Next Generation Health Management as a Serious Business Strategy

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  • We have now quantitated Direct vs Indirect costs . Presenteeism costs represent approximately ¾ of the pie and the vast majority Of costs to the corporation.
  • Next Generation Health Management as a Serious Business Strategy

    1. 1. Next Generation Health Management as a Serious Business Strategy THE UNIVERSITY OF MICHIGAN HEALTH MANAGEMENT RESEARCH CENTER Dee. W. Edington
    2. 2. UM-HMRC Corporate Consortium <ul><li>Steelcase </li></ul><ul><li>Progressive </li></ul><ul><li>We Energies </li></ul><ul><li>General Motors </li></ul><ul><li>Crown Equipment </li></ul><ul><li>Foote Health System </li></ul><ul><li>Medical Mutual of Ohio </li></ul><ul><li>St Luke’s Health System </li></ul><ul><li>Cuyahoga Community College </li></ul><ul><li>International Truck and Engine </li></ul><ul><li>Blue Cross Blue Shield Rhode Island </li></ul><ul><li>United Auto Workers-General Motors </li></ul><ul><li>Wisconsin Education Association Trust </li></ul><ul><li>Southwest Michigan Healthcare Coalition </li></ul><ul><li>Australian Health Management Corporation </li></ul><ul><li>Kellogg </li></ul><ul><li>JPM Chase </li></ul><ul><li>Gulf Power </li></ul><ul><li>Brush Wellman </li></ul><ul><li>Delphi Automotive </li></ul><ul><li>Florida Power & Light </li></ul><ul><li>Affinity Health System </li></ul>*The consortium members provide health care insurance for over two million Americans. Data are available from eight to 18 years. Meet on First Wednesday of each December in Ann Arbor
    3. 3. Health Management in the Workplace 1. Health Status 2. Life Expectancy 3. Disease Care Costs 4. Health Care Costs 5. Productivity a. Absence b. Disability c. Worker’s Compensation d. Presenteeism e. Quality Multiplier 6. Recruitment and Retention 7. Company Visibility 8. Social Responsibility 1981, 1995, 2000, 2006 D.W. Edington Healthier Person Better Employee Gains for The Organization Job Performance 1. Individual attitudes 2. Group attitudes 3. Energy levels 4. Vitality 5. Empowerment 6. Environment Health Management Programs Lifestyle Choices
    4. 4. X UM-HMRC Ann Arbor x Rhode Island a Healthy State? New way to do Health Management In the United States and Throughout the World
    5. 5. <ul><li>Building an Integrated, Sustainable Business Strategy </li></ul><ul><li>(Next Generation Programs, Champion Companies, Zero Trends) Four Hours </li></ul><ul><li>Complete Strategy and Next Generation Three Hours </li></ul><ul><li>Fundamental Strategy and Next Generation Two Hours </li></ul><ul><li>Business Strategy and Next Generation 90 minutes </li></ul><ul><li>Short Business Strategy and Next Generation 60 minutes </li></ul><ul><li>Executive Summary 45 minutes </li></ul><ul><li>Executive Summary of Executive Summary 20 minutes </li></ul>Next Generation Health Management as a Serious Business Strategy
