Health Management as a Serious Economic Strategy: The Critical Role of the Healthy and High Performing Workplace and

Work ForceHealth as a

Serious Economic Strategy

THE UNIVERSITY OF MICHIGAN

HEALTH MANAGEMENT RESEARCH CENTER

Dee W. Edington

Business and Community Problem

Currently, most costs associated with workplace and workforce performance are growing at a rate faster than is sustainable

How are we going to be successful in this increasingly competitive world without a healthy and high performing workplace and workforce?

How can we turn costs into an investment?

UM-HMRC Corporate ConsortiumFordDelphiKelloggUS SteelWe Energies JPMorgan Chase Delphi Automotive Southern CompanyNavistar Corporation University of MissouriMedical Mutual of OhioFlorida Power and LightSt Luke’s Health System Allegiance Health SystemCuyahoga Community College United Auto Workers-General Motors

Wisconsin Education Association TrustAustralian Health Management

Corporation

Steelcase (H)General Motors Progressive (H)

Crown Equipment Affinity Health System

SW MI Healthcare Coalition (H)

*The consortium members provide health care insurance for over two million individuals. Data are available from three to 20 years.

Meets on First Wednesday of each December in Ann Arbor.

New way to do Health ManagementIn the United States and Throughout the World

X

UM-HMRC Ann Arbor

XNew Ulm

Building a Sustainable Business and Economic Strategy

1. Workshop: Champion Companies, Zero Trends Eight Hours

2. Complete Strategy/Champion Company Four Hours

3. Fundamental Strategy/Champion Company Two Hours

4. Business Strategy/Champion Company 90 minutes

5. Short Business Strategy/Champion Company 75 minutes

6. Executive Summary of Zero Trends 45 minutes

7. Executive Summary of Executive Summary 30 minutes

Zero Trends: Health as a Serious Economic Strategy

Heart of New UlmPopulation Health Management as a

Serious Economic Strategy:November 10, 2009

Mission Change the Strategy for Health and Disability from a Health Strategy to an Economic Strategy

Natural Flow of a Population High Risks and High Costs

Business Case Health as an Economic Strategy

Solutions Five Pillars to Support a Culture of Health

10

25

15

All slides are available

Section I

The Current Healthcare Strategy

Natural Flow

Wait for Sickness and then Treat

(…in Quality terms this strategy translates into

“wait for defects and then fix the defects” …)

Estimated Health Risks

Health Risk Measure

Body WeightStress Safety Belt UsagePhysical ActivityBlood PressureLife SatisfactionSmoking Perception of Health Illness DaysExisting Medical ProblemCholesterolAlcoholZero Risk

High Risk

41.8%31.8% 28.6% 23.3% 22.8%22.4% 14.4% 13.7%10.9% 9.2% 8.3% 2.9%14.0%

OVERALL RISK LEVELS Low Risk 0-2 risks Medium Risk 3-4 risks High Risk 5 or more

From the UM-HMRC Medical Economics Report

Estimates based on the age-gender distribution of a specific corporate employee population

1640 (35.0%)

4,163 (39.0%)

678(14.4%)

Risk Transitions (Natural Flow)Time 1 – Time 2

High Risk(>4 risks)

Low Risk(0 - 2 risks)

Medium Risk(3 - 4 risks)

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%)

Modified from Edington, AJHP. 15(5):341-349, 2001

Average of three years between measures

Low

19-34 35-44 45-54 55-64 65-74 75+$0

$3,000

$6,000

$9,000

$12,000

$1,776 $2,193 $2,740

$3,734 $4,613

$5,756

$1,414

$2,944

$3,800

$5,212

$6,636

$8,110

$2,565

$3,353

$4,620

$6,625

$7,989

$8,927

$5,114 $5,710

$7,991

$10,785

$11,909 $11,965

Costs Associated with RisksMedical Paid Amount x Age x Risk

Annual Medical Costs

Med Risk

Age Range

High

Non-Participant

Edington. AJHP. 15(5):341-349, 2001

Total Value of Health

• Medical/Hospital• Drug• Absence• Disability • Worker’s Comp• Effective on Job• Recruitment• Retention• Morale

Disease

The Economics of Health Status

Learnings from Section I

The flow of Risks is to High-Risk

The flow of Costs is to High-Cost

Costs follow Risks and Age

The world we have made as a result of the

level of thinking we have done thus far

creates problems we cannot solve

at the same level of thinking

at which we created them.

