the hidden risk that is tearing your company apart acbg 3 30 10
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The ACBG Edge is an process that allows construction companies manage the health and productivity risk of their employees. This complements American Construction Benefits Group\’s Lean Health Insurance Advantage. Together, these construction wellness processes create champion companies in 3 short years.TRANSCRIPT
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The Hidden Risk That is Tearing Your Company Apart:
Understanding Your Total Cost of Healthcare and its Impact on Your Profits
Presented by: Steve Heussner
March 30, 2010
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The Pathway To Today’s Health!!!!
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5 Confidential, unpublished property of CIGNA. Do not duplicate or distribute. Use and distribution limited solely to authorized personnel. © Copyright 2008 CIGNA.
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0 1000 2000 3000 4000 5000 6000
AustriaBelgiumCanada
Czech RepublicDenmark
FinlandFrance
GermanyGreece
HungaryIcelandIreland
ItalyKorea
LuxembourgMexico
NetherlandsNew Zealand
NorwayPoland
PortugalSlovak Republic
SpainSweden
SwitzerlandUnited Kingdom
United States
Per capital health expenditures in US $
Source: Organization for Economic Cooperation and Development (OECD)
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Source: Organization for Economic Cooperation and Development (OECD)
0 1 2 3 4 5 6 7
AustraliaAustriaCanada
Czech RepublicDenmark
FinlandFranceGreece
HungaryIreland
ItalyKorea
LuxembourgMexico
NetherlandsNorw ay
PolandPortugal
Slovak RepublicSpain
Sw edenSw itzerland
TurkeyUnited Kingdom
United States
Acute care beds/1,000 population
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Source: Organization for Economic Cooperation and Development (OECD)
0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5
AustraliaAustria
BelgiumCanada
Czech RepublicDenmark
FinlandFrance
GermanyGreeceIcelandIreland
ItalyKorea
LuxembourgMexico
NetherlandsNew Zealand
NorwayPoland
PortugalSlovak Republic
SpainSwitzerland
TurkeyUnited Kingdom
United States
Practicing physicians/1,000 population
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0 2 4 6 8 10 12 14 16 18 20
AustraliaAustria
BelgiumCanada
Czech RepublicDenmark
FinlandFrance
GermanyGreece
HungaryIcelandIreland
ItalyJapanKorea
LuxembourgMexico
NetherlandsNew Zealand
NorwayPoland
PortugalSlovak Republic
SpainSweden
SwitzerlandUnited Kingdom
United States
Source: Organization for Economic Cooperation and Development (OECD)
Percent of population over age 65
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0 5 10 15 20 25 30 35
% females
% males
% total pop.
United States
United Kingdom
Switzerland
Sweden
Slovak Republic
Norway
Netherlands
Luxembourg
Japan
Ireland
Iceland
France
Finland
Czech Republic
Source: Organization for Economic Cooperation and Development (OECD)
Obesity rate (BMI>30kg/m2)
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Obesity
• The effects of obesity is similar to 20 years of aging.
• Obesity is a greater trigger for health problems and increased health spending than smoking or drinking.
• Individuals who are obese have 30% to 50% more chronic medical problems than those who smoke or drink heavily.
National Business Group on Health
Healthy Weight, Healthy Lifestyles Primary Fact Sheet
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Obesity
• Overweight and obese individuals are at an increased risk for:
• Type 2 diabetes
• Heart disease
• Hypertension
• Endometrial, breast, prostate and colon cancers
• Respiratory problems
• Stroke
• Osteoarthritis
• Sleep apnea
• Gallbladder disease
• Poor female reproductive health
• Depression
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Sleep Apnea
• Sleep disorder that causes excessive daytime sleepiness.
• Upper airway is blocked by relaxing soft tissue causing complete or partial obstruction.
• Breathing can stop from 10 seconds to 2 minutes.
• Episodes can occur from 5 to 100 times an hour.
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Sleep Apnea Signs & Symptoms
• 92% of those diagnosed are male.
• Average BMI of 31 (Obese).
• Short, stocky neck (>17 inches).
• Snoring.
• Pauses in breathing at night.
• Waking up gasping or choking.
• Weight problems.
• High blood pressure.
