Health Management as a Serious Business Strategy

University of Michigan Health Management Research CenterUniversity of Michigan Health Management Research Center

Health Management as Health Management as a Serious Business a Serious Business

Strategy Strategy

THE UNIVERSITY OF MICHIGANHEALTH

MANAGEMENT RESEARCH CENTER

THE UNIVERSITY OF MICHIGANHEALTH

MANAGEMENT RESEARCH CENTER


The Secret to Zero Trends

Michigan PHA Annual MeetingSeptember 18, 2008

The Mission: Regaining Vitality in Americans and The Mission: Regaining Vitality in Americans and AmericaAmerica

Failed Healthcare Strategy: Failed Healthcare Strategy: Wait for Sickness: Wait for Sickness: Treat Treat 2020

Proposed Zero Trend Strategy: Proposed Zero Trend Strategy: Manage Health Manage Health Status Status 2020

The Solution: The Solution: Integrate Health into Company Integrate Health into Company Culture Culture 2020

Slides available


Lifestyle Scale for Individuals and Populations: Self-LeadersLifestyle Scale for Individuals and Populations: Self-Leaders

ChronicChronicSigns &Signs &

SymptomsSymptoms

FeelingFeeling OK OK

PrematurePrematureSickness, Sickness, Death & Death & DisabilityDisability

High-Level High-Level Wellness, Wellness, Energy and Energy and VitalityVitality

Edington. Corporate Fitness and Recreation. 2:44, 1983


From the Cost of Health CareFrom the Cost of Health Care to the to the

Total Value of Health Total Value of Health

From Health as the Absence of Disease to Health as Vitality and

Energy

From Individual Participation to Population Engagement

To Change the Conversation

From Behavior Change to Integration of Health into the Culture


Estimated Health ProblemsSelf -Reported

AllergiesBack PainCholesterolHeart Burn/Acid RefluxBlood PressureArthritisDepressionMigraine HeadachesAsthmaChronic PainDiabetesHeart ProblemsOsteoporosisBronchitis/EmphysemaCancerPast StrokeZero Medical Conditions

Health Problems

33.2% 26.9% 16.2% 15.2% 14.5% 14.5% 10.7% 9.4% 7.0% 6.4% 3.8% 3.3% 1.8%

1.7% 1.3% 0.7% 31.9%

UM-HMRC Estimated Medical Economics Report


1640 (35.0%)

4,163 (39.0%)

678(14.4%)

Risk Transitions

Time 1 – Time 2

Risk Transitions

Time 1 – Time 2

High RiskHigh Risk(>4 risks)(>4 risks)High RiskHigh Risk(>4 risks)(>4 risks)

Low RiskLow Risk(0 - 2 risks)(0 - 2 risks)

Medium RiskMedium Risk(3 - 4 risks)(3 - 4 risks)

2,373 (50.6%)

21,750 (77.8%)

4,546(42.6%)

10,670 (24.6%)

4,691 (10.8%)

27,951 (64.5%)

11,495 (26.5%)

5,226 (12.1%)

26,591 (61.4%)

892(3.2%)

1,961 (18.4%)

5,309 (19.0%)

Modified from Edington, AJHP. 15(5):341-349, 2001

Average of three years between measures


23,043 (34.0%)

25,856 (20.3%)

6,936(10.2%)

Cost Transitions

Time 1 – Time 2

High Cost($5000+)

High Cost($5000+)

Low CostLow Cost(<$1000)(<$1000)

Medium CostMedium Cost($1000-$4999)($1000-$4999)

37,701 (55.7%)

119,271 (74.1%)

75,500(59.1%)

127,644 (35.8%)

67,680 (19.0%)

160,951 (45.2%)

130,785 (36.7%)

73,427 (20.6%)

152,063 (42.7%)

9,4389,438(5.9%)(5.9%)

26,288 26,288 (20.6%)(20.6%)

32,242 (20.0%)32,242 (20.0%)

N=356,275 Non-Medicare Trad/PPO

Modified from Edington, AJHP. 15(5):341-349, 2001


Total Medical and Pharmacy Costs Total Medical and Pharmacy Costs Paid by Quarter for Three GroupsPaid by Quarter for Three Groups

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Q_12 Q_10 Q_8 Q_6 Q_4 Q_2 Q0 Q2 Q4 Q6 Q8 Q10 Q12

Serious Cost

Medium Cost

Low Cost

Musich,Schultz, Burton, Edington. DM&HO. 12(5):299-326,2004


Summary of the

Do-Nothing Strategy

The flow of Risks is to High-Risk

The flow of Costs is to High-Cost

Costs follow Risks and Age


Section II

The Health Status Strategy:

The Emerging Focus


Estimated Health Risks Health Risk Measure

Body WeightStress Safety Belt UsagePhysical ActivityBlood PressureLife SatisfactionSmoking Perception of Health Illness DaysExisting Medical ProblemCholesterolAlcoholZero Risk

High Risk

41.8%31.8% 28.6% 23.3% 22.8%22.4% 14.4% 13.7%10.9% 9.2% 8.3% 2.9%14.0%

OVERALL RISK LEVELS Low Risk 55.3% Medium Risk 27.7% High Risk 17.0%

UM-HMRC Estimated Medical Economics Report


25.30%

56.40%

80.00%

9.50%

32.00%

61.40%

3.00% 10.50% 18.60%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Less than 45 45 to 64 Greater than65

Low RiskLow Risk

Excess Self-Reported Major Diseases Associated with Excess

RisksPercent with Percent with DiseaseDisease

Med RiskMed Risk

Age RangeAge Range

HighHigh

Musich, McDonald, Hirschland, Edington. Disease Management & Health Outcomes 10(4):251-258, 2002.


Distribution: Age, Costs, & Risk Status

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

<5 10-14

19-24

29-34

39-44

49-54

59-64

69-74

79-84

0%

20%

40%

60%

% High Risk from HRA

Costs by Age Group

% of Population and Costs (All Covered Lives) % High Risk

N=1.2M individuals in total population. N=300K in risk population


LowLow

$5,114$5,710

$7,991

$10,785$11,909 $11,965

$2,565$3,353

$4,620

$6,625

$7,989$8,927

$1,414 $2,944$3,800

$5,212

$6,636$8,110

$1,776$2,193 $2,740

$3,734 $4,613$5,756

$0

$3,000

$6,000

$9,000

$12,000

19-34 35-44 45-54 55-64 65-74 75+

Costs Associated with Risks Associated with RisksMedical Paid Medical Paid Amount x Age x Risk x Age x Risk

Costs Associated with Risks Associated with RisksMedical Paid Medical Paid Amount x Age x Risk x Age x Risk

Annual Annual Medical CostsMedical Costs

Med RiskMed Risk

Age RangeAge Range

HighHigh

Non-ParticipantNon-Participant

Edington. AJHP. 15(5):341-349, 2001


$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70-74

75-79

80-84

85+

0-2 Risk Non- Participants 3-4 Risk 5+ Risk

Company Paid: Medical/Pharmacy, Age and Risk Groups

Modified from Edington. AJHP. 15(5):341-349, 2001


Total Value of Health• Sickness• Drug• Absence• Disability • Worker’s Comp• Effective on Job• Recruitment• Retention• Morale

Disease

Health

Risks

The Economics of the Medical System and Health Status as Paid by Companies

Where is the Investment?


$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


Association of Risk Levels with Association of Risk Levels with Corporate Cost MeasuresCorporate Cost Measures

Outcome Measure

Low-Risk

(N=671)

Medium-Risk

(N=504)

High-Risk

(N=396)

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%

Wright, Beard, Edington. JOEM. 44(12):1126-1134, 2002


Cluster AnalysisHealth Measure

SmokingAlcoholPhysical activitySafety belt usageBody mass indexSystolic blood pressureDiastolic blood pressureCholesterolHDL cholesterolSelf-perceived healthLife satisfactionStressIllness days

Cluster 1:Risk taking(N=6688)

Overall RisksLow risk (0-2 risks)Medium risk (3-4 risks)High risk (5+ risks)Average Number of risks

50.2%35.7%14.1%

2.8

97.6%2.4%

00.6

26.5%48.9%24.7%

3.6

18.9%35.9%45.2%

4.4

31%10%28%36%27%9%5%

19%34%13%4%9%

21%

0%0%0 %0 %

25 %0 %0 %

19 %10 %0 %0 %0 %0 %

16%3%

19%22%38%81%61%27%33%9%2%2%

12%

27%5%

26%31%27%23%20%22%24%28%73%76%26%

Cluster 2:Low Risk(N=3164)

Cluster 3:Biometrics(N=3100)

Cluster 4:Psychological

(N=3927)

Baunstein, Yi, Hirschland, McDonald, Edington. Am. J. Health Behavior. 25(4):407-417, 2001

University of Michigan Health Management Research CenterUniversity of Michigan Health Management Research CenterNCEP ATP III. JAMA. 2001;285:2486.