- Albert Einstein

Section II

Build the Business Case for the Health as a Serious Economic

Strategy

Engage the Total Population to get to the Total Value of

HealthComplex Systems (Synergy & Emergence)

versus Reductionism (Etiology)

Business Concept

Health Risks are Associated

With Disease and Costs

Less than 45 45 to 64 Greater than 650.0%

20.0%

40.0%

60.0%

80.0%

100.0%

3.00% 10.50%18.60%9.50%

32.00%

61.40%

25.30%

56.40%

80.00%

Low Risk

Excess Diseases Associated with Excess Risks (Heart, Diabetes, Cancer, Bronchitis, Emphysema

Percent with Disease

Med Risk

Age Range

High

Musich, McDonald, Hirschland, Edington. Disease Management & Health Outcomes 10(4):251-258, 2002.

Business Concept

Excess Costs follow Excess Risks

Low Risk (0-2 Risks)

HRA Non-Par-ticipant

Medium Risk (3-4 Risks)

High Risk (5+ Risks)

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$840 $1,261

$3,321

Excess Costs

Base Cost

Excess Medical Costs due to Excess Risks

$2,199

$3,039$3,460

$5,520

Edington, AJHP. 15(5):341-349, 2001

Outcome Measures

Low-Risk

Medium-Risk

High-Risk

Excess Cost Percentage

Short-term Disability $ 120 $ 216 $ 333 41%

Worker’s Compensation

$ 228 $ 244 $ 496 24%

Absence $ 245 $ 341 $ 527 29%

Medical & Pharmacy

$1,158 $1,487 $3,696 38%

Total $1,751 $2,288 $5,052 36%

Association of Risk Levels with Corporate Cost Measures

Wright, Beard, Edington. JOEM. 44(12):1126-1134, 2002

Business Concept

Change in Costs

follow

Change in Risks

Change in Costs follow Change in Risks

-$600

-$400

-$200

$0

$200

$400

$600

3 2 1 0 1 2 3Co

st

red

uc

edC

os

t in

cre

ase

d

Risks Reduced Risks Increased

Updated from Edington, AJHP. 15(5):341-349, 2001.

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

Business Concept

Change in Costs

Follow Engagement

Yearly Average Disability Absence Days by Participation

Pre-Program

Program Years

$200Work Day

X1.2 Work Days

ParticipantYear

X 2,596 participants =$623,040

Year

The average annual increase in absence days (1995 – 2000):

 Participants: 2.4

Non-Participants: 3.6

Schultz, Musich, McDonald,Hirschland,Edington.JOEM 44(8):776-780, 2002

6.6 6.98.7

14.1

6.6

17.215.7

23.321.2

17.6

12

8.8

0

5

10

15

20

25

95 96 97 98 99 0

ParticipantNon-Participant

Business Concept

Eliminate “Silo” ThinkingConsider the Total Value of Health

Total Value of Health

Presenteeism AbsenteeismSTDLTD

Medical & Pharmacy

Edington, Burton. A Practical Approach to Occupational and Environmental Medicine (McCunney). 140-152. 2003

Worker’s Compensation

Time-Away-from-Work

Total Value of Health• Medical/Hospital• Drug• Absence• Disability • Worker’s Comp• Effective on Job• Recruitment• Retention• Morale

Disease

HealthRisks

The Economics of Health Status

The world we have made as a result of the

level of thinking we have done thus far

creates problems we cannot solve

at the same level of thinking

at which we created them.

- Albert Einstein

Medical and Drug Cost (Paid)*

2001 2002 2003 2004$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

Non-Impr

Improved

Year

Pai

d

Improved=Same or lowered risks

Slopes differ

P=0.0132

Impr slope=$117/yr

Nimpr slope=$614/yr

Zero Trendsfollow

“Don’t Get Worse” and

“Help the Healthy People Stay Healthy”

Total Value of Health Medical/Hospital Drug Absence Disability Worker’s Comp Effective on Job Recruitment Retention Morale

Disease

HealthRisks

The Economics of Total Population Engagement and Total Value of

Health

Low orNo Risks

Where is the Investment?

increase

increase

decrease

Learnings for Section II

Excess Costs are related to Excess Risks

Costs follow Engagement and Risks

Controlling Risks leads to Zero Trend

Section III

The Evidence-Based Solution:

Integrate Health into the

Culture

(…in Quality terms this strategy translates into “…fix the systems

that lead to the defects” …)

Business and Community Problem

Currently, most costs associated with workplace and workforce performance are growing at a rate faster than is sustainable

How are we going to be successful in this increasingly competitive world without a healthy and high performing workplace and workforce?