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~ 10 to 15% have been diagnosed
85% of OSA patients remain untreated
Obstructive Sleep Apnea United States
~20 million persons17 million
Undiagnosedfor OSA
3 millionTreatedfor OSA
Over 17 Million Undiagnosed Patients
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30%
35%
50%
60%
80%
Coronary ArteryDisease
All Hypertension
Congestive HeartFailure
Stroke / TIA
Drug-ResistantHypertension
Logan et al.J. Hypertension 2001
Javaheri et al.Circulation 1999
Sjostrom et al.Thorax 2002
Schafer et al.Cardiology 1999
Bassetti et al.Sleep 1999
Prevalence of Sleep Apnea
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• Tracked 339 driver associates with Sleep Apnea
• Evaluated safety performance and health care costs- 12 months before treatment and 12 months after treatment
• Findings:- Preventable crashes were reduced by 30%- Median cost of crashes reduced by 48%- Retention rate improved by 60% over fleet avg.- Health care costs reduced by over 50%- Health care savings of $539.00 per driver / month
• Expanded study in 2006 to 788 drivers – Similar results- Statistically analyzed by 3rd party
Schneider Study, 2004 - 2006
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• For every dollar invested into the program, their return on investment was a two to three dollar savings on medical and accident expenses
• A 200% increase in employee retention for those in their program as compared to the company overall
• Drivers treated for sleep apnea had a 73% reduction in accidents
• A 91% reduction in hospital admissions
• And an overall a 57% reduction in healthcare costs.
Schneider Study, 2004 - 2006
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¹ Kryger, et al. OSA Patients Use More Health Care Resources Ten Years Prior to Diagnosis. Sleep Research Online 1998:1(1):71-74
$5,000
$4,000
$3,000
$2,000
$1,000
$0
$7,500
$6,000
$4,500
$3,000
$1,500
0
Avg. Physician Visit Costs
Avg. Hospitalization Expenses
NON-OSAGROUP
$1,969
OSAGROUP
$6,176
NON-OSAGROUP
$3,734
$6,176
$3,734
OSAGROUP
$3,972
$3,972
$1,969
Individual Impact of OSA on Utilization Costs
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• Diabetes affects nearly 21 million Americans (7% of population)
• Diabetes is the 6th leading cause of death in US
• 50% of people with type 2 diabetes also suffer from sleep apnea
1Centers for Disease Control and Prevention, National Diabetes Fact Sheet, 20052Babu, Ambika, R., et al. Type 2 Diabetes, Glycemic Control, and Continuous Positive Airway Pressure in Obstructive Sleep Apnea. Arch Intern Med 2005:165:447-452
The Link Between OSA and Diabetes
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Diabetes
• 23.6 million people or 7.8% of the population of the United States has diabetes.
• Cases of diabetes doubled from 1990 to 2005.
• Cases are expected to double again by 2030.
• The incidence of Type II Diabetes in adolescence has increased 10 times over the last decade and now constitutes just over 1/3 of new pediatric diabetes cases.
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• Diabetes is the 7th leading cause of death nationally, over 233,000 deaths per year.
• According to the National Center for Health Statistics, diabetes is the only major disease besides Alzheimer's with a death rate that continues to rise.
• Diabetes deaths have climbed 22% since 1990
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Cost of Diabetes in the U.S.
• Total cost is $174 billion a year.
• Direct medical cost are $116 billion a year.
• Indirect costs are $58 billion a year (Disability, Work Loss, Premature Death).
• Annual health cost of a person with Type II Diabetes is 3.2 times the average American without diabetes.
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Complications of Diabetes
• Of those with diabetes:
• 3 out of 5 people have 1 other serious health problem.
• 1 in 3 has two other serious health problems.
• 1 out of 10 has three other serious health problems.
• 1 out of 13 has four or more other serious health problems.
• Diabetes is the leading cause of adult blindness, lower limb amputation, kidney disease and nerve damage.
Diabetes Sources:National Diabetes Fact Sheet of the National Center for Chronic Disease
Prevention and Health Promotion; NCHS; CDC; ADA; AACE
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“Behaviors drive 80% of disease, premature deaths, healthcare and productivity costs.”
