the economics of wellness: is your wellness program making an impact? lee dukes, president principal...
Post on 01-Apr-2015
215 Views
Preview:
TRANSCRIPT
The Economics of Wellness:Is Your Wellness Program Making an Impact?
Lee Dukes, PresidentPrincipal Wellness Company
Costs Follow Risks
While there are many reasons why
health care costs have risen rapidly
over recent years, researchers agree:
poor health caused by unhealthy
behaviors is the largest controllable
factor. Costs follow risks!
UnhealthyBehavior
Health CareCosts
Physical inactivity, poor eating habits, tobacco use, unmanaged stress
Health Risks
Obesity, high blood pressure, elevated cholesterol and blood sugar
ChronicDisease
Diabetes, heart disease, hypertension, stroke
While there are many reasons why
health care costs have risen rapidly
over recent years, researchers agree:
poor health caused by unhealthy
behaviors is the largest controllable
factor. Costs follow risks!
UnhealthyBehavior
STD, WC, Productivity
Costs
Physical inactivity, poor eating habits, tobacco use, unmanaged stress
Health Risks
Obesity, high blood pressure, elevated cholesterol and blood sugar
ChronicDisease
Diabetes, heart disease, hypertension, stroke
Costs Follow Risks
N = 27,799
Wellness Score 81.1
Mean Cost $5,150
9,452 (34%)71.8
$7,728
18,347 (66%)85.9
$3,822
6,285 (22.6%)
71.4$8,801
3,167 (11.4%)
82.8$5,675
2,810 (10.1%)
75.6$7,051
15,537 (55.9%)
87.0$3,691
4,819 (17.3%)
70.9$9,555
1.466 (5.3%)82.6
$6,564
1,131 (4.1%)74.8
$6,812
2,036 (7.3%)83.9
$4,899
1,306 (4.7%)74.3
$9,078
1,504 (5.4%)84.1
$6,728
1,742 (6.3%)76.0
$6,893
13,795 (49.6%)
87.6$3,704
University of Michigan Health Management Research Center
Year 1
Year 2
Year 3
Translating Health Status to Dollars
Medical Paid Amount x Age x Risk
Medical Costs Associated with Risks
$2,098
$4,530
$5,813
$1,550
$2,667
$3,364
$4,718
$1,351 $2,110
$2,912
$3,894
$1,122$1,523 $2,081
$2,941
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
19-34 35-44 45-54 55-64
Annual Medical Costs
Moderate
Unknown
Low
High
$7,123
Musich, Lu, McDonald, Champagne, Edington. AJHP. 18(3): 264-268, 2004
36 Studies
• 22 medical costs, 22 absenteeism, 8 both
• Healthcare average ROI 3.3:1
• Absenteeism average ROI 2.7:1
Other Meta Analyses
• 2001 by Steve Aldana 3:5 - 5.8:1
• 2005 by Larry Chapman 5.8:1
Health Affairs: February 2010
Return on Investment
Can be prospective or retrospective
Estimate of how much you saved compared to how much you spent
Expressed as a ratio (2:1)
Not the same as savings• Savings = difference in dollars with vs. without the
investment• ROI = Savings / program costs in today’s dollars
ROI can be low but savings can be high
What Is ROI?
Source: Ron Z. Goetzel, Forecasting ROI for Improving Employee Health and Productivity, NBGH Oct. 2007
If health care costs trended upward or downward, was it the result of changes related to…
• Plan design• Employee population• Available services• Employer policies• Government policies• Healthcare providers
Probably a combination, with various degrees of
impact
Challenges of Measuring ROI for Wellness
Zero Trend
Time
Yea
r-O
ver-
Yea
r In
crea
se
35%
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
do-nothing trend
negative trend
zero trend
Why only measure economic impact?
Other important metrics • Health of the population
• National health standards • Economic impact studies
• Engagement rates• Employee satisfaction and perceptions• Changes in company policies• Environmental changes• Leadership support• External exposure• Preventive care
Evaluating Program Impact
Considerations
• Expectations
• Baseline status
• Claims data
• Privacy
• Outliers
• Time period
Evaluating Program Impact
Option 1Claims experience: compare claims of wellness participants to non-participants
Pros – connects engagement to dollars
Cons – the smaller the number of participants, the likely to include biases
– if little or no incentive, will attract healthiest
– if high participation for participating in DM or coaching, will attract the least healthy
– must account for changes in plan design and/or plan choice
Evaluating Program Impact
Evaluating Program Impact
Option 2Changes in risk status; model the estimated economic impact by risk changes compared to a do-nothing strategy; medical, productivity, STD, Workers’ comp
Pros – aligns health improvement with wellness effort
– does not require claims data
Cons – modeled approach
– requires high engagement rates
– requires some sophistication to both explain and understand
– does not account for non-participants in cohort group
Evaluating Program Impact
Translating Health Status to DollarsN = 672
Estimated Economic Impact - Modeled
Option 3Changes in risk status compared to claims experience; Markov Chain analysis
Pros – aligns risk group with average claims experience
– easy to communicate to C-suite
Cons – requires high engagement rates
– baseline diminishes over time
– does not account for costs that would likely have been incurred if no program in place
– does not account for non-participants
Evaluating Program Impact
26
2010 Risk Transition 2011
Net Change in Risk Status is 4.4% Improvement90% Low Risk stayed Low Risk
Low Risk6,947 (76%)
Moderate Risk1,877 (20%)
High Risk393 (4%)
High Risk298 (3%)
Moderate Risk1,621 (18%)
Low Risk7,298 (79%)
Low Risk (n=6,231)
Moderate Risk (n=675)
High Risk (n=41)
Low Risk (n=981)
Moderate Risk (n=758)
High Risk (n=138)
Low Risk (n=86)
Moderate Risk (n=188)
High Risk (n=119)
Translating Health Status to DollarsN = 9,217
$5,565 $5,615
$6,685 $6,724
$11,755 $12,915
XYZ Claims Cost Per Employee
27
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Ave
rage
Cla
ims
per
Em
ploy
ee
Without Wellness With Wellness Running Average
Lee DukesPresident, Principal Wellness Company
dukes.lee@principal.com
Contact Information
top related