the changing landscape of employer health benefits — the transition from cost to value

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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 tparry@ibiweb.org 415-222-7282

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