Michael D. Parkinson, MD, MPH, FACPMFormer EVP, Chief Health and Medical Officer
Lumenos/Wellpoint
UM HMRC Wellness in the Workplace Annual ConferenceMarch, 2009
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70% of medical & Rx claims are from poor lifestyle choices
48
71%
63% 61%54%
44%
32%22% 21%
16%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Po
or
Nu
trit
ion
No
Exe
rcis
e
Hig
h S
tres
s
Hig
h C
ho
l
Rec
ent
Bac
kP
ain
Dri
vin
gR
isks
Sm
oki
ng
Hig
h B
loo
dP
ress
ure
Alc
oh
ol
Ab
use
New England Journal of Medicine
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Coca Cola (12 oz. can)
Calories Sugar (g) Sugar (teaspoons)
140 36 7.2
#1 Source of Calories in the U.S. = Soft Drinks
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#1 Vegetable in the U.S. = French Fries
Calories Sodium Total Fat (g)
500 350 25
McDonald’s Large Fries
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Common Lunch???
McDonald’s Value Meal
Calories Sodium (mg)
Total Fat (g)
Sugar (g) / Tsps
Big Mac 540 1,040 29 9 / 2.25
Large Fries 500 350 25 0
Large Coke 310 20 0 86 / 21.5
TOTAL 1,350 1,410 54 95 / 23.75
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Is Cancer Preventable by Behavior?
• “…one-third of the more than 500,000 cancer deaths that occur in the U.S. each year is attributed to diet and physical activity habits, including overweight and obesity, while another third is caused by exposure to tobacco products.”
• “Although genetic inheritance influences the risk of cancer, most of the variation in cancer risk across populations and among individuals is due to factors that are not inherited.”
American Cancer SocietyCancer Journal for Clinicians
January 28, 2010
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Behavioral Causes of Death
Mokdad, A.H., Marks, J.S., et al. Actual causes of death in the United States. JAMA. 2004; 291:1238-1245.
Actual Cause No.(%) in 1990 No.(%) in 2000
Tobacco 400,000 (19) 435,000 (18.1)
Poor diet and physical inactivity 300,000 (14) 400,000 (16.6)
Alcohol consumption 100,000 (5) 85,000 (3.5)
Microbial agents 90,000 (4) 75,000 (3.1)
Toxic agents 60,000 (3) 55,000 (2.3)
Motor vehicle 25,000 (1) 43,000 (1.8)
Firearms 35,000 (2) 29,000 (1.2)
Sexual behavior 30,000 (1) 20,000 (0.8)
Illicit drug use 20,000 (<1) 17,000 (0.7)
Total 1,060,000 (50) 1,159,000 (48.2)
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Current tobacco use
Reported use of medications
Sedentary lifestyle
Rate Health as poor or fair
Absent 5 days or greater in the past year
Blood pressure 130/85 or greater
Cholesterol 220 or greater
Greater than 20% over ideal body weight
Report high stress on the health risk appraisal
Glucose 110 or greater
HDL less than 40 mg/dl
LDL greater than 100
Triglycerides 150 or greater
Family history of heart disease
Family history of diabetes
High fat intake
Current Diabetes
Alcohol use
Master List of Risk Factors
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There is a direct relationship between the number of risk factors an individual has and their propensity to be a low, medium or high spender of the health care system.
0 – 1 risk factors = low risk
2 – 4 risk factors = medium risk
5 or more risk factors = high-risk
Source: University of Michigan Health Management Research Center
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University of Michigan Health Management Research Center
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 Self-Reported Major Diseases Associated with Excess Risks
Percent with Disease
Med Risk
Age Range
High
Musich, McDonald, Hirschland, Edington. Disease Management & Health Outcomes 10(4):251-258, 2002.
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University of Michigan Health Management Research Center
Medical/Drug Cost Comparison by Risk Status
Yen, Witting, Edington. AJHP. 6:46-54, 1991
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University of Michigan Health Management Research Center
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
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Spill Over Medical Costs
• Work Comp
• LTD & STD
• Absenteeism
• Presenteeism
• Productivity
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University of Michigan Health Management Research Center
Relative Value of Health to the Organization: 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
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Health and Presenteeism
• The Institute for Health and Productivity Management coined the term “presenteeism”.
• The time when employees continue to work despite the presence of illness that reduces their productivity.
• Good health optimizes employee functionality; in other words, individuals who feel better also work better.
