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The Real Costs of Workforce Depression

The Real Costs of Workforce Depression



Employees who live with depression know its costs only too well. Employers, however, are likely to greatly underestimate depression’s impact on their employees and the costs to their business.

Employees who live with depression know its costs only too well. Employers, however, are likely to greatly underestimate depression’s impact on their employees and the costs to their business.



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  • In 2009, the Integrated Benefits Institute conducted a study on depression by analyzing claims data from a master research database provided IBI by Ingenix, a subsidiary of UnitedHealth Group The analysis covered a database that included almost 401,000 unique employees, with more than 45,000 filing a short-term disability (STD) claim, plus STD results put into the context of an analysis of a large national employee self-report database populated by the Health and Work Performance Questionnaire (HPQ) This database includes information on 27 self-reported chronic health conditions, including depression IBI has access to this data through its partnership with HPQ creator and Harvard researcher Dr. Ron Kessler IBI also modeled lost productivity based on the work by Professors Sean Nicholson at Cornell University and Mark Pauly from the Wharton School of Business. Their work with 800 ERs quantifies the opportunity costs of employees being absent from work (in addition to their replacement costs and wage-loss benefits payments): The ease with which the employer can replace workers The degree to which employees work in teams The time value of output (can the employer sell to the market all of its good or services as soon as they are available).
  • Depression relationship to the composition of the sample of STD claims 80% of the STD cases in this sample DID NOT involve depression during the disability event About 5% of the claims went out on STD with a depression diagnosis Twice that share received STD benefits for another diagnosis but were treated for depression during the disability period And 4% had depression treatment prior to the disability event but not during the STD period
  • The study compared STD duration for claims with a depression diagnosis (Depression group) to a control group with no depression treatment during the STD period Employees in the depression-diagnosis group have 44% more lost time – an additional 22 days – than control group employees The control group then was compared to those with an STD claim for another diagnosis, but who received treatment for depression during the STD period - co-morbid depression (Co-morbid Group) The group with co-morbid depression has 30% more lost time than the control group – 15 more days Both groups of employees with depression have significantly more lost time than employees in the control group The extended durations imply either that the disability conditions are of substantially greater severity for employees who receive treatment for depression, or that they face greater challenges in returning to work – or both In making all these comparisons, adjustments were made for gender; age; the company for which an employee works; whether or not the employee was hired during the observation period; the duration of the STD period; claims for chronic and injury conditions before and after the first STD; and average monthly group health payments prior to the first STD
  • The study compared components of full costs for all STD cases where there was any depression treatment during the STD period. This is NOT limited to depression-diagnosis STD The study notes two important findings If lost-time components are ignored, only 36% of full costs are considered Lost productivity costs are the single biggest component of full costs Thus, STD absence for these cases is a far more important influence on the bottom line than most employers have realized Unless these full costs are understood, employers will sub-optimize investments in mental health interventions
  • There is some evidence that early treatment of depression may shorten duration of STD benefits and reduce costs When depression is co-morbid to another disability-diagnosis medical condition, medical treatment prior to and during the STD is associated with lower costs for this type of STD claim than when treatment occurs only after STD The association does not appear for depression-diagnosis claims, however the duration effect from early treatment for depression is confirmed for this research by comments from the IBI Member Solutions Board for this research (comprised of employer and supplier experts from IBI’s membership) Several of the recommendations deal with the importance of early screening to detect depression in the workforce for management and treatment Other research using a randomized control trial design confirms that proper depression care can have a duration effect [Wang P.S., G.E. Simon, J. Avorn, F. Azocar, E.J. Ludman, J. McCulloch, M.Z. Petukhova, R.C. Kessler. 2007. Telephone Screening, Outreach, and Care Management for Depressed Workers and Impact on Clinical and Work Productivity Outcomes. JAMA. 298(12):1401-11.]
  • Additional information about the importance of screening for depression as a management tool also comes from the research This graphic shows disaggregated cost information for a control group with no depression treatment either pre- or post-STD In the next slide we compare the make up and extent of these control-group costs to such costs where depression treatment exists after onset of the disability – the Co-morbid group The only difference between the Control Group and the Co-morbid Group is the presence of post-STD claim treatment for depression IBI controlled for other differences related to the presence of co-morbid conditions and other measured factors
  • First we show the amount of depression-related treatment for the Co-morbid group The amount of treatment costs for co-morbid depression in the Co-morbid Group is relatively small In the next slide, we show the rest of the costs for the Co-morbid Group
  • We can see that that a little bit of co-morbid depression-related medical treatment is associated with far more in treatment costs for other medical conditions and payments related to lost time than in the Control Group, where a claim has no depression 20% more in total medical costs ($2,311) and 35% more in wage-replacement benefits and lost productivity costs ($5,441) compared to an STD claim with no depression This is especially true compared to medical treatment costs for the non-depression conditions in the co-morbid group Of course, part of the drug costs also are likely to pertain to depression The lesson here is to be sure to closely monitor STD claims for depression – both at the beginning of an STD claim and as it progresses. The appearance of depression at any stage may call for more intensive management Disability can be depressing and depression is expensive It can be an important marker for the need for management and treatment of the associated medical conditions, as well as the depression itself There also is striking evidence here that a full-cost perspective tells a very different story than viewing paid losses alone
  • By relying only on medical, pharmacy and disability claims data, employers have a window into what is being treated but not necessarily what is truly going on with employee health Plan design and access to care will have a significant influence on what shows up in claims data. After all, if all an employer is concerned about is medical costs, the most dramatic medical cost control strategy comes from providing no coverage at all As part of IBI’s partnership with Dr. Ronald Kessler of Harvard Medical School, IBI researchers have access to the HPQ database of self-reports compiled over the past several years That database includes information from the employees’ viewpoint on 27 chronic health conditions, and includes information on prevalence, treatment penetration, and absence and presenteeism lost time. Depression is one of those conditions included This database reveals several important things about depression as noted in the slide
  • Bringing together information both from STD claims and the HPQ data gives a window into overall sources of lost productivity related to depression After seeing how much of full costs is represented by lost productivity in STD, now let’s view the sources of lost productivity related to employees with depression in the whole workforce STD claims represent only a small part of lost productivity associated with depression STD claims with a depression diagnosis provide only 6% of workforce lost days for workers with depression Even when we add lost days for employees with depression that are on STD for another medical condition, total lost productivity related to STD is only 19% of total lost days for employees with depression Adding lost time for sick days associated with employees with depression adds another 18% Finally, the biggest driver of lost productivity – at 63% of total lost days – is presenteeism That is, health-related lost time for employees showing up for work who are depressed And given that such a large share of employees that report being depressed are not getting care, it is not surprising that presenteeism is so important Such results challenge employers to expand the scope of depression prevention and management
  • IBI’s depression research highlights the importance of managing and treating depression in the workforce Examination of the full costs of depression reinforces: The bottom-line risks of not managing depression The expanded ROI that can come from depression interventions

The Real Costs of Workforce Depression The Real Costs of Workforce Depression Presentation Transcript