    6. 6. <ul><li>Agenda </li></ul><ul><li>Health Management as a Serious Business Strategy </li></ul><ul><li>Providence RI: November 20, 2006 </li></ul><ul><li>Introductory Comments 5 </li></ul><ul><ul><ul><li>Do-Nothing Strategy 10 </li></ul></ul></ul><ul><ul><ul><li>Business Concepts to Build the Strategy 10 </li></ul></ul></ul><ul><ul><ul><li>Next Generation Programming 25 </li></ul></ul></ul><ul><ul><ul><ul><li>Champion Company, Zero Trend </li></ul></ul></ul></ul><ul><ul><ul><li>Summary 5 </li></ul></ul></ul><ul><li>Slides available via e-mail attachment </li></ul>
    7. 7. Introductory Comments
    8. 8. Outcomes to get to Zero Trend 90%-95% participation and 75% to 85% low-risk Keep the healthy people healthy Don’t get worse Strategy Next Generation Program to drive Objective Partners: company; employee; health plans; benefit consultants; primary care physicians; pharmaceutical companies. Objective Shareholder value from creative and innovative products from healthy and productive people Key Thoughts
    9. 9. “ The Total Value of Healthcare” (Managing health status) To “ The Cost of Healthcare” (Treating disease) To Moving the Paradigm From “ Health is Free” (Healthcare Costs < Total Benefits) Adopt the Quality Strategy: Fix the Systems
    10. 11. Section I The Do-Nothing Strategy
    11. 12. Business Case The Natural Flow of Health Risks and Behaviors
    12. 13. Health Risks and Behaviors OVERALL RISK LEVELS Low Risk 0 to 2 high risks Medium Risk 3 to 4 high risk High Risk 5 or more high risks Health Risk Measure Alcohol Blood Pressure Body Weight Cholesterol Existing Medical Problem HDL Illness Days Life Satisfaction Perception of Health Physical Activity Safety Belt Usage Smoking Stress High Risk Criteria More than 14 drinks/week Systolic >139 or Diastolic >89 mmHg BMI  27.5 Greater than 239 mg/dl Heart, Cancer, Diabetes, Stroke Less than 35 mg/dl >5 days last year Partly or not satisfied Fair or poor Less than one time/week Using safety belt less than 100% of time Current smoker High
    13. 14. Risk Transitions Time 1 – Time 2 High Risk (>4 risks) Low Risk (0 - 2 risks) Medium Risk (3 - 4 risks) Modified from Edington, AJHP. 15(5):341-349, 2001 Average of three years between measures 1640 (35.0%) 4,163 (39.0%) 678 (14.4%) 2,373 (50.6%) 21,750 (77.8%) 4,546 (42.6%) 10,670 (24.6%) 4,691 (10.8%) 27,951 (64.5%) 11,495 (26.5%) 5,226 (12.1%) 26,591 (61.4%) 892 (3.2%) 1,961 (18.4%) 5,309 (19.0%)
    14. 15. Business Case The Natural Flow of Health Care Costs
    15. 16. Cost Transitions Time 1 – Time 2 N=356,275 Non-Medicare Trad/PPO Modified from Edington, AJHP. 15(5):341-349, 2001 23,043 (34.0%) 25,856 (20.3%) 6,936 (10.2%) High Cost ($5000+) Low Cost (<$1000) Medium Cost ($1000-$4999) 37,701 (55.7%) 119,271 (74.1%) 75,500 (59.1%) 127,644 (35.8%) 67,680 (19.0%) 160,951 (45.2%) 130,785 (36.7%) 73,427 (20.6%) 152,063 (42.7%) 9,438 (5.9%) 26,288 (20.6%) 32,242 (20.0%)
    16. 17. Total Medical and Pharmacy Costs Paid by Quarter for Three Groups Musich,Schultz, Burton, Edington. DM&HO. 12(5):299-326,2004
    17. 18. Business Case The Natural Flow of Risks and Costs
    18. 19. Costs Associated with Risks Medical Paid Amount x Age x Risk Low Risk Medium Risk High Risk Edington. AJHP. 15(5):341-349, 2001 Non - - Participant
    19. 20. This is the Way Americans Have been Living their Lives for 60 Years Can You Afford the Economic Consequences of the Do-Nothing Strategy?
