HEALTH AND PRODUCTIVITY MANAGEMENT

HEALTH AND HEALTH AND PRODUCTIVITY PRODUCTIVITY MANAGEMENTMANAGEMENT

H P MH P MTHINK GLOBALLY!

BY: BRIAN D. HARRISON, MDDATE:9/28/04

The PerfectSTORM?????

Or the Perfect Opportunity???

Increase in Cost of Health Care Increase in Cost of Health Care (Based on Average Annual 7.3% Increase)(Based on Average Annual 7.3% Increase)

$ $

0.7

3.1

1.4

0

0.5

1

1.5

2

2.5

3

3.5

1990-Actual 2001-Actual 2012-Estimate

$ In

crea

ses i

n Tr

illio

ns

Source: Center for Medicare and Medicaid Services, Office of the Actuary – Feb. 2003

$

$

$4,924

$4,430

$4,097

$3,817$3,594

$3,703

$3,653

$5,616

$3,000

$3,500

$4,000

$4,500

$5,000

$5,500

$6,000

1995 1996 1997 1998 1999 2000 2001 2002

COST OF CARE = COST OF PREMIUM

Insurers don’t originate the money, they just pass on the bills. Insurers are a conduit for cash, not a source.Those who pay the premiums are the source of the money.Every insured person pays for every other person (including those needing medical miracles).

WHY ECONOMIC SOLUTIONS FAIL TO SOLVE

THE PROBLEM:It’s not an economic problem

It’s a HEALTH problem!

2003 HEALTH COSTS

Total Health Spending

____________________________________

1.7 Trillion___________

7% Annual Growth

ChronicDisease

Treatment__________________________________

700 Billion___________

10% Annual Growth

Pharmacy Services

_______________________________

200 Billion__________

12% Annual Growth

SpecialtyPharmaceuticals

______________________________

30 Billion____________

30% Annual Growth

(CHANGING DEMAND-cont)

DEMAND FOR MIRACLES WILL CONTINUE, AND MIRACLES ARE

EXPENSIVEEXAMPLE –Intracoronary Stents didn’t exist 10 years ago• Now the total market is 2 billion dollars per year.• Very effective at reducing risk of a second heart attack

(80-90% of the time).• However 10-20% clog within the first 6 months. Now,

even more expensive stents (drug eluting) have been developed that may clog less. These will become standard and further increase the cost.

• The genie won’t go back in the bottle!

(CHANGING DEMAND-cont.)(CHANGING DEMAND-cont.)

HOW MUCH CORONARY DISEASE CAN BE

PREVENTED WITH 2 BILLION DOLLARS

PER YEAR?

YOU GET WHAT YOU PAY YOU GET WHAT YOU PAY FOR FOR

THERE ARE 8,000 SEPARATE BILLING CODES

FOR CARE, NONE FOR PREVENTING

A DISEASE

HERO 2003 www.the-HERO.org

A ProblemA Problem

• The $1.9 trillion “Health Care” system has little to do with achieving or maintaining optimal health.

• In reality, it is a $1.9 trillion “Diagnosis and Treatment” system.

HERO 2003 www.The-HERO.org

HERO 2003 www.the-HERO.org

A Window of OpportunityA Window of Opportunity• The cost of health care is beyond what

employers can afford and will increase exponentially over the next decade.

• Employers don’t know what to do.

• An unprecedented opportunity to establish the importance and effectiveness of optimal health as an investment in human capital.

HERO 2003 www.The-HERO.org

Health Insurance is a ________?

Benefit – a gift you buy to make someone happy; you shop for the best valueCommodity – something you buy from the lowest bidder; you buy as little as you must haveInvestment – considered purchase based on ROI, including risk and return; if it’s good, you want a lot

8

Human Capital—Perspectives Over Time

PrePre--IndustrialIndustrial IndustrialIndustrial PostPost--IndustrialIndustrial

“My men can work harder than your men.”

“My machines are bigger, faster, more powerful than your

machines.”

