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Determining a Wellness ROI

Cherri Burdeyny, CEBSManager, Information Management and Plan AdministrationAlberta School Employee Benefit PlanEdmonton, Alberta

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Determining a Wellness ROI

• Real-life example of calculating ROI• Why it matters and to whom• Pitfalls to avoid• Takeaways:

– Who realizes the majority of cost savings?– What should be measured?– Benefits beyond savings?

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Agenda

1. Governance and general operations2. Challenges and observations3. Our approach4. Analysis and validation5. Looking toward the future6. Key takeaways

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Governance and General Operations

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Who We Are

• A Health and Welfare Trust

ASBA appoints 5 ASEBP Trustees

ATA appoints 5 ASEBP Trustees

10 ASEBP Trustees governed by

Deed of Trust

CREATED BY THE EDUCATION SECTOR FOR THE EDUCATION SECTOR

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Mission Statement

“With a focus on improving the overall health of our covered members, ASEBP strives to be the recognized leader for Alberta’s public education sector in providing comprehensive health benefits and related services.”

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Who We Serve

• Public education sector—K to 12• Over 55,000 covered members and their dependents in

almost 60 school jurisdictions• Third-party administrator (TPA) for Alberta Retired

Teachers’ Association

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Our Services

• Health & Disability Management Services– Proactive, holistic approach to promote and sustain strong

health and, where health is compromised, positive management of a disability.

• Benefit Services– Primary point of contact for all covered members,

responsible for providing accurate benefit information to maximize the benefits of coverage.

• School Jurisdiction Services– Central point of contact for all communications between

ASEBP and school jurisdiction employee representatives.

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Our Benefit Groupings

Income Replacement• Life Insurance• Basic Accidental Death

and Dismemberment• Extended Disability

Benefits (EDB)

General Health• Extended Health

Care (EHC)• Dental Care• Vision Care

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And so much more…

• Health Spending Account administration• Taxable Spending Account (pilot)• Employee Family Assistance Program (pilot)• Health services

– Healthy living initiatives– Chronic disease prevention clinics– Apple-a-Day

Additional Services

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Challenges and Observations

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Observations

• Aging population • Increase in health concerns among younger population• Cost expected to grow by 144% over 10 years• Per capita to grow by 110% over 10 years• EDB represents highest cost and highest risk, followed by

health plan• Expectation by school jurisdictions that plan premiums

will not exceed inflation

A COMPREHENSIVE VIEW OF THE FUTURE (POSITIVE AND NEGATIVE) IS NEEDED TO OPTIMIZE PLANNING

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Our Report Card

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Our Report Card

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The Issue

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The Issue

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Key Drivers

• MOVE away from fully pooled model • IDENTIFY metrics for ASEBP’s Rx plan—map risks to long-term

sustainability• BUILD business case for trustees to better manage drug spend• UNDERSTAND disease-state drivers to tailor health initiatives• ASSESS current benefit investments—effectiveness and ROI

FUTURE SUSTAINABILITY OF THE PLAN REQUIRES LONG TERM VISION AND COMMITMENT TO STRATEGY

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Our Approach

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Trustees Strategic Focus

1. Financial health

2. Progressive benefit offerings

3. Healthy living strategy

4. Operational readiness

5. Strong relationships

IS A QUANTIFIED ROI NECESSARY, OR IS INTUITION ENOUGH?

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Changing the Focus

• Health benefits vs. illness benefits• Health is more than an absence of

illness– Physical, mental, spiritual, cultural and

social dimensions• Health is a shared responsibility

IF WE CAN IMPROVE THE HEALTH, WE IMPROVE THE RISK FILE

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Our Health Model

Building Good Health—Keeping You Healthy—Supporting Your Health

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Our vision as a health organization...

PAY MANAGE PREVENT

“I didn’t even realize I had the potential to develop diabetes. Thank goodness for the health services at

ASEBP that alerted me to my potential and provided support in

addressing my related health issues.”

“I wonder what new information ASEBP has discovered for

managing my diabetes? Having their support in linking me to the community resources was

invaluable.”