    20. 21. Section II Key Business Concepts To Build the Business Case
    21. 22. Business Concept Eliminate “Silo” Thinking Consider the Total Value of Health
    22. 23. Relative Value of Health to the Organization: Total Value of Health Presenteeism Absenteeism STD LTD Medical & Pharmacy Edington, Burton. A Practical Approach to Occupational and Environmental Medicine (McCunney). 140-152. 2003 Worker’s Compensation Time-Away-from-Work
    23. 24. Business Concept Excess Costs follow Excess Risks
    24. 25. Excess Medical Costs due to Excess Risks Edington, AJHP. 15(5):341-349, 2001 $2,199 $3,039 $3,460 $5,520
    25. 26. Excess Pharmaceutical Costs due to Excess Risks $345 $443 $526 $567 $750 $754 $1,121 Burton, Chen, Conti, Schultz, Edington. JOEM. 45(8): 793-802. 2003
    26. 27. Excess Disability Costs due to Excess Risks Wright, Beard, Edington. JOEM. 44(12):1126-1134, 2002 36% of Absence, STD, Worker’s Comp $491 $666 $783 $1,248
    27. 28. Excess On-The-Job Loss due to Excess Risks Burton, Chen, Conti, Schultz, Pransky, Edington. JOEM. 47(8):769-777. 2005 14.7%
    28. 29. Business Concept Total Value of Health to an Organization
    29. 30. Association of Risk Levels with Corporate Cost Measures Wright, Beard, Edington. JOEM. 44(12):1126-1134, 2002 Excess Cost Percentage High-Risk (N=396) Medium-Risk (N=504) Low-Risk (N=671) Outcome Measure 41% $ 333 $ 216 $ 120 Short-term Disability 24% $ 496 $ 244 $ 228 Worker’s Compensation 29% $ 527 $ 341 $ 245 Absence 38% $3,696 $1,487 $1,158 Medical & Pharmacy 36% $5,052 $2,288 $1,751 Total
    30. 31. Business Concept Risks Travel Together
    31. 32. Cluster Analysis Health Measure Smoking Alcohol Physical activity Safety belt usage Body mass index Systolic blood pressure Diastolic blood pressure Cholesterol HDL cholesterol Self-perceived health Life satisfaction Stress Illness days Cluster 1: Risk taking (N=6688) 31% 10% 28% 36% 27% 9% 5% 19% 34% 13% 4% 9% 21% 0% 0% 0 % 0 % 25 % 0 % 0 % 19 % 10 % 0 % 0 % 0 % 0 % 16% 3% 19% 22% 38% 81% 61% 27% 33% 9% 2% 2% 12% 27% 5% 26% 31% 27% 23% 20% 22% 24% 28% 73% 76% 26% Cluster 2: Low Risk (N=3164) Cluster 3: Biometrics (N=3100) Cluster 4: Psychological (N=3927) Baunstein, Yi, Hirschland, McDonald, Edington. Am. J. Health Behavior. 25(4):407-417, 2001 Overall Risks Low risk (0-2 risks) Medium risk (3-4 risks) High risk (5+ risks) Average Number of risks 50.2% 35.7% 14.1% 2.8 97.6% 2.4% 0 0.6 26.5% 48.9% 24.7% 3.6 18.9% 35.9% 45.2% 4.4
    32. 33. Business Concept Costs are Associated with the Wellness Score
    33. 34. Relationship Between Annual Medical and Pharmacy Costs and Wellness Score Annual Medical Costs Wellness Score Yen, McDonald, Hirschland, Edington. JOEM. 45(10):1049-1057, 2003. One Point in Wellness Score Equals $56
    34. 35. Business Concept Stratification of the Population for Intervention
    35. 36. Stratification In the Health Promotion Opportunity Health Promotion Opportunity
    36. 37. Predictability to be at High Cost 0.10 0.07 0.08 0.14 0.18 0.18 0.19 0.75 0.83 0.79 0.64 0.57 0.54 0.52 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 base t1 t2 t3 t4 t5 t6 Time % Low intervention (71%) High Intervention (29%) Sp=(1-0.10)=0.90 Sp=(1-0.07)=0.93 Sp=(1-0.08)=0.92 Sp=(1-0.14)=0.86 Se=0.75 Se=0.83 Se=0.79 Se=Sensitivity Sp=Specificity
    37. 38. Business Concept Proof of Concept (Necessary and Sufficient) 1. Improve Health Status Transitions 2. Decrease Healthcare Cost Trend 3. Decrease Productivity Loss 4. Improve Overall Trends for all Outcomes Business Case is pretty good but not yet perfect. We need Champion Companies!!!!
