measuring the productivity impact of health thomas parry, ph.d. president
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Measuring the Productivity Impact of Health Thomas Parry, Ph.D. President. Integrated Benefits Institute. Today’s Agenda. What is health-related productivity? How do you measure it pragmatically ? How do CFOs see it? Is it big enough to care about? - PowerPoint PPT PresentationTRANSCRIPT
Measuring the Productivity Impact of Health
Thomas Parry, Ph.D. President
Integrated Benefits Institute
Today’s Agenda• What is health-related
productivity?• How do you measure it
pragmatically?• How do CFOs see it?• Is it big enough to care about?• What do you do it you don’t have
all the data?
About IBI• National, not-for-profit corporation• 670 corporate sponsors• Employers: 90% of IBI’s members• IBI’s mission. Demonstrate the business
value of a healthy workforce through:– Independent HPM research– Measurement and modeling tools– Forum for sharing ideas and experience
• Visit www.ibiweb.org
Operational definition: “the financial impact on the company when employees are not at work and fully function due to their health”
Quantifying Financial Lost Productivity*
• Two components: absence and decrements in job performance (“presenteeism”)
• The Financial Impact of Absence– Wage replacement payments– “Opportunity costs” of ER’s response
• The Financial Impact of Presenteeism– Wage and benefit “overpayments”– Opportunity costs of resulting lost time
Translating Lost Time into Lost Productivity*
• Ease in replacing workers• Time-value of output• Degree of working in teams
*Source: Sean Nicholson, Mark Pauly, et al., "Measuring the Effects of Work Loss on Productivity with Team Production," Health Economics 15: 111-123 (2006).
How Big is It?
The Full Costs of EE Health-- Auto Manufacturers
• Estimates based on IBI’s new FCE modeling tool
• 171,250 employees• Employer-paid claims costs only• Published as IBI Quick Study in
February 2011
Health Costs – The Traditional View
Medical (EE) Medical (family)$0
$100
$200
$300
$400
$500
Medical
Total = $509 MM
Health Costs – Adding Pharmacy
Medical (EE) Medical (family)$0
$100
$200
$300
$400
$500
Medical Pharmacy
Total = $623 MM
Health Costs – Adding Lost-Time Pay
Medical (EE) Medical (family) Time-loss pay$0
$100
$200
$300
$400
$500
Medical Pharmacy Wage replacements
Total = $824 MM
Health Costs – Adding Absence Impact
Medical (EE) Medical (family) Time-loss pay Lost productivity$0
$100
$200
$300
$400
$500Medical PharmacyWage replacements Absence LP
Total = $923 MM
Health Costs – Adding Performance Impact
Medical (EE) Medical (family) Time-loss pay Lost productivity$0
$100
$200
$300
$400
$500
Medical Pharmacy Wage replacementsAbsence LP Performance LP
Total = $1.29 B
Full Cost Components
Medical Wage replacementsAbsence LP Performance LP
8%48%
28%
16%
Health and Productivity as a Business Strategy: A Multiemployer Study*
* JOEM Vol. 51, No. 4, April 2009
Full Costs – Medical, Pharmacy, Absence and Presenteeism
Co-Morbidity and Lost Time
0
5
10
15
20
25
30
35
40
1 2 3 4 5 6 7 8 9 10+
# of chronic conditions
Lost
day
s
Absence lost time Presenteeism lost time
The View from the C-Suite
Linking Health, Productivity & the Bottom Line
Strong link61%
Weak link7%
Moderate link32%
CFO Survey, IBI, 2002
The Impact of Ill-Health
0%
25%
50%
75%
100%
Highermedical
Troublefocusing on
job
Moreabsence
Affectsbottom line
beyondhealthcare
Adverselyaffects other
benefitscosts
Need largerworkforce
Agree Strongly agree
96%90% 86% 84%
71%
47%
Source: The Business Value of Health: Linking CFOs to Health and Productivity , IBI, 2006
Workforce Productivity’s Impact on Financials
CFO Survey, IBI, 2002
None1%
Slight Degree4%
Great Degree51%
Moderate Degree16%
Critical Factor28%
A big deal for 79%
21
Are CFOs Getting Information?
• Absence– 51% ever get reports on
occurrence– 22% get reports on financial
impact
• Presenteeism– 22% ever get reports on
occurrence– 8% get reports on financial impact
Source: The Business Value of Health: Linking CFOs to Health and Productivity , IBI, 2006
Sources of Information
Absence• Components
– Sick leave– Short-term disability– Long-term disability– Family and medical leave– Workers’ comp
• Company experience• Industry information• Modeled information
Performance• Self-reported• Company surveys• Health-risk assessments• Modeled information