“I wonder how much coverage I have left for my diabetic supplies?”

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Our Health Living Program (HLP)

An integrated, long term collaborative solution providing resources to improve and sustain health.• Biometric Screening• Confidential Online HRA• Lifestyle Coaching• Wellness Committees

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Our Approach

• INCREASE knowledge by providing tools and resources

• IDENTIFY AND PRIORITIZE strategies around specific disease states

• PROMOTE shorter EDB recovery times, support earlier return to work

• USE predictive modelling to examine “what if” scenarios

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Predictive Modelling—Why

• ILLUSTRATE the impact of potential changes and actions

– Identify what has to be changed– Determine how sensitive costs are to specific change– Quantify how much these changes will cost or save

• CREATE a big picture to build a successful benefit strategy

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Predictive Modelling—Why

• ANALYZE potential causes of deviations between actual and expected value

• LEARN from experience, track the impact of the changes, and calculate ROI

• SUPPORT controlling and management of expected costs and risks

THE VALUE OF AWARENESS: OPTIMIZING BENEFIT PLANS FOR CURRENT AND FUTURE NEEDS

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Predictive Modelling—How

• IDENTIFY and map future drug spend trending: – Changes in covered members– Drug experience of group– Benefit related to uncertainty (risk) assessment

• CHANGE 43 assumptions with real-time tool, including:

– Modelling of uncertainties and funding/plan design changes

– Use EDB and EHC data

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Predictive Modelling—How

• DEVELOP strategic benchmarking to identify comprehensive benefit position

• BUILD a conservative business case

STRATEGIC IDENTIFICATION OF POTENTIAL IMBALANCE BETWEEN BENEFIT COST EFFICIENCY ANDORGANIZATIONAL BENEFIT RISK TOLERANCE.

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Analysis and Validation

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The Journey

Challenges along the way:– Pooled spend/resources– Readiness and buy-in– Scalability– Motivated partners– Collective bargaining – Change mindset from cost to investment– Audience values (e.g., Patriot Act)– External partners/relationships

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Impact: What we heard

“Working with my Lifestyle Coach helped me to stay on track and achieve some goals.”

“Many of us on staff have worked through weight loss and exercise

together for the past few years, this is the one that it has allowed us to continue

and focus on this!”

“It’s a great change to see staff coming together to celebrate in different ways. Like

instead of going out for supper, we go golfing or tobogganing.”

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Analysis

• What data can be measured and tracked?• What is the cost side of the business?• Where are the trends taking us?• What are the key risks and specific health challenges?• What was needed to gauge “real” success?• What is the ROI of the HLP?

UNDERSTANDING AND PROVING ROI ENLIGHTENS US ON HOW WE CAN BETTER USE INFORMATION

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Defining Return on Investment

SIMPLE BUT CRUCIAL TO GAUGE SUCCESS AND SUSTAINABILITY

ROI Savings Achieved

Investment Made

Projected Pre-Wellness Plan CostActual Plan Cost

WellnessSaving

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Measuring Results

• IDENTIFY trends by measuring:– Plan experience

• Trends• Patent cliff impact• Per capita costs• Utilization• Dispensing fees• Transition allowance

– Enrolment– Participation in HLP vs. non-participating

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Measuring Results

• ESTABLISH baseline– Comparable districts– Entire business block

• DEVELOP multi-dimensional analysis (historical and current):

– Aggregate– Segmented– Individual

LEVERAGE THE MODEL TO FINESSE DATA IN ORDER TO DEVELOP DEEPER UNDERSTANDINGOF DIFFERENCES AND TRENDS

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Putting Data to Use

• CONDUCT cross analysis of comparable districts• PROJECT future costs vs. actual results• IDENTIFY key risks and categories• UNDERSTAND important sources of costs, trends and

risks• FILTER out noise (e.g., H1N1)

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Quantitative Findings

• In the process of completing the ROI review, participating HLP members were segmented by their risk profile using the following:

– Paid claims amount– Utilization– Year-over-year trend– Therapeutic categories

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Quantitative Findings20

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• Wellness strategies assist to move the average per capita claim cost and trend down across each of the five health risk groups

RISK IS NOT A COST ITSELF; RATHER RISK IS THE UNCERTAINTY OF COST

Claimant Risk Segmentation

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Quantitative Findings

Benefit Cost Evolution and Projection

- Total benefit cost without recent drug changes and HLP

- Total benefit cost with recent drug changes only

- Total Benefit Cost with recent drug changes and HLP

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Quantitative Findings

AS HLP GENERATES SAVINGS, ROI CONTINUES TO GROW.

Improving Participant Health – Decreasing Cost Escalation (11%)

Expected Increase in Plan Cost

With

Rx

& H

LP

With

Rx

Cha

nges

No

Cha

nges

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Qualitative Findings

“Soft” results– Recruitment/retention– Engagement– Reduced absenteeism

& presenteeism– Culture– Client loyalty– Community impact

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Key Observations

• The HLP has positive affect on costs, trends and volatility

• Employee risk groups decrease • Results are time sensitive• Average per capita cost trend decrease

– EHC 4% – EDB 5%

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Key Observations

• Require solid knowledge base on specific health challenges to ensure sustainability:

– What are the required resources to support continuation?– Is there capacity to support it?– Are stakeholders engaged?

ASEBP ACHIEVED A 700+% ROI ON HLP – PROGRAM DESIGN ENSURES CONTINUED SUCCESS

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Looking Toward The Future

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Next Steps

• Quantify “soft” results• Extend Health Care case management• Interact with provincial Strategic Clinical Networks• More robust gathering of HLP investments• Continue and expand disease state focus• Health and fitness support• Wellness Committee templates and support• Interactive health help—ask an expert!

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Key Takeaways

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Who saves?

• Wellness reduces medical costs at three levels:

– public plans– benefit plans– individual out-of-pocket

costs

HEALTHY RETURNS AND SUSTAINABILITY REQUIRE LONG TERM COMMITMENT

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What should be measured?

• Two types of benchmarks:– Like groups – Starting point data of own group

• Risk levels and segmentation• Top risk factors• Impact of external pressures• Predictive analytics and modelling are key

USING ONLY PAST STATISTICS IS NO LONGER A SOUND STRATEGY IN A SIGNIFICANTLY CHANGING ENVIRONMENT.

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Benefits Beyond Savings

• TARGET areas of success in order toredeploy savings

• SUPPORT creative solutions to plan designs and benefit offerings

• PROMOTE higher productivity• SHARE successes• ENCOURAGE positive behavioural change• BUILD loyalty

INSIGHT INTO WHERE YOU ARE TODAY, ALLOWS FOR VISION ON WHERE YOU WANT TO BE IN FUTURE.

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Pitfalls to Avoid

• Do not make conclusions based on figures alone• Indirect costs/benefits can have high impact so include

them• Don’t fall victim to “all or nothing”• It does not have to be so complicated• Well-structured protocol is critical• More data to the model does not make it better

IT’S NOT A PROJECT, IT’S A JOURNEY.

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Conclusion

Our experience with the HLP predictive analytics and modeling suggest that all benefit plans have the unique opportunity to embrace wellness as a benefit strategy with a quantifiable ROI.

ASEBP achieved 700+% ROI and other plans can do it too.

ASEBP MISSION: “ WITH FOCUS ON IMPROVING THE OVERALL HEALTH OF OUR COVERED MEMBERS…”

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"Information only becomes knowledge in the hands of someone who knows

what to do with it." Peter Drucker

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Our Partners & Sources

• Aon Hewitt

• Benefits Canada, March 8, 2012, “Predictive Modelling for Benefits Plans” by Perry Dorgan and Alexander Uborcev

• Benefits Canada, July 4, 2013, “Improving Individual and Organizational Health with a Measurable ROI.” by Alexander Uborcev and Perry Dorgan

• Cubic Health Reports, Mike Sullivan

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Questions

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Thank You

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