    38. 39. Business Concept Change in Costs follow “ Don’t Get Worse”
    39. 40. Medical and Drug Cost (Paid)* *per employee , Improved=374, Non-Improv=103 HRA in 2002 and 2004 Improved=Same or lowered risks *Medical and Drug, not adjusted for inflation Slopes differ P=0.0132 Impr slope=$117/yr Nimpr slope=$614/yr
    40. 41. Business Concept “ Bend the Trend”
    41. 42. Financial Services ( Healthcare Spend) *per employee Slope = $150/yr Year 1= $255 Year 2= $118 Year 3= $82 GOOD, but too slow!!
    42. 43. Section III Health Management: Next Generation Programming Champion Companies Zero Trend The Question is: What will Work?
    43. 44. <ul><li>Three Key Business Beliefs </li></ul><ul><li>Individuals Can Maintain Low-Risk Health Status even as they Age </li></ul><ul><li>An Employer and its Partners can Help its Members Obtain and Maintain Low-Risk Health Status </li></ul><ul><li>The Major Economic Benefit is in Paying Attention to Individuals with Low-Risk Health Status </li></ul>
    44. 45. Business Concept Partners to get to Next Generation, Champion Company and Zero Trend <ul><li>Company (Private or Public or non-Profit) </li></ul><ul><li>Management Union </li></ul><ul><li>Health Plan </li></ul><ul><li>Benefit Consultant </li></ul><ul><li>Primary Care Physicians </li></ul><ul><li>Pharmaceutical Companies </li></ul><ul><li>Individuals </li></ul>Health Systems???
    45. 46. Where are the Opportunities for Population Health Management? Health Promotion Opportunity Condition Management Opportunity Medical & Care Management Opportunity Medical and Drug Costs only
    46. 47. Business Concept Next Generation Programming for Champion Companies to Achieve Zero Trend Integration and Sustainability
    47. 48. Next Generation Health Management Program Vision from Senior Leadership Worksite Environment Population Programs Website Low-Risk Maintenance Know Your Numbers Physical Activity Nutrition Awareness Wellness Modules Individual Stratification Coaching Sessions Health Advocate Triage to Resources Health Risk Appraisals Incentives Measurement
    48. 49. Next Generation 1. Senior Leadership Vision
    49. 50. Vision from the Senior Leadership <ul><li>Clear Vision within Leadership </li></ul><ul><li>Vision Connected with Company Strategy </li></ul><ul><li>Vision Shared with Employees </li></ul><ul><li>Accountability and Responsibility Assigned to Operations Leadership </li></ul>
    50. 51. Next Generation 2. Environmental Strategies
    51. 52. Environment Interventions (Culture) <ul><li>Management and Leadership of the Company and Unions </li></ul><ul><li>Mission and Values Aligned with a Healthy and Productive Culture </li></ul><ul><li>Policies and Procedures Aligned with Healthy and Productive Culture </li></ul><ul><ul><li>Vending Machines Job Design </li></ul></ul><ul><ul><li>Cafeteria Flexible Working Hours </li></ul></ul><ul><ul><li>Stairwells Smoking Policies </li></ul></ul><ul><ul><li>Other Benefit Design </li></ul></ul>
    52. 53. Next Generation Benefit Design to Promote Consumerism <ul><li>Move from Entitlement to Consumer </li></ul><ul><ul><li>Incentives follow Actionable Behaviors </li></ul></ul><ul><li>Provide Transparency </li></ul><ul><ul><li>Appropriate Physicians </li></ul></ul><ul><ul><li>Appropriate Health Systems </li></ul></ul><ul><ul><li>Appropriate Pharmaceutical Solutions </li></ul></ul><ul><li>Promote Maintenance of Health Status </li></ul>
    53. 54. Next Generation 3. Health Risk Appraisals
    54. 55. Health Risk Appraisals <ul><li>Comprehensive and Lifestyle Oriented </li></ul><ul><li>Tested for Reliability and Validity </li></ul><ul><li>Evidence-Based </li></ul><ul><li>Tailored Profile returned to Individual </li></ul><ul><li>Recommendations connected to Local Resources </li></ul><ul><li>Counseling </li></ul>
