Health Care Costs to Double – The February issue of Health Affairs (Borger. Smith, Truffer, et, al. [25]2006, 61-73), published an analysis of a federal government report on current and projected health care costs over the next ten years. The estimated cost for 2005 is $2.02 trillion, which is 16.2% of the GDP. (editorial comment) - Numbers of this magnitude are incomprehensible for the human mind, so comparisons may bring the costs into sharper focus. The federal budget for 2005 was $2.47 trillion. Put another way, the cost of health care was about 80% of the amount required to operate the entire federal government. How can the 16.2% of the GDP be put into perspective? The sum total of all manufacturing in the U.S. for 2005 was 20% of the GDP, compared to the 16.2% for health care alone.

This is where we are today. The key question is where are we going? According to the Health Affairs report, in 2015, health care costs will be $4.0 trillion, which translates to about $12,320 per person. The percent of GDP will escalate to 20%. (editorial comment) $4.0 trillion annually calculates to about $11 billion every 24 hours. Does this put the cost of health care in a more understandable perspective? Probably not, but the main issue is that with continuing escalations of this magnitude, prevention is an absolute must.

The Harvard Business Review & Employee Health Management – Among those involved in Employee Health Management (EHM), there is a standing desire to see information published in the Harvard Business Review that advances the EHM agenda. The reason is because of the large number of CEO, CFO, and other senior management readers. The February issue contains the annual “HBR List of Breakthrough Ideas for 2006”. Among the top ten Breakthrough Ideas is an article titled, “Seeing the ‘Health’ in Health Care Costs”. The article starts with this observation:

“Amid corporate hand-wringing over raising health care spending, researchers – and a growing number of companies – are validating the truth of a well-known but often ignored principle: An ounce of health is worth a pound of health care. That is, businesses can reduce their over-all health care costs through targeted spending to prevent illness and improve health among their employees”.

The story continues by describing innovative and successful EHM programs at Dow Chemical, Pitney-Bowes, International Truck & Engine, and Johnson & Johnson. The article concludes with the following:

“Targeted health promotion programs like these exemplifies a fundamental shift in attitudes towards health care costs, one promoted by the growing realization among employers that smart investments in employee health not only is cost neutral, but will more than pay for itself. Companies that take this approach gain some control over seemingly uncontrollable health care spending and create a win-win situation: Their workers enjoy better health and quality of life while they (employers) realize more productive employees and improved financial results”.

Source: Harris & Sullivan. Seeing the “Health” in Health Care Costs. Harvard Business Review, Feb. 2006; 48-49. (editorial comment) - Why is this important? In a previous issue of this e - newsletter, it was pointed out that when the 160 CEO members of the Business Roundtable were asked “What is your company’s greatest concern?”, 43% said health care costs, 20% said energy costs, 19% said legal issues and 18% noted other reasons. Source: http://www.brt.org This clearly indicates that CEOs perceive a problem with the costs of healthcare. Now, the HBR is accepting for publication articles that recognize employee health management as a potential solution for the number one CEO concern. This could cause senior executives to be further motivated to invest in employee health management.

Attention…Communication-Education Needed – According to a survey conducted by MetLife, Inc, most employees have little comprehension about the amount of money their employer pays for health care coverage. The survey included 2,445 employees, 903 of which were over 21 years of age and 1,542 were 18 years or older. Nearly 50% were of the opinion that the employer pays less than $2,000 annually for employee health care, while about 28% thought that the employer pays less than $1,000 per year. 57% of the employees indicate they devote 30 minutes or less to make a decision about which health care plan they chose during open enrollment. Perhaps related to this, 60% say they do not understand which benefits plan best serve their needs. Source: http://www.metlife.com

A separate but related survey by Watson Wyatt Worldwide illustrates why communication-education about the value of the health care plan is important. About 12,000 employees were asked how well the company provided information about the value of its health benefits. The average turnover rate was about 17% at corporations that offered rich benefits, but has poor communications. By contrast, the average turnover rate was 12% among corporations that provided less costly benefits, but effectively communicated the value of the health benefits. For corporations who had rich benefits and exemplar value communications, the turnover rate was 8%. Source: http://www.watsonwyatt.com (editorial comment) - From this it can be assumed that one of the largest investments made by the employer may not be understood nor appreciated by employees. Is this a failure in corporate culture to adequately communicate and provide regular employee education on the value of the care plan and how to use it…or is this the responsibility of the employee-dependent to assume the responsibility to be better informed on health care economics?

