the changing landscape of employer health benefits — the transition from cost to value
DESCRIPTION
Employers are at a line of demarcation in how they structure and deliver health benefits. Many are focused solely on financing/coverage of health care and do not understand the importance and business impact of health outcomes such as absence, disability, performance and productivity. Thomas Parry, president of the not-for-profit Integrated Benefits Institute, will discuss the full costs of health, how to make the business case to senior leaders and how to track key results.TRANSCRIPT
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The Changing Landscape of Employer Health Benefits — The
Transition From Cost to Value
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Speaker: Thomas Parry President Integrated Benefits Institute
Moderator: Kellye Whitney
Associate Editorial Director Workforce magazine
The Changing Landscape of Employer Health Benefits — The
Transition From Cost to Value
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Kellye Whitney Associate Editorial Director Workforce magazine
The Changing Landscape of Employer Health Benefits — The
Transition From Cost to Value
#WFwebinar
Thomas Parry President Integrated Benefits Institute
The Changing Landscape of Employer Health Benefits — The
Transition From Cost to Value
The Changing Landscape of Employer Health Benefits -- From Cost to Business Value --
Thomas Parry, Ph.D. President Integrated Benefits Institute
A New Employer Setting
• Responding to the ACA: Why stay in?
• Show the C-suite the value of improved workforce health
• Dead end: attempting to control claims costs in separate program silos
• Looking for best strategies to improve workforce health, reduce lost time, enhance productivity and impact business
• Limited data, time and dollars
Where Employers Started: Cost Shifting
Health Costs Plan Design
Trying to Get on the Front End of Cost
Treatment
Health Costs Plan Design
Chronic Health Conditions
Health Risks
Understanding Outcomes
Treatment
Health Costs Plan Design
Chronic Health Conditions
Health Risks
Work Absence/Disability
Work Performance
Lost Productivity
Next: Encompassing a Broader View
Treatment
Health Costs Plan Design
Chronic Health Conditions
Health Risks
Work Absence/Disability
Work Performance
Lost Productivity
EE Health Behaviors & Engagement
Corporate Culture & Structure
Business Performance
Wellbeing
What’s at Risk for Employers?
The True Costs of Health
• 10,000 life manufacturing company
• 71% male
• 19% of employees 55 years or older
• 61% skilled/semi-skilled laborers
Healthcare Costs – The Traditional View
Health Costs – Adding Lost Time Costs
The Total Costs of Health
Full Cost Components
Number of Chronic Conditions
Chronic Conditions & Treatment
Chronic Condition Prevalence -- Top Five --
Lost Productivity Costs: Top 5 Chronic Conditions
$5.5
$4.3 $3.8
$3.2 $3.0
Chronic Conditions & Co-Morbidities
Linking Healthcare to Productivity Outcomes
Going Beyond Medical & Pharmacy to Absence and Presenteeism
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
Cos
t per
100
0 EE
s
Medical Pharmacy Absence lost prod Presenteeism lost prod
Co-Morbidity and Lost Time
IBI Research: Making Health the CFO’s Business
Principal Findings • CFOs are key participants in benefits
decisions • Health is an organizational priority • Productivity is critical to the bottom line,
but the role of health is less clear • CFOs understand that health impacts
performance • Internal information is most credible • Critical information for health-investment
decisions is lacking
The Impact of a Health-Focused Culture • Improving health is seen as very important
to productivity • Health’s impact on business goes beyond
healthcare costs and includes sick leave, “opportunity costs” of health, turnover, and absence payments
• Broader information available to make investment decisions: EE satisfaction, health risks, performance impact, ROI
Strength of Health Culture
The Impact of a Health-Focused Culture • Improving health is seen as very important
to productivity
• Health’s impact on business goes beyond healthcare costs and includes sick leave, “opportunity costs” of health, turnover, and absence payments
• Broader information available to make investment decisions: EE satisfaction, health risks, performance impact, ROI
Linking Health & Financial Performance: Putting Results in the CFO’s Terms
• Healthcare costs • Sick days • Turnover • “Opportunity costs” • Absence payments
Broad Information is Useful … But Not Very Available
MGM Mirage Case Study
IBI Health & Productivity Snapshot Results
1.8 lost days per FTE/Year 6.2 lost
days per FTE/Year
Lost worktime = 8 days per FTE/Year or $2,598 per FTE/Year in Lost Productivity
Lost-Time Improvement’s Impact on EBIDTA
Reducing 1 lost day/FTE = $15 MM to EBIDTA* from Productivity Gains
*Earnings before Interest, Depreciation, Taxes and Amortization
The Bottom Line
Savings $15.0 MM Wall-Street Multiple 10.7X Outstanding Shares 284.3 M Gain in Stock Price $ .56/share Principal Owner (56%) $90 MM
One Day of Productivity Improvement
The Challenge of “Big Data” to Employers
Workforce Key Health Dimensions* Ø Financial (cost) Ø Program participation Ø Biometric screening Ø Health risks Ø Utilization Ø Preventive care Ø Chronic conditions Ø Lost worktime Ø Lost productivity Ø Employee engagement
* Thomas Parry and Bruce Sherman, A Pragmatic Approach for Employers to Improve Measurement in Workforce Health and Productivity, Population Health Management, Vol. 15, No. 2, 2012
The Temporal Dimension Leading indicators ü Health risks ü Biometrics ü Chronic condition prevalence
Treatment indicators ü Preventive care ü EE engagement ü Health services utilization ü Program participation
Lagging indicators ü Financial ü Lost worktime ü Lost productivity
Dimensions & Dashboard Metrics Dimension Summary Metric
Financial Program cost/EE
Program participation EEs participating/All EEs
Biometrics EEs reaching target/All EEs
Health risks # of health risks/EE
Utilization # EEs getting care/All EEs
Preventive care # EEs getting screened/All EEs
Chronic conditions # EEs w/ chronic conditions/All EEs
Lost worktime # of lost workdays/EE
Lost productivity Lost productivity $/EE
Employee engagement Engagement score/EE
Thinking about Metrics as Hierarchies
Dashboard metrics
Component metrics
Contributing metrics
For more information: Thomas Parry [email protected] 415-222-7282
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