    55. 56. Next Generation 4. Individual Based Programs
    56. 57. Coaching Strategies for Individual Intervention Contact each individual (at least three times) Unlimited contacts by level of probability of being high cost within the next two to three years and cluster Pay attention to cluster and prioritized risks Use variety of contacts (one on one, telephone and web) for sustainable engagement Frequent evaluation of coach/client participation and satisfaction Use situational and whole person approach Engage individual in positive actions. Ask but don’t tell. Use triage, health advocate strategies, develop Self-Leaders and use all available resources
    57. 58. Business Concept Limitations to Current Interventions
    58. 59. Observed Program Attrition Rates 35% Percent reduction in next bar 22% 52% 55% 36% Lynch, Chen, Edington. JOEM. 48:447-454, 2006
    59. 60. Observed Program Attrition Rates Patients with Acute/Chronic Episodes 56% Percent reduction in next bar 63% 62% Lynch, Chen, Edington. JOEM. 48:447-454, 2006
    60. 61. Business Concept Managed the Person: Not the Risk or Disease
    61. 62. Intervention for Biometric Cluster (Metabolic Syndrome)
    62. 63. NCEP ATP III. JAMA. 2001;285:2486 . >40 in (>102 cm) >35 in (>88 cm)  150 mg/dL <40 mg/dL <50 mg/dL  130/85 mmHg  110 mg/dL Defining Level Risk Factor <ul><li>Waist Size </li></ul><ul><li>Men </li></ul><ul><li>Women </li></ul><ul><li>2. Triglycerides </li></ul><ul><li>3. HDL-C </li></ul><ul><li>Men </li></ul><ul><li>Women </li></ul><ul><li>4. Blood pressure </li></ul><ul><li>5. Fasting glucose </li></ul>Clinical Identification of Metabolic Syndrome Any three of the following:
    63. 64. Development and Consequences of Metabolic Syndrome Where do you want to intervene in the process? <ul><li>Risks: </li></ul><ul><li>Waist Circumference </li></ul><ul><li>Hypertension </li></ul><ul><li>Glucose Intolerance </li></ul><ul><li>Triglycerides </li></ul><ul><li>HDL Cholesterol </li></ul>Pre-Metabolic Syndrome Metabolic Syndrome Heart Disease Diabetes Retinopathy Neuropathy Nephropathy <ul><li>Costs to Individual: </li></ul><ul><li>Quality of Life </li></ul><ul><li>Morbidity </li></ul><ul><li>Mortality </li></ul><ul><li>Costs to Employers: </li></ul><ul><li>Health care costs </li></ul><ul><li>Productivity costs </li></ul>
    64. 65. Intervention for Psychological Cluster
    65. 66. Development and Consequences of Mental Health Issues (DRAFT) Where do you want to intervene in the process? <ul><li>Risks: </li></ul><ul><li>Perception of Health </li></ul><ul><li>Life Satisfaction </li></ul><ul><li>Job Satisfaction </li></ul><ul><li>Stress </li></ul><ul><li>Job Related </li></ul><ul><li>Non-Job Related </li></ul><ul><li>Illness Days </li></ul>Pre-Mental Health Issues Mental Health Syndrome Job Issues Family Issues Serious Mental Health Diagnoses <ul><li>Costs to Individual: </li></ul><ul><li>Quality of Life </li></ul><ul><li>Morbidity </li></ul><ul><li>Mortality </li></ul><ul><li>Costs to Employers: </li></ul><ul><li>Health care costs </li></ul><ul><li>Productivity costs </li></ul>
    66. 67. Next Generation 5. Population Based Programs
    67. 68. Population-Based Programs <ul><li>Population Programs Orientation </li></ul><ul><li>Pedometers, know your numbers, no weight gain </li></ul><ul><li>Human Resource Orientation </li></ul><ul><li>People skills/Communications </li></ul><ul><li>Health Communications </li></ul><ul><li>Written materials, Online portal, etc </li></ul><ul><li>Environmental Orientation </li></ul><ul><li>Stairwells/Vending, Food Services, Other </li></ul>