>40 in (>102 cm)>35 in (>88 cm)

150 mg/dL <40 mg/dL<50 mg/dL

130/85 mmHg

110 mg/dL

Defining LevelRisk Factor

1. Waist SizeMen

Women2. Triglycerides

3. HDL-C Men Women

4. Blood pressure

5. Fasting glucose

Clinical Identification of Metabolic Syndrome

Any three of the following:


Development and Consequences of Metabolic

SyndromeRisks: Waist Circumference Hypertension Glucose Intolerance Triglycerides HDL Cholesterol

Pre-Metabolic Syndrome

Metabolic Syndrome

Heart Disease

Diabetes

RetinopathyNeuropathyNephropathy

Costs to Individual: Quality of Life Morbidity Mortality

Costs to Employers: Health care costs Productivity costs

Where do you want to intervene in the process?


Development and Consequences of Mental Health Issues (DRAFT)

Risks: Perception of Health Life Satisfaction Job Satisfaction Stress Job Related Non-Job Related Illness Days

Pre-Mental Health Issues

Mental Health

Syndrome

Job Issues

Family Issues

Serious Mental Health Diagnoses

Costs to Individual: Quality of Life Morbidity Mortality

Costs to Employers: Health care costs Productivity costs

Where do you want to intervene in the process?


Relative Value of Health to the Organization: Total Value of Health

Presenteeism AbsenteeismAbsenteeismSTDLTD

Medical & Pharmacy

Edington, Burton. A Practical Approach to Occupational and Environmental Medicine (McCunney). 140-152. 2003

Worker’s Compensation

Time-Away-from-Work


Change in Costs follow Change in Risks

-$600

-$400

-$200

$0

$200

$400

$600

3 2 1 0 1 2 3Co

st

red

uc

edC

os

t in

cre

ase

d

Risks Reduced Risks Increased

Updated from Edington, AJHP. 15(5):341-349, 2001.

Overall: Cost per risk reduced: $215; Cost per risk avoided: $304 Actives: Cost per risk reduced: $231; Cost per risk avoided: $320 Retirees<65: Cost per risk reduced: $192; Cost per risk avoided: $621 Retirees>65: Cost per risk reduced: $214; Cost per risk avoided: $264


0%

50%

100%

150%

200%

250%

0 1 2 3 4 5 6 7 8 9 10

Cost Savings Associated with Program Involvement from 1985

to 1995

Programming Year

Zero or One HRA (N=804)Two or More HRAs (N=522)

Annual Increase = 12.6%

Annual Increase = 4.2%


Yearly Average Disability Yearly Average Disability Absence Days by ParticipationAbsence Days by Participation

Pre-Program

Program Years

$200Work Day

X1.2 Work Days

ParticipantYear

X 2,596 participants =$623,040

Year

The average annual increase in absence days (1995 – 2000):

Participants: 2.4

Non-Participants: 3.6

Schultz, Musich, McDonald,Hirschland,Edington.JOEM 44(8):776-780, 2002

6.6 6.98.7

14.1

6.6

17.215.7

23.321.2

17.6

12

8.8

0

5

10

15

20

25

95 96 97 98 99 0

Participant

Non-Participant


Medical and Drug Cost (Paid)*

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

2001 2002 2003 2004

Year

Pai

d Non-Impr

Improved

*per employee , Improved=374, Non-Improv=103HRA in 2002 and 2004Improved=Same or lowered risks*Medical and Drug, not adjusted for inflation

Slopes differ

P=0.0132

Impr slope=$117/yr

Nimpr slope=$614/yr


Distribution: Age, Costs, & Risk Status

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

<5 10-14

19-24

29-34

39-44

49-54

59-64

69-74

79-84

0%

20%

40%

60%

% High Risk from HRA

Costs by Age Group

% of Population and Costs (All Covered Lives) % High Risk

N=1.2M individuals in total population. N=300K in risk population


Summary

Business Case for Health Management

Excess Costs are related to Excess Risks

Costs follow Engagement and Risks

Controlling Risks leads to Zero Trend


Section III

The Solution:

Integration of a Health Focus into the Culture of the

Organization


HealthierPeople

ProductiveEmployees

Gains for TheOrganization

1. Health Status 2. Life Expectancy 3. Disease Care Costs 4. Health Care Costs 5. Productivity

a. Absence b. Disability c.Worker’s Comp. d. Presenteeism e. Quality Measure 6. Retention 7. Company Visibility 8. Social Responsibility

1981, 1995, 2000, 2006, 2008 D.W. Edington

Leadership Vision Environmental Issues Individual Strategies Population Strategies Incentives Measurement

Integrating Health Status into the Culture of the Company


Total Population ManagementTotal Population Management

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Q_12 Q_10 Q_8 Q_6 Q_4 Q_2 Q0 Q2 Q4 Q6 Q8 Q10 Q12