“My people are smarter, more creative, more customer service-oriented, more productive than yours.”

Productivity Model Final Outcome Intermediate Outcome

AccountabilityImprove HealthStatus

OptimizeProductivity/

Job Performance

ReduceUnnecessaryLost Work

Time

Employer/Purchaser

Employee/Patient

Provider

Health Plan/Delivery System

ImproveOrganizational

Health

Productivity Model - Three Parts

Disease

Management

Health Management

Demand

Management

C o s t s I n c r e a s e W it h R is k & A g eC o s t s I n c r e a s e W it h R is k & A g eM e d ic a l C o s t s b y H e a l t h R i s k L e v e ls a n d A g e

1 9 9 7 - 1 9 9 9 A v e r a g e A n n u a l P a id A m o u n t s

$3,432$4,130

$6,664

$9,221$10,095

$2,025 $2,741$3,601

$5,445

$7,268

$1,247 $1,515 $1,920$3,366

$4,319

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

<35 35-44 45-54 55-64 65+

0-2 Risks3-4 Risks

5+ Risks

H E R O R e s e a r c h : S tu d y # 1H E R O R e s e a r c h : S tu d y # 1Im p a c t o n In d i v id u a l H e a l t h C a r e C o s t s :

H ig h - R is k v s . L o w e r - R is k E m p lo y e e s70.2%

46.3%34.8%

21.4% 19.7% 14.5% 11.7% 10.4%

-50%

-25%

0%

25%

50%

75%

100%

Dep

ress

ion

Stre

ss

Glu

cose

Wei

ght

Toba

cco-

Past

Toba

cco

Blo

odPr

essu

re

Exer

cise

Perc

ent

S o u rc e : In te g r a te d B e n e fi ts In s t itu te (2 0 0 1 )

HERO 2003 www.the-HERO.org

Does It Work?

" There have been over 125 health enhancement research studies peer reviewed and published showing positive clinical, behavioral and/or ROI results..

HERO 2003 www.The-HERO.org

Relationship Between Cost and Wellness Score

Figure 10

2817

25082369

2087

1643

2638

2,970

1415

1800

2818

$1,200

$1,600

$2,000

$2,400

$2,800

$3,200

50 55 60 65 70 75 80 85 90 95

Annual Medical Costs

Wellness Score

-$1,000

-$500

$0

$500

$1,000

$1,500

$2,000

5+ 4 3 2 1 0 1 2 3 4 5+

Change in Cost Associated with Change in Risk

Risks Reduced Risks Increased

HOW TO “THINK GLOBALLY”

Learn lessons from research and mega trends.Do “Global Accounting”of profits and losses associated with human capital.

GLOBAL ACCOUNTINGrequires

AN INTEGRATED DATABASEMedical and Pharmaceutical claimsHealth Risk Appraisal scoresAbsence dataShort & Long-Term Disability (STD/LTD)Worker CompTurnoverDirect production data or performance eval

BECAUSE YOU CAN’T MANAGE

WHAT YOU CAN’T MEASURE

Health and ProductivityMeasurement….

Measure the prevalence of diseases and risk factors (HEALTH INDICATORS)

Correlate with cost of losses from absence, STD/LTD, Worker Comp, turnover, presenteeism (PRODUCTIVITY INDICATORS)

. . . . enables Health and Productivity MANAGEMENT

Intervene to improve a Health Indicator

Measure (or at least calculate) the effect on a Productivity Indicator

THIS SETS THE STAGE FOR A VALUE-BASED HEALTH

CARE MODELEmployer needs it for productivity, profit, and competitiveness reasons.Employee needs it for cost, comfort, maintenance of health reasons.

CREATING WISE CONSUMERSCREATING WISE CONSUMERS

People need information about self care/self treatment.People need information about quality of health care providers and institutions.

WHY EMPLOYEES CARE NOW MORE THAN EVERThreat of unemployment Quality of life reasonsOut of pocket costs