Worksite Wellness:An Economic Case Study for a

Horton Relationship

Rick Klein

The Horton Group

Early Detection, Intervention and Proper Treatment of disease are key elements of controlling future cost.

The most important component of your long term healthcare cost control strategy should be including the participants in the solution.

Working in partnership, both the employer and employee win.

Why Wellness at the Worksite?

Why Wellness at the Worksite?

• After payroll, employee benefits is a company's largest budgeted expense.

• Health insurance premiums have annually increased at a rate significantly higher than inflation as measured by CPI.

• Current trend increase predicted to be 8 to 12%.• Premium increase is comprised of:

– Claims/Utilization (80%)– Demographic Changes– Overall medical inflation– Administration

Why Wellness at the Worksite?• 80% of all claims are caused by chronic conditions.

– Cardio Vascular Disease– Hypertension/Stroke– Diabetes– Smoking related diseases– Musculoskeletal disorders

• Claims associated with depression can multiply your health care costs by a factor of 2 to 3.

• A large amount of inappropriate plan utilization can be reduced through better understanding of how the plan works.– Excess emergency room usage

• 53% of ER visits are not urgent• 60% of primary care visits are for information or reassurance.

– Rx fulfillment• Generic vs. Formulary• Retail vs. Mail Order

The Business Case for Wellness

• High risk employees are high cost.• Excess health costs are related to excess risks.

– For every risk that is reduced $231 is saved.– For every risk that is avoided $320 is saved.

• Percentages show that those at high risk for a particular health measure have at least 4 other health risks.– Base cost for a low risk (0-2) employee - $2,199– Excess cost for a medium risk (3-4) employee -

$1,261.– Excess cost for a high risk (5+) employee - $3,321.

University of Michigan Health Management Research Council data

Disability Costs

Excess risks also apply to disability claims.– Low risk (0-2) employee’s have a base cost of $491.– Medium risk (3-4) have an excess cost of $292.

It also affects the cost of lost productivity.– EE’s participating in a wellness program average 2.4 days per

year of lost productivity.– EE’s not participating average 3.6 days.

At $200 per workday 1.2 days = $240.$240 X your ee base = lost productivity annually.

University of Michigan study

Case Study Statement

• Early detection will reduce total claims.– Direct health care costs dropped 26%

• Proper diagnosis and treatment will increase productivity and decrease lost time at work.– Worker’s compensation and disability costs went

done 30%– Sick leave taken reduced by 28%

Partnership for Prevention, Worksite Health ENewsletter, 2005, www.prevent.org

Result

• In a typical group of 100 employees, 7% of every workday is unproductive due to untreated conditions.

• This equates to 34 minutes of every untreated employee's work day is unproductive.

• This group of employees have a cost overhead of 8% to perform the same work as a healthy employee.

• Additionally, this group will account for a major portion of quality problems, disability claims and workman's compensation claims.

University of Michigan

General Conclusions

• Intervention leads to statistically significant changes in health status.

• Intervention leads to a statistically significant improvement in work performance.– 8% increase in productivity– 15% reduction in staff turnover– 9% decrease in unplanned absence

Horton Health Initiative

• On Site Wellness Screenings

• On Site Health Risk Assessment

• Education

• Communications

• Measurement

• Feedback

• Ongoing Assistance

/

interactivehs.com News to Use Health News Outcome

Reporting

Personal Health Report

EducationEducationEngageUnderstandEducateMaintainCall to Action

ControlControl HealthFocus

ActEducateControl

Worksite Health EvaluationsDiscoveryDiscovery

Strategies:AwareDiscoverEngage

Components: Goals:

The interactive health solutions approach- reduce severity of claims and improve employee productivity by helping employees get and stay healthy.

Not all Employees Have the Same Needs

A one size fits all approach leaves many participants out of the equation.

Goals should include:– For the healthy- stay that way– For the less than healthy, migrate them in

steps to an improving state of control and overall health.

Case Management

Optimal Health – Disease Management

Wellness

Well & Low Risk Members

(HRA, Wellness,

Prevention)

Low Risk Members

(Wellness, UM, Disease

Management)

Moderate Risk Members

(UM, Case Mgmt, Disease

Mgmt)

High Risk Members with

Multiple Disease States

(UM, Case Mgmt Disease Mgmt)

Members Requiring Complex Care

(UM, Case Mgmt, Disease Mgmt,

LongTerm Care)

Members Health Risk

Utilization Management

321 4 5

1 2 3 4 5

Optimal Health Plus Process

Your Long Term Strategy

• Replace a wait until it breaks payment plan with pro-active annual screening and testing of employees

• Replace a once a year rate surprise with a quarterly review of plan results

• Start treating the funds committed to healthcare as a long term investment rather than a short term expense.

Bottom LineBottom Line

• Healthier EmployeesHealthier Employees

• Improved ProductivityImproved Productivity

• Lower Insurance CostsLower Insurance Costs

Do you know where you are going?

It has been said if you do not plan on where you are going, you will certainly get there.

However, to improve your chances of liking the destination when you arrive, you have to plan for it.

It’s your choice - A long term strategy for combating the rising cost of healthcare. The future is what you make it!