Serious Costs

Medium Cost

Low Cost

Wellness Opportunity

Condition Management Opportunity

Sickness & Care Management Opportunity

Medical and Drug Costs only


Vision from the Senior Leadership

Clear Vision within Leadership

Vision Connected with Company Strategy

Vision Shared with Employees

Accountability and Responsibility Assigned to Operations Leadership

Management and Leadership of the Company and Unions transition to the Cheerleaders


Environment Interventions Mission and Values Aligned with a Healthy

and Productive Culture

Policies and Procedures Aligned with Healthy and Productive Culture Vending Machines Job Design Cafeteria Flexible Working Hours Stairwells Smoking Policies

Benefit Design Aligned with a Healthy and Productive Culture

Management and Employees prepared for a Culture of health (small group meetings, shared vision, expectations,


Health Risk Appraisal

Plus

Biometrics Screening and Counseling

Plus

Contact the Health Advisor

Plus

Two Other Activities

Components of HRA Engagement


Health Advocacy/Advisor for Individual Interventions

Each individual contact a Coach

Use variety of contacts (one on one, telephone and web) for sustainable engagement and unlimited contacts Pay attention to

Level of probability of being high cost (ranked order)

Cluster cohort (risk profile)

Prioritized risks (ranked order of risks for most impact)

Use situational and whole person approach

Engage individual in positive actions. Ask but don’t tell. Use triage, health advocate and advisor strategies to develop Self-Leaders and use all available resources


Observed Program Attrition Rates23.5%

15.3%

12.0%

5.8%

2.6% 1.7%

0%

5%

10%

15%

20%

25%

Identified AttmptedContact

Contacted Participated Remain 6months

Remain 12months

Percent of total population

35%

Percent reduction in next bar

22%

52%55% 36%

Lynch, Chen, Edington. JOEM. 48:447-454, 2006


0%

10%

20%

30%

40%

50%

60%

70%80%

90%

100%

Total HRA Target Attempt Contact Part 6-month 12-month

Intervention: High Risk Strategy

Vision from leadership, preparation (why, what, purpose) for HRA High premium reimbursement, better plan,… Everyone contact a coach Coaching style and content for everyone Unlimited contacts (inbound/Outbound)Target: rectangular engagement pattern


Create a “Winners” Health Strategy

The First Six-Months: “Don’t Get Worse.”

Health Status Winner’s Strategy The Failed Strategy

Body Weight Don’t Gain Weight Reduce Weight to 25 BMI

Physical Activity Walk 500 steps/day Walk 10,000 steps/day

Blood Pressure Know Your Numbers Control Your Numbers

Cholesterol Know Your Numbers Control Your Numbers

The Second Six-Months: “Raise the Bar in Small Intervals”


Programs for Populations and Individuals

Weight Management Behavioral Health & EAP

Physical Activity Business Specific Modules

Stress Management Communications

Safety Belt Use Career development

Smoking cessation Clinic or Medical Center

Ergonomics Condition Management

Nutrition Education Financial Management

Social Support


Influence of Incentives

1. No incentive

2. Passive incentive

3. Small item incentive

4. Cash incentive

5. Benefit Plan

6. Benefit Plan plus cost reduction

7. Combination of Benefits and Cash


Incentives

Annual Incentive

Benefit Options (Co-pays, Deductibles, HSA contributions, … )

Premium Reductions/Premium Plan($600 to $2000)

Throughout the Year

Hats and T-Shirts

Cash, debit cards($25 to $200)


Scorecard

Percent Participation: 80% to 95%Over a rolling three yearsHRA + Three Coaching sessions + Two other sessions

Percent Low-Risk: 70% to 85%Percent of the eligible population

Estimated Cost of Program: $400 Dollars per Eligible employee

Estimated Savings: $800Dollars per Eligible Employee


Learning Points

3. “Total Population Management” is the effective healthcare strategy and to capture the “Total Value of Health”

2. Refocus the definition of health from “Absence of Disease to High Level Vitality.”

4. The business case for Health Management indicates that the critical strategy is to “Keep the Healthy People Healthy” (“keep the low-risk people low-risk”).

5. The first step is, “Don’t Get Worse” and then “Let’s Create Winners, One Step at a Time.”

1. The “Do Nothing” strategy is unsustainable.


Thank you for your attention.Please contact us if you have any questions.

Phone: (734) 763 – 2462Fax: (734) 763 – 2206

Email: [email protected]

Website: www.hmrc.umich.edu

Phone: (734) 763 – 2462Fax: (734) 763 – 2206

Email: [email protected]

Website: www.hmrc.umich.edu Dee W. Edington, Ph.D. , Director Health Management Research Center University of Michigan 1027 E. Huron St. Ann Arbor MI 48104-1688

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Health Management as a Serious Business Strategy