The Value of Health and the Power of PreventionRon Loeppke, MD, FACOEM, FACPM

Vice Chairman, U.S. Preventive Medicine

Cost Crisis Driven by the Health Crisis:• Increased utilization (increasing Burden of Illness and Burden of Risk)• Epidemiologic trends (Age Wave “Silver Tsunami”) • Focus on the Health in Health Reform

Employers Asking for Integrated Population Health Solution:• Moving “upstream” = Prevention and Wellness focus• Whole Population/Whole Person Integrated Intervention Solution• Healthy Human Capital is the Business Value Proposition for better Health

Demand-side and Supply-side in Promoting a Culture of Health:• Aligning Incentives for Health among Consumers, Providers, Employers & Insurers• High Tech, High Touch Decision Support (Future of Wireless, Smart Phone Apps)• Promote a Culture of Health in Workplaces, Communities, States and Nation

Converging Trends and the Need for a Culture of Prevention

The Problem: The “Health Crisis” has led to the “Cost Crisis”

Increasing burden of illness and risk leading to increased healthcare costs and reduced U.S. productivity in global economy

Devastating impact of the Burden of Chronic Illness– 133 million Americans have one or more chronic health conditions– 75% of all health care spending is on those with one or more chronic illness– 27% of rise in healthcare costs associated with the increase in obesity rates

» The Waist Line impacts the Bottom Line

80% of Heart Disease and Diabetes as well as 40% of Cancer are Preventable– if Americans just stopped smoking, ate healthy and exercised

K.E. Thorpe, Health Affairs 24, no.6 (2005): 1436-1445; and K.E. Thorpe et al., Health Affairs 23, no. 6 (2004): 480-486.

Lifestyle 51%

Heredity 20%

Environment 19%

Health Services 10%

Health Behaviors: The Main Mortality Risk Factors in U.S.

Lifestyle

Heredity

Environment

Health Services

Mokdad AH, et.al. Actual Causes of death in the United States, 2000. JAMA. 2004; 291:1238-1245.

Personal Health Behaviors are the main Causes of Death

The Case for Workplace Wellness: Health and Productivity Improvement

The stakes could not be higher…

Employers depend on a healthy and productive workforce to compete in the global economy

Employers focusing on the link between the Health of their workforce and the Engagement, Energy, Resiliency and Performance of their workforce and the health of the company performance

Employer Corporate Health Strategies Must: Leverage the benefits of better health rather than merely

manage the costs of the health benefit

Copyright 2010 U.S. Preventive Medicine

Personal Health CostsMedical CarePharmaceutical costs

Productivity Costs

Presenteeism

OvertimeTurnover

Temporary StaffingAdministrative Costs

Replacement TrainingOff-Site Travel for Care

Customer DissatisfactionVariable Product Quality

Absenteeism

Short-term Disability Long-term Disability

The Bigger Problem: The Full Cost of Poor Health to Employers

Iceberg of Full Costs from Poor Health

Sources: Loeppke, R., et al., "Health and Productivity as a Business Strategy: A Multi-Employer Study", JOEM.2009; 51(4):411-428. and Edington DW, Burton WN. Health and Productivity. In McCunney RJ, Editor. A Practical Approach to Occupational and Environmental Medicine. 3rd edition. Philadelphia, PA. Lippincott, Williams and Wilkens; 2003: 40-152

70

%3

0 %

Top 10 Health Conditions by Med + Rx Costs

Other C

ancerB

ack/Neck Pain

Other C

hronic Pain

Coronary H

eart Disease

High C

holesterolA

rthritis

Depression

Hypertension

Diabetes

GER

D

$0$20,000$40,000$60,000$80,000

$100,000$120,000$140,000$160,000$180,000$200,000

DrugMedical

Loeppke, R., et al., "Health and Productivity as a Business Strategy: A Multi-Employer Study“. JOEM. 2009;51(4):411-428.

Per 1000 FTEs for Employers

Top 10 Health Conditions by Full Costs For Employers (Med + RX + Absenteeism + Presenteeism)

Costs/1000 FTEs

Depression

Obesity

Arthritis

Back/N

eck PainA

nxiety

GER

D

Allergy

Other C

ancerO

ther Chronic Pain

Hypertension

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

PresenteeismAbsenteeismDrugMedical

Loeppke, R., et al., "Health and Productivity as a Business Strategy: A Multi-Employer Study“. JOEM. 2009;51(4):411-428.

The Solution: Reduce the Burden of Risk And Illness

Shifting Costs

Actual Cost Decrease

Reducing the burden of health risks and illness leads to a healthier population and measurable TOTAL COST DECREASES.

Current system focus on the financial transactions of healthcare does not lower total costs — it tends to only shift them.

Why The Prevention Plan?

Proprietary and Confidential U.S. Preventive Medicine, Inc.