How can we turn costs into an investment?

Vision for Zero Trends

Zero Trends was written to be a

transformational approach to the

way organizations ensure a

continuous healthy and high

performing workplace and

workforce

Integrate Health into Core BusinessHealthier

PersonBetter

EmployeeGains for TheOrganization

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/Retention

7.Company Visibility

8. Social Responsibility1981, 1995, 2000, 2006, 2008 D.W. Edington

Lifestyle Change

Health Management Programs

Company Culture and Environment Senior Leadership Operations Leadership Self-Leadership Reward Positive Actions Quality Assurance

Five Pillars of a Population Health Management System

Five Fundamental Pillars

Senior Leadership

Operational Leadership

Self Leadership

RewardsQuality

Assurance

Senior Leadership

Create the Vision

• Commitment to healthy culture

• Connect vision to business strategy

• Engage all leadership in vision“Establish the business value of a healthy and high performing organization and workplace as a world-wide competitive advantage”

Operational Leadership

Align Workplace with the Vision

• Brand health management strategies

• Integrate policies into health culture

• Engage everyone

“You can’t put a changed person back into the same environment and expect the change to hold”

Population Health Management Strategy

Health Management --healthy stay healthy --don’t get worse

Disease Management --stay on protocol --don’t get worse

Sickness Management --reduce errors --coordinate services

Where is the economic strategy?

Environment Interventions Mission and Values Aligned with a

Healthy and Productive Culture

Policies and Procedures Aligned with Healthy and Productive Culture

Vending Machines Job Design Cafeteria

Flexible Working Hours

Stairwells Smoking Policies

Benefit Design Aligned with a Healthy and Productive Culture

Management and Employees prepared to integrate health into the company culture (small group meetings, shared vision, expectations,…)

Total Health &

Productivity Management

Create an Integrated and Sustainable Approach

On-site Medical, H&S•Diabetes education pilot• Injury and medical management•Occupational Health and Safety

Health Advocate• Provide Direction• Get the Care You Need• Coaching & Outreach

Health Plan DesignEnvironmental Design

Behavioral Health• Work/Family• Work Life Plus

Health Portal•Stay healthy•Health information• Make informed choices

Health Risk Assessment • Assess and track health behaviors• Maintain health• Address health risks

Fitness Centers•Low risk maintenance•High risk reduction

Wellness Programs•Active expansion•Retiree communications/awareness program

Disease Management•High Acuity (identified high cost disease)

•Low Acuity (identified lower cost disease; lifestyle behavior focus)

Case Management

• STD, LTD• Workers’ Compensation• Scattered Absence

Absence Management

Long Term Strategy—Short Term Solutions

Operational Leadership: Align workplace with vision

Operations management support Sr. Leadership vision

Management health champions identified

Create employee wellness committees with manager participation

Health presentations included during Safety meetings

Include health as a performance indicator at line management level

Employee wellness coordinators appointed at each site

Integrated approach to health and well-being

Robust branding and marketing & communication strategy

Self Leadership

Create Winners

• Help employees not get worse

• Help healthy people stay healthy

• Provide improvement and maintenance strategies

“Create winners, one step at a time and the first step is don’t get worse’

Health Risk Appraisal

Individual Strategy for Engagement

Biometrics Screening and Counseling

Contact a Health Advocate

Two Other Activities

Population-Based ResourcesWeight Management Business Specific ModulesPhysical Activity Career developmentStress Management CommunicationsSafety Belt Use Financial ManagementSmoking cessation Social/Information NetworksNutrition Education Disease Management Clinic or Medical CenterOn-Line Information ErgonomicsNurse LineNewsletters Vision

Dental

Behavioral Health & EAP HearingPharmacy Management Chiropractic

Complementary Care

Case Management Integrative Medicine

Absence Management Physical TherapyDisability Management

Self Leadership: Create Winners

Align workplace with vision

Employees have access to health resources before, during, and after work hours

Environment supports culture of health - Food services, Fitness center, Health centers, - Health Promotion, EAP, Other

Provide wellness programs to address all levels of a health continuum: Healthy -At Risk-Chronic-Catastrophic

Health coaches

Decision support tools

Employees, dependents, and retirees are eligible to participate

Reward Actions

Reinforce the Culture of Health

• Reward champions

• Set incentives for healthy choices

• Reinforce at every touch point

“What is rewarded is what is sustained”