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University of Michigan Health Management Research Center
Total Disability Cost by Risk Status
Wright, Beard, Edington. JOEM. 44(12):1126-1134, 2002
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University of Michigan Health Management Research Center
Estimated Loss of Productivity by Risk Status
*p<.05, **p<.01
Burton, Chen, Conti, Schultz, Pransky, Edington. JOEM. 47(8):769-777. 2005
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University of Michigan Health Management Research Center
$840 $1,261
$3,321
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
Low Risk (0-2Risks)
HRA Non-Participant
Medium Risk (3-4 Risks)
High Risk (5+Risks)
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
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University of Michigan Health Management Research Center
$175 $292
$757
$0
$500
$1,000
$1,500
Low Risk (0-2Risks) N=685
HRA Non-Participant
N=4,649
Medium Risk (3-4 Risks) N-520
High Risk (5+Risks) N=366
Excess Costs
Base Cost
Excess Disability Costs due to Excess Risks
$491$666
$783
$1,248
Wright, Beard, Edington. JOEM. 44(12):1126-1134, 2002
36% of Absence, STD, Worker’s Comp
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University of Michigan Health Management Research Center
Excess On-The-Job Loss Due to Excess Risks
12.2%
6.2%
0%
5%
10%
15%
20%
25%
30%
Low Risk (0-2 Risks)n=17,947
Medium Risk (3-4 Risks)N=6,959
High Risk (5+ Risks) n=3,469
Excess CostBase Cost
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University of Michigan Health Management Research Center
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
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2007 Duke University Medical Center Study Findings
• Study includes 11,728 employees from 1997 to 2004
• Obese employees:
• Filed twice as many WC claims as non-obese.
• Had 7 times higher medical costs from those claims.
• Lost 13 times more days from work injury or work illness.
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72
Business Impact of Today’s Poor Health
Source: The McKinsey Quarterly, Dec 2008 Arch. Of Internal Medicine, April 2007
0%
200%
400%
600%
800%
1000%
1200%
18.5 - 24.9 BMI (Recommended)
30 - 34.9 BMI (Obesity class I)
35 - 39.99 BMI (Obesity class II)
?40 BMI (Obesity class III)
100% 118% 155% 191%100%
236%
347%
755%
100%
430%
729%
1194%
Medical Claim Cost Workers Comp Cost Productivity/Lost Time
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Other Areas Impacted by Poor Health
• Insurance premiums
• Retained losses
• Stop loss deductible payments
• Self-insured claims
• Internal administrative expenses
• Risk, safety & claims staffing
• HR workload
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Direct and Indirect Burden of Illness Study
• Institute of Health and Productivity, Cornell University
• Using The Medstat Group’s database
• The study included 374,799 employees from 1997 to 1999
• Reported on the financial consequences of the top 10 most costly and prevalent conditions
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Direct and indirect burden of illness, by condition and service area (using $23.15/hour wage estimate).
JOEM, Volume 46, Number 4, April 2004
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Cost of Excess Risk
Low Risk Med Risk High Risk
STD $222 $400 $616
WC $422 $452 $918
Absenteeism $453 $631 $994
Med & Rx $2,143 $2,752 $6,841
Presenteeism $4,860 $6,353 $14,054
Total $8,100 $10,588 $23,423
Excess Cost/Risk $0 $2,488 $15,323
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Excess Risk Impact on Profits
Number of Employees 500
Low Risk Med Risk High Risk
Risk Distribution 35% 35% 30%
Ex Cost From Ex Risk 0 $435,313 $2,298,375
Total Excess Cost $2,733,688
Profit Margin 0.05
Revenue Needed to Cover Excess Risk $54,673,750
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10% Improvement
Number of Employees 500
Low Risk Med Risk High Risk
Risk Distribution 45% 30% 25%
Ex Cost From Ex Risk 0 $373,125 $1,915,313
Total Excess Cost $2,288,438
Profit Margin 0.05
Revenue Needed to Cover Excess Risk $45,768,750
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20% Improvement
Number of Employees 500
Low Risk Med Risk High Risk
Risk Distribution 55% 25% 20%
Ex Cost From Ex Risk 0 $310,935 $1,532,250
Total Excess Cost $1,843,188
Profit Margin 0.05
Revenue Needed to Cover Excess Risk $36,863,750
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“The problem is that no entity in the current U.S. health care system makes any money until people get sick.”
- Dee W. Edington, PhD
Health Management Research Center, University of Michigan
HR Magazine, June 2009