Health is an Action Verb

Copyright 2010 U.S. Preventive Medicine

U.S. Preventive Medicine

A Bundled

Clinical Model of Prevention

Primary, Secondary, & Tertiary Prevention

High-Tech, High-Touch Model

New Benefit | Comprehensive Solution

USPM Differentiators First Prevention Plan in the Industry:

– Evidence Based Clinical Model of Preventive Medicine (Best Science put into Practice)– Unique Proprietary Prevention Score (Combination of Assessment and Participation)– Independent and Portable for the Consumer

World Class Interactive Online Prevention Experience:– Comprehensive Engaging Platform (Youtube/iTunes/Personal Website/Virtual Coach)– Personalized and Tailored Experience based on risk factors/age/gender

Better Measurable Results:– Higher Participation/Engagement Rates– Greater Reduction of Health Risks (Journal of Population Health Management article)

Flexible and Customizable Solutions for any size Employer and Consumer:– Modular Pricing and Feature Sets across Prevention Continuum– Flexible Lab panels with automatic integration into Personal Health Record– Convenient Lab delivery options (onsite, at a LabCorp PSC, or at home finger stick)

Unparalleled International Advisory Board of Thought Leaders

USPM International Advisory BoardDee W. Edington, PhD DirectorUniversity of MichiganHealth Management Research Center

Wayne N. Burton, MDGlobal Corporate Medical Director American Express Corp

George K. Anderson, MD, MPHMajor General, USAF, MCThe Society of the Federal Health Agencies

Cyndy Nayer, MA, President / CEOCenter for Health Value Innovation

Chris McSwainDirector, Global BenefitsWhirlpool Corporation

Professor Sir Mansel Aylward CBChair, Public Health Wales and DirectorCentre for Research, Cardiff, Wales

Pamela A. Hymel, MD, MPH, FACOEMGlobal Medical DirectorDisney, Inc.

John J. (Jack) Mahoney, MD, MPHChief Medical OfficerCenter for Health Value Innovation Sandra Gibson Hassink, MD, DirectorThe Nemours Pediatric Obesity InitiativeDuPont Hospital M. Akram Khan, MD, PresidentThe Center for Preventive MedicineTM North Texas; Cardiac Center of Texas

Professor Jaspal S. Kooner, MD, Head of Clinical CardiologyEaling Hospital NHS Trust, London England

Ronald C. Kessler, PhD Department of Health Care PolicyHarvard Medical School

Ron Z. Goetzel, PhDInstitute for Health and ProductivitySchool of Public Health, Emory University

Catherine M. Baase, MDGlobal Director, Health Services The Dow Chemical Company

Mike CritelliRetired CEO and Executive ChairmanPitney Bowes

S. Jay Olshansky, PhDProfessor, School of Public Health The Population Research Center Sean Nicholson, PhD Associate ProfessorDepartment of Policy Analysis andManagement at Cornell University

Thomas Parry, PhDPresidentIntegrated Benefits Institute

Andrew WebberPresident & CEONational Business Coalition on Health

(NBCH)

*David B. Nash, MD, MBA, Dean and Professor Thomas Jefferson University School of Population Health

The Prevention Plan™ (Prevention & Wellness)

Prevention Score

Allows Employer to Align Incentives and Rewards Based on Health Proactivity

Helps Member Track Progress Toward Prevention Goals

ROI VOI Return on Investment Value of Investment

Beyond ROI to the Business Value of Health

Financial Indicators Financial Indicators/Net Savings

Participation Indicators

Preventive Screening Indicators

Health Risk Indicators

EBM Clinical Indicators

Utilization Indicators

Productivity Indicators

Shareholder Value

Loeppke R. “The Value of Health and the Power of Prevention”. Int J Workplace Health Manage. 2008; 1 (2) 95-108.

Measurable Impact of The Prevention Plan

Impact of The Prevention Plan on Employee Health Risk Reduction October, 2010 Issue: Population Health Management

Co-authored by:Ron Loeppke, MD, MPH, FACOEM, FACPMVice- Chairman of the Board, U.S. Preventive Medicine, Inc.

Dee Edington, PhDDirector of the Health Management Research Center at the University of Michigan Member of the U.S. Preventive Medicine International Advisory Board

Sami A. Bég MD, MPA, MPHAssociate Medical Director for U.S Preventive Medicine, Inc.

All information herein is confidential and not for distribution.Proprietary and Confidential

U.S. Preventive Medicine, Inc.

Effectiveness In Improving Health Risks Demonstrated

Baseline to Year One Health Risk Category Transitions for Cohort

Participating in The Prevention Plan

Proprietary and Confidential U.S. Preventive Medicine, Inc.

194

8092008

1,69720091,452

2008

Overall Health Risk Transition

Net Movement of Risk Levels in Cohort Baseline (2008) vs. Year 1 (2009)

7152009 345

2008

N=2,606

Low Moderate High

55.72%

13.24%7.44%

(p < 0.001)

31.04%27.44%(p < 0.001)

65.12%(p < 0.001)

Proprietary and Confidential U.S. Preventive Medicine, Inc.

Loeppke, R; Edington, D; Beg, S. Impact of The Prevention Plan on Employee Health Risk Reduction, Population Health Management. Vol 13, No. 5, 2010.

Health Risk Level Transitions USPM vs Natural Flow

Proprietary and Confidential U.S. Preventive Medicine, Inc.

Low Moderate High -

200

400

600

800

1,000

1,200

1,400

1,600

1,800

1,452

809

345

1,320

834

452

1,697

715

194

Year 1 (Baseline)

Natural Flow (Expected)

USPM Yr 2 (TPP)

Loeppke, R; Edington, D; Beg, S. Impact of The Prevention Plan on Employee Health Risk Reduction, Population Health Management. Vol 13, No. 5, 2010.

Health Risk Transition among the Study Cohort

Copyright 2010 U.S. Preventive Medicine

Loeppke, R; Edington, D; Beg, S. “Impact of The Prevention Plan on Employee Health Risk Reduction.” Population Health Management. 2010 13 (5): 275-284

Key Individual Risk Reduction Cohorts

# Reporting High risk

# Reporting High Risk

# Decrease in High Risk

% Decrease in High Risk

p ValueStat Sig

2008(Baseline)

2009(1 Yr on TPP)

Blood Pressure 395 226 -169 -42.78% < 0.001Fasting Blood Sugar 469 323 -146 -31.13% < 0.001

Stress 413 310 -103 -24.94% < 0.001Perception of Health 351 265 -86 -24.50% < 0.001

Alcohol 347 263 -84 -24.21% < 0.001Cholesterol 322 249 -73 -22.67% < 0.001

Physical Activity 475 387 -88 -18.53% < 0.001Absenteeism > 3 Days 393 335 -59 -14.76% < 0.05

Fatty Diet 1733 1477 -256 -14.77% < 0.001

Loeppke, R; Edington, D; Beg, S. Impact of The Prevention Plan on Employee Health Risk Reduction, Population Health Management. Vol 13, No. 5, 2010.

Cost

s In

crea

sed

Cost

s Re

duce

d

Reduce Costs by Reducing Health Risks

Source: Edington, Zero Trends, 2009 and Edington, AJHP. 15(5):341-349, 2001.

$800

$400

$200

$0

<$200>

<$400>

<$800>

-3 -2 -1 0 1 2 3

Risks Reduced Risks Increased

$215 Average Savings(per Risk Reduced per person per year)

-2 or more

-10

12 or more

% of Productivity

Change

Improve Workforce Productivity by Reducing Health Risk

6%

4%

2%

0%

-2%

# of Health Risk Changes

Source: Burton, W. et. al. The Association of Health Risk Change and Presenteeism Change. JOEM. Volume 48, Number 3, March 2006, pp 252-263.

$950 Average Productivity Savings(per Risk Reduced per person per year)

Wellness Works and Prevention Pays

Average ROI

$3.27 + $2.73 Med/Rx Absenteeism

Savings Savings

$6.00 saved for every $1.00 invested

In Comprehensive Wellness

Baicker K, Cutler D, Song Z. Workplace Wellness Programs Can Generate Savings. Health Aff (Millwood). 2010; 29(2).

The Business Value of Better Health and Productivity

Market cap value impact from regaining 1 Day of productivity per year per FTE

Example: 58,000 employees, current 8 Days per FTE of health-related productivity loss

Ron Loeppke MD Proprietary and ConfidentialLoeppke R. “The Value of Health and the Power of Prevention”. Int J Workplace Health Manage. 2008; 1(2)95-108.

1 Day per FTE of Regained Productivity = $18.8M EBITDA impact

13x (EBITDA Multiple)

$244.4M estimated market cap increase

÷ 292M shares

$0.84 in additional per share value

Employer Health & Productivity InitiativesDemonstrate Superior Financial Performance*

Employers with Highly Effective Health & Productivity Improvement Programs:

Yielded 20% More Revenue per Employee

Demonstrated a 16.1% Higher Market Value

Delivered 57% Higher Shareholder Returns

*National Business Group on Health/Watson Wyatt “Staying at Work Report” 2007/2008 from Survey of 355 Large Employers

Prevention…is the Ultimate Solution

“An Unhealthy America” 2007 study by Rich Devol, et.al. The Milken Institute.Nonprofit, nonpartisan and publicly- supported economic think tank

could have an economic impact of $1 trillion annually…

Tertiary Prevention (earlier EBM condition mgmt)

Primary Prevention (wellness, health promotion)

Secondary Prevention (earlier detection/diagnosis)

Milken Study Finds:

Historic Paradigm Shift

MONUMENTAL TRANSITION FROM “SICK” CARE SYSTEM TO TRUE “HEALTH” CARE SYSTEM

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