Most Employers Underestimate Full Costs of Employee Health on Productivity
among workers is far costlier to U.S. employers than they realize, impacting
their profitability and undercutting the nation’s overall productivity,
according to a major study published this week in the Journal of Occupational
and Environmental Medicine (JOEM).
The multi-year study of ten organizations employing more than 150,000
workers indicates that employers who focus only on medical and pharmacy costs
in creating employee health strategies may misidentify the health conditions
that most impact the productivity of their employees — while underestimating
the impact of other factors.
One such factor, “presenteeism,” occurs when employees with health
conditions are present at their jobs but are unable to perform at full
capacity. The study closely examined the effects of presenteeism, concluding
that impaired employee-performance typically creates a greater drain on a
company’s productivity than employee absence — a finding which could come as
a surprise to some employers.
The study also found that when considering medical and drug costs alone,
the top five conditions driving costs are cancer (other than skin cancer),
back/neck pain, coronary heart disease, chronic pain, and high cholesterol.
But when health-related productivity costs are measured along with medical and
pharmacy costs, the top five chronic health conditions driving these overall
health costs shift significantly, to depression, obesity, arthritis, back/neck
pain and anxiety.
The study suggests that many employers miss an opportunity to improve
productivity and their bottom-line results by failing to recognize and
prioritize these health conditions when they develop integrated employee-
health strategies and related interventions.
The study, coordinated by the American College of Occupational and
Environmental Medicine (ACOEM), the Integrated Benefits Institute (IBI), and
Alere LLC (formerly Matria Healthcare, Inc.) is one of the largest of its kind
to date. Research was conducted via the Alere Center for Health Intelligence
and funding was provided by the National Pharmaceutical Council.
“The wake-up call for U.S. employers is that simply looking at the costs
of specific medical conditions by adding up medical and pharmacy claims costs
alone won’t give a true picture of the full impact of poor health on the much
greater costs of lost productivity in the workforce,” said
MPH, executive vice president of Health and Productivity Strategy for Alere(R)
and one of the study’s lead researchers. In addition to his role at Alere(R),
Dr. Loeppke serves on the board of directors of both IBI and ACOEM.
“Employers need to move beyond solutions that focus only on specific
medical conditions and toward the development of integrated personal health
support strategies that deal with multiple health conditions and health risks
by focusing on the whole person as well as the whole population,” said
especially important if American business is to remain competitive in the
midst of a dire global economy.”
Other highlights of the study:
— Health-related productivity costs are significantly greater than
medical and pharmacy costs alone. On average, every
costs is matched to
figure is much greater for some conditions.
— Co-morbidities — employees with multiple chronic health conditions –
drive the largest effects on productivity loss. The study calls for further
research to better evaluate the impacts of co-morbidities by conditions and
combinations of conditions.
— The impact of poor health on productivity impacts all levels of an
enterprise. Executives/managers seem to suffer high presenteeism productivity-
loss related to specific health conditions along with those in non-managerial
Researchers analyzed more than 1.1 million medical and pharmacy claims
during the study. The ten corporations that participated ranged from an
industrial chemical manufacturer and a computer hardware manufacturer to
telecommunications and technology companies.
To fully gauge health-related productivity costs, researchers measured
medical and pharmacy spending along with lost-productivity costs related to
absence and presenteeism. The study notes that employers have not historically
assessed costs in this way, limiting themselves instead to a “siloed” approach
that seeks to manage single health-cost categories, such as medical visits or
pharmaceuticals, through benefit-package design.
Researchers compared pharmacy and medical claims data to employee self-
reported absence, presenteeism and health information collected through the
Health and Work Performance Questionnaire (HPQ), developed by
Information collected on employer business measures was combined with this
database in modeling health-related lost productivity.
The analysis employed by the research team breaks down the silos typically
used when examining the cost of health care for a company. “When medical costs
are viewed in a silo, or without the broader context of the full health-
related costs, the full impact of a given health condition may be seriously
underestimated without accurately assessing the accompanying costs of lost
productivity,” Dr. Loeppke said.
“A healthy workforce is critical to an employer’s ability to compete in
today’s economy,” said
Council. “This landmark study can help employers understand the importance of
balancing health care costs with quality of care and wellness and prevention
initiatives when designing benefits. By recognizing these issues, employers
can take steps toward improving employee health, productivity, and retention,
as well as spend their health care dollars more effectively.”
“The transformational opportunity for employers is to look beyond
healthcare benefits as a cost to be managed and rather to the benefits of good
health as an investment to be leveraged. Ultimately, a healthier, more
productive workforce can help drive a healthier economy for our nation,” Dr.
ACOEM, IBI and Alere(R) have all launched efforts that encourage employers
to embrace the full-cost view of workplace health. ACOEM’s Health and
Productivity Management (HPM) Center, located at
www.acoem.org/HealthandProductivity.aspx, offers resources to help assess full
costs, as does IBI’s HPQ-Select and other tools located at www.ibiweb.org, and
Alere(R), which is located at www.alere.com.
Study authors include
The American College of Occupational and Environmental Medicine (ACOEM)
represents nearly 5,000 physicians specializing in occupational and
environmental medicine. Founded in 1916, ACOEM is the nation’s largest medical
society dedicated to promoting the health of workers through preventive
medicine, clinical care, disability management, research, and education. For
more information, visit www.acoem.org.
Alere, a member of the Inverness Medical Innovations
(www.invernessmedical.com) family of companies, is a leading provider of
health management services to health plans and employers. In collaboration
with industry and academic thought leaders, the Alere Center for Health
Intelligence is at the epicenter of leading, ground-breaking research on
important healthcare issues, conducting research and analysis on business
initiatives and strategies and publishing findings in leading peer-reviewed
health publications. For more information, email alereinfo@ alere.com or visit
The Integrated Benefits Institute provides employers and their supplier
partners with resources for proving the business value of health. A nonprofit
supplier of health and productivity research, measurement and benchmarking,
IBI’s programs, resources, measurement tools and expert networks advance
understanding about the link between — and the impact of — health-related
productivity on corporate profitability. For more information, visit
The National Pharmaceutical Council’s overarching mission is to sponsor,
participate in, and promote the scientific analyses of the appropriate use of
pharmaceuticals and the clinical and economic value of improved health
outcomes through pharmaceutical innovation. Supported by research-based
pharmaceutical member companies, NPC sponsors and conducts research and
education projects showing how the appropriate use of pharmaceuticals improves
both patient treatment and cost outcomes in the overall health care
environment. For more information, visit www.npcnow.org.
SOURCE American College of Occupational and Environmental Medicine; Alere(R);
Integrated Benefits Institute; National Pharmaceutical Council