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Opportunities for Health: Embracing “Shared Value” Approaches

Derek Yach, Chief Health Officer, Vitality

December 3, 2015

Institute of Medicine, The Venable Building, Washington DC

@VitalityUSA | #VitalityImpact

Overview

• What do public health leaders say about the role of the private sector and health?

• How can we use market forces and the power of corporations to advance global health?

• How can metrics & reporting drive change for good?

• How do the products and services of diverse corporate players influence health?

@VitalityUSA| #VitalityImpact

What do public health leaders say about the private sector role in health?


Many NGOs & academics are understandably discouraging, distrustful and influenced by history


The global tone is set by WHO

“powerful economic operators and their equally powerful lobbies”

Margaