200$100 $0 Medical (EE) Medical (family) Time-loss pay
  • 9. Health Costs – Adding Absence Impact Medical Pharmacy Wage replacements Absence LP$500 Total = $923 MM$400$300$200$100 $0 Medical (EE) Medical (family) Time-loss pay Lost productivity
  • 10. Health Costs – Adding Performance Impact Medical Pharmacy Wage replacements Absence LP Performance LP$500 Total = $1.29 B$400$300$200$100 $0 Medical (EE) Medical (family) Time-loss pay Lost productivity
  • 11. Full Cost Components 28% 48% 8% 16% Medical Wage replacements Absence LP Performance LP
  • 12. Quantifying Financial Lost Productivity* • Lost productivity – “the financial impact on a company when employees are not at work and fully functioning” • Two components: absence and decrements in job performance (“presenteeism”) • The Financial Impact of Absence – Wage replacement payments – “Opportunity costs” of ER’s response • The Financial Impact of Presenteeism – Wage and benefit “overpayments” – Opportunity costs of resulting lost time*Source: Sean Nicholson, Mark Pauly, et al., "Measuring the Effects of Work Loss on Productivity withTeam Production," Health Economics 15: 111-123 (2006).
  • 13. Full Costs – Medical, Pharmacy, Absence and Presenteeism $400,000 $350,000 $300,000Cost per 1000 EEs $250,000 $200,000 $150,000 $100,000 $50,000 $0 Medical Pharmacy Absence lost prod Presenteeism lost prod
  • 14. Co-Morbidity and Lost Time Absence lost time Presenteeism lost time 40 35 30Lost days 25 20 15 10 5 0 1 2 3 4 5 6 7 8 9 10+ # of chronic conditions
  • 15. The View from the C-Suite
  • 16. Making Health the CFO’sBusinessThomas Parry, Ph.D.President Integrated Benefits Institute
  • 17. Key Research Questions• How do CFOs view workforce health as a priority in their business?• What’s the relationship between health of EEs and health of the company?• What types and sources of information are considered credible?• How do CFOs see VBBD?• What kind of information is needed?
  • 18. Health as a corporate priority 8% 8% 6% 19% 24% 24% 49% 56% 48%69% 68% 75% 20% 20% 19% Promoting healthy A culture of health is a key Comprehensive health behaviors is a company company goal coverage is important to priority company financial strategy Strongly Agree Agree Neither Agree Nor Disagree Disagree or strongly disagree
  • 19. Leaders and Non-LeadersH+P Leaders The uninitiated 29% 53% 18% The ambivalent
  • 20. Workforce productivity as "one of the most important factors" for … 62% 45% 8% Ability to respond to Financial performance Reputation w/customer/market needs lenders/investors
  • 21. “Very important” to workforce productivity Maintaining skilled 75% workforce Controlling staff size 61%Increasing EE satisfaction 51% Controlling turnover 48% Providing EE training 42% Making capital 37% investments Health Improving EE health 30% Other 22%
  • 22. % CFOs that say EE health is "veryimportant" to workforce productivity 48% 23% H+P Leaders Other CFOs
  • 23. The Importance of Information
  • 24. Improving workforce health: information credibilityCompanys claims costs 70% 28% 2% EE surveys 31% 62% 8% Companys information 22% 70% 8% Outside information 21% 75% 3% Modeled estimates 15% 74% 12% Supplier recos 14% 76% 10% Very Credible Somewhat Credible Not Credible
  • 25. Usefulness of Information100% 96% 91% 90% 90% 89% 88% 83% 82%80%60%40%20% 0% Helpful Not helpful
  • 26. Availability of Helpful Information100%80%60% 79% 75%40% 54% 51%20% 37% 36% 24% 15% 0% Available Unavailable
  • 27. Lessons
  • 28. Lessons for CFOs• Credible information and methods for measuring impact are available in market• Partner with colleagues in your organization who measure/manage lost time• Make your financial goals well known within your organization and with key supplier partners
  • 29. And if you’re working with CFOS...• Access the solid business case info that is available• Advocate a culture of health• Start with maximizing available internal information• Learn CFO’s strategic financial goals and focus there• What’s the current culture of health?• Are you working with an H+P Leader?
  • 30. Employers and Data
  • 31. Key Dimensions of Population Health• Financial • Preventive care• Program • Chronic participation conditions• Biometric • Lost worktime screening • Lost productivity• Health risks • Employee• Utilization engagement
  • 32. The Temporal Dimension• Leading indicators – Health risks – Biometric screening – Chronic condition prevalence• Treatment indicators – Preventive care – EE engagement – Health services utilization – Program participation• Lagging indicators – Financial – Lost worktime – Lost productivity
  • 33. Dimensions & Dashboard Metrics Dimension Summary MetricFinancial Program cost/EEProgram participation EEs participating/All EEsBiometric screening EEs reaching target/All EEsHealth risks # of health risks/EEUtilization # EEs getting care/All EEsPreventive care # EEs getting screened/All EEsChronic conditions # EEs w/ chronic conditions/All EEsLost worktime # of lost workdays/EELost productivity Lost productivity $/EEEmployee engagement Engagement score/EE
  • 34. Thinking about Metrics asHierarchies Dashboard metrics Component metrics Contributing metrics
  • 35. Dimension: Lost Work Time Dimension Dashboard Component Metrics Contributing Metrics MetricsLost worktime
  • 36. Dimension: Lost Work Time Dimension Dashboard Component Metrics Contributing Metrics MetricsLost worktime # of lost days/EE
  • 37. Dimension: Lost Work Time Dimension Dashboard Component Metrics Contributing Metrics MetricsLost worktime # of lost days/EE Incidental absence days/EE LTD lost days/EE WC lost days/EE Reduced performance days/EE STD lost days/EE
  • 38. Dimension: Lost Work Time Dimension Dashboard Component Metrics Contributing Metrics MetricsLost worktime # of lost days/EE Incidental absence days/EE LTD lost days/EE WC lost days/EE Reduced performance days/EE STD lost days/EE Incidence/100 EEs Ave. duration/claim Median duration/claim
  • 39. Contact IBIThomas Parry, Ph.D., Presidenttparry@ibiweb.orgwww.ibiweb.org