Positive Re-Enforcement

Culture reminders (Managers, Leaders,…)

Cash, debit cards ($25 to $200) Benefit Design (HSA contributions) Hats and T-Shirts Population programs Surprise events Decorate stairwells Special cafeteria/vending offerings Organizational rewards

(Departments…)

Reward Positive Actions to Reinforce a culture of health

Incentives tied to medical plan designed: Premium reduction HRA completion Non tobacco user incentive Incentive tied to results

Reduced or no co pays for preventative services and adherence of certain drug classes

Wellness rebates for participation in Physical Activity; Weight management Tobacco cessation programs

Greater subsidy of healthy foods in our cafeterias, lower costs to employees

Recognition of employees that improve their health through positive lifestyle changes

Quality Assurance

Outcomes Drive the Strategies

• Integrate all resources

• Measure outcomes

• Make it sustainable

“Metrics to measure progress towards the vision, culture, self-leaders, actions, economic outcomes”

Measurement Scorecard

Percent Engagement: 85% to 95%HRA + Screening/counseling + Coaching + Two other sessions

Percent Low-Risk: 75% to 85% Percent of Total EligibleProof of Concept

Change in Risk Levels beats the Natural Flow

Change in Cost Levels beats the Natural Flow

Year over Year Trends Approach Zero Percent

Improved/no change Separate from Not Improved

Measurement Outcomes drive strategyCreate a clear vision

Change in risk status

Health improvement

Cost of the programs

Engagement

Employee satisfaction

Partner performance

Integration of all resources (company and community)

Leadership scorecard (specific to each company)

All economic indicators (individual and company)

Business Case

Indicators of Sustainability

1. Company Engagement

2. Individual Engagement

3 Vision from

Leaders

Healthy System & Culture

Engage all in Culture

Reward Positive Actions

Progress in all areas

2 Speech from

Leader

Risk Reduction

Reduce all Risks

Incent H-Risk

Change in Risks, ROI

1 Inform Leader

Out-source Reduce H-Risks

Incent H-Risk

Change in Risks

0 Do Nothing

Do Nothing

Do Nothing

Do Nothing

Do Nothing

1 2 3 4 5

Engagement Level of the OrganizationProgram Rating

Do Nothing

Champion

Comprehensive

Traditional

Senior Leadership

Operations Leadership

Self-Leadership

Rewards for Positive

Actions

Quality Assurance

Five Pillars

Health Risk Appraisal

Engagement of Individuals (employees and spouses)

Biometrics Screening and Counseling

Contact a Health Advocate

Two Other Activities

Business Case

Indicators of Sustainability

3. Environmental Support

4. Perception of the Culture

Perception of the Culture from Survey

Not supportive Median Very supportive

Supportive Environment

From Survey

Very Supportive

Not Supportive

Supportive Environment and Culture

M

A

B

Summary

Employer Costs Medical Drug Absence Disability Worker’s Comp Effective on Job Recruitment Retention Morale

Disease

Total Population Engagement ,Total Value

Health Risks

Low or No Risks

Beyond Wellness

Medical Care Management

Disease and Risk

Management

Risk Reduction

Environment and Culture

Health Care Costs

Number of Health RisksWellness Rating

0 1 2 3 4 5 6 7 Sick-DiseaseWell +3 +2 +1

Productivity1. Absence 2. Disability 3. Worker’s Comp 4. Effective on Job

Lifestyle Scale for Individuals and Populations: Self-Leaders

ChronicSigns &

SymptomsFeeling OK

PrematureSickness, Death & Disability

High-Level Wellness, Energy and Vitality

Edington. Corporate Fitness and Recreation. 2:44, 1983, Modified 2009

Sound Bites

3. “Total Population Management” is the effective healthcare strategy and to capture the “Total Value of Health.”

2. Refocus the definition of health from “Absence of Disease to High Level Vitality.”

4. The business case for Health Management indicates that the critical strategy is to “Keep the Healthy People Healthy” (“keep the low-risk people low-risk”).

5. The first step is, “Don’t Get Worse” and then “Let’s create Winners, One Step at a Time.”

1. The “Do Nothing” strategy is unsustainable.

Thank you for your attention.Please contact us if you have any questions.

Phone: (734) 763 – 2462Fax: (734) 763 – 2206

Email: dwe@umich.edufeifeiw@umich.edu

Website: www.hmrc.umich.edu Dee W. Edington, Ph.D. , Director Health Management Research Center University of Michigan 1015 E. Huron Street Ann Arbor MI 48104-1689