    68. 69. Wellness Programming for Individuals <ul><li>Wellness Modules </li></ul><ul><li>High-Risk Reduction Ergonomics </li></ul><ul><li>Smoking cessation </li></ul><ul><li>Weight Loss Low-Risk Maintenance </li></ul><ul><li>Stress Management Population based </li></ul><ul><li>Physical Activity </li></ul><ul><li> Business Specific Modules </li></ul><ul><li>Communications </li></ul><ul><li>Condition Management Career development </li></ul><ul><li>Blood pressure </li></ul><ul><li>Cholesterol Special Promotions </li></ul><ul><li>Diseases </li></ul><ul><li>Other </li></ul>
    69. 70. Next Generation 6. Incentives
    70. 71. Incentives <ul><li>Annual Incentive </li></ul><ul><li>Benefit Options (Co-pays, Deductibles, HSA contributions, … ) </li></ul><ul><li>Premium Reductions/Premium Plan </li></ul><ul><li>($600 to $2000) </li></ul><ul><li>Throughout the Year </li></ul><ul><li>Hats and T-Shirts </li></ul><ul><li>Cash, debit cards </li></ul><ul><li>($25 to $200) </li></ul>
    71. 72. Next Generation 7. Measurement, Evaluation and Decision Support
    72. 73. Measurement, Evaluation and Decision Support Key Analytics to Drive Success <ul><li>Decisions Based upon Program Results </li></ul><ul><li>Process Orientation </li></ul><ul><ul><li>Participation </li></ul></ul><ul><ul><li>Employee Satisfaction </li></ul></ul><ul><li>Reduction in Health Risk or Don’t Get Worse </li></ul><ul><ul><li>Individual’s prioritized risk </li></ul></ul><ul><ul><li>Lessen Pain and Suffering in Individuals and Families </li></ul></ul><ul><ul><li>Population based prevalence </li></ul></ul><ul><li>(Continued) </li></ul>
    73. 74. Measurement, Evaluation and Decision Support Key Analytics to Drive Success <ul><li>4. Total Value of Health (Medical and Productivity) </li></ul><ul><li>5 . Key Analytical Reports </li></ul><ul><ul><li>HRA summary with benchmarks and with costs </li></ul></ul><ul><ul><li>Time 1 and Time 2 </li></ul></ul><ul><ul><li>Risk-Cost Reports </li></ul></ul><ul><ul><li>Cluster Analyses </li></ul></ul><ul><ul><li>Productivity </li></ul></ul><ul><ul><ul><li>Time-Away-From-Work </li></ul></ul></ul><ul><ul><ul><li>Presenteeism </li></ul></ul></ul><ul><li>6. Proof of Concept (Beat Natural Flow/Bend the Trend Lines) </li></ul><ul><li>7. Shareholder Value </li></ul>
    74. 75. Scorecard <ul><li>Percent Participation: 80% to 95% </li></ul><ul><li>Over a rolling three years </li></ul><ul><li>HRA + Three Coaching sessions + Two other sessions </li></ul><ul><li>Percent Low-Risk: 70% to 85% </li></ul><ul><li>Percent of the eligible population </li></ul><ul><li>Estimated Cost of Program: $400 </li></ul><ul><li>Dollars per Eligible employee </li></ul><ul><li>Excluding major incentive </li></ul><ul><li>Estimated Savings: $800 </li></ul><ul><li>Dollars per Eligible Employee </li></ul>
    75. 76. Summary
    76. 77. <ul><li>Committee to Assess Worksite Preventive Health Program Needs of NASA Employees </li></ul><ul><li>The National Academies </li></ul><ul><li>Institute of Medicine </li></ul><ul><li>Food and Nutrition Board </li></ul>
    77. 78. Outcomes to get to Zero Trend 90%-95% participation and 75% to 85% low-risk Keep the healthy people healthy Don’t get worse Strategy Next Generation Program to drive Objective Partners: company; employees; health plans; benefit consultants; primary care physicians; pharmaceutical companies. Objective Shareholder value from creative and innovative products from healthy and productive people Key Thoughts
    78. 79. What’s the Point?
    79. 80. Thank you for your attention. Please contact us if you have any questions. Phone: (734) 763 – 2462 Fax: (734) 763 – 2206 Email: [email_address] Website: www.hmrc.umich.edu Dee W. Edington, Ph.D. , Director Health Management Research Center University of Michigan 1027 E. Huron St. Ann Arbor MI 48104-1688

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