Employee Health Management (EHM) Integration – Integration is starting to become the standard for employee health management (EHM). The HERO Forum Think Tank defines EHM as the integration of the following programs and activities:

• Assist and encourage employees and dependents who are no or low risk to maintain this status over time.
   
• Regular employee and dependent health assessments and targeted interventions to eliminate or reduce modifiable health risks.
   
• Targeted disease management to control symptoms in the short term and minimize major co-morbidities in long term.
   
• Monitor and manage absenteeism.
   
• Demand management (nurse telephone counseling, Internet information-education, self help books, etc) to control physician and emergency room visits.
   
• Disability management which results in expedient return to work.

Increasing numbers of corporations have integrated these components into a single cross-communication-interaction model. Several of the HERO Forum Think Tank members have gone a step further by integrating the above module into the health care plan.

One of these EHM core components, disease management, was addressed in the February issue of the Journal of Occupational and Environmental Medicine. The article reports on the impact of arthritis on medical expenditures, absenteeism and short term disability. Over a one year period, data from nine employers were used to compare direct and indirect costs for 8,502 employees who have arthritis with a matched group of employees without arthritis. Regression analysis was used to adjust for a variety of differences. Average total cost for employees with arthritis was $4,244 more than for workers without arthritis. The cost burden for arthritis was compared to that of hypertension, coronary heart disease, diabetes, cancers, asthma, depression, low back disorders, renal failure, and obstructive lung disease. Arthritis was the fourth most costly. Source: The Impact of Rheumatoid Arthritis on Medical Expenditures, Absenteeism, and Short Term Disability Benefits. Ozminkowski, Burton, Goetzel, el al. J. Occup. Environ. Med. 2006:48;135-148.

Achieving EHM Best Practice – What is EHM Best Practice? Is it a program where every core component is perfect, or is it state of the art, or the one that has received the most awards of recognition, or is it the one that is presented most often at conferences? This question could go on and on because there is a lack of widely accepted EHM standards and definitions. This situation is about to get better. CDC is funding work by Thomson Medstat to identify and better define what is required. The HERO Forum Think Tank is working on the Employee Health Management Best Practice Scorecard (Scorecard). The Scorecard identifies critical core components that the Think Tank feels should be part of the Best Practice equation. Some of these are Corporate Culture & Executive Commitment, Effective Use of Incentives, Integration & Communication, High Participation Rates, Documented Risk Reduction, Business Oriented Financial Impact, Global Application, etc. In each case, benchmark standards are suggested. This approach assumes that Best Practice is the sum total of these and core components. Approaching benchmarking and Best Practice through the development and refinement of individual core components could make the challenge more manageable and enhance the potential for success.

The HERO Forum for Employee Health Management Solutions – This is to announce the HERO Forum for Employee Health Management Solutions, which will convene September 18-20, 2006, at the Hyatt Regency Chicago O’Hare Airport. This is not a conference but a Forum. Most conferences consist of a series speakers who often deliver a monolog on “what you should do”. According to the dictionary, a Forum is “any public meeting place with open discussion”. Open discussion means back and forth interaction between all participants, not a one-sided monolog.

Specifically, the Forum centers on “HOW TO” Workshops on the Best Practice core components noted in the previous Achieving EHM Best Practice section…How to generate Corporate Culture & Executive Commitment, How to develop effective Incentives, How to create and calculate Financial Returns, etc. Workshops are facilitated by employers who have the most mature, successful and data-rich programs. They explain in detail and interact on how they do it. The Workshops are 90-120 minutes sessions, with about half the time for employer facilitation, and the other half for audience reaction, comments, critique, questions and answers. In addition to the Workshops, there are corporate executive Keynote presentations, along with several timely Panel-Audience Discussions. The uniqueness of the Forum raises the bar for EHM education-sharing content and high-quality networking. Facilitation and over-sight is provided by the HERO Forum Think Tank.

If this sounds of interest, please reserve September 18-20, 2006 on your calendar. For more information, go to: http://www.the-hero.org

“A person who has health has a thousand wishes,
the person who doesn’t, has but one”.

                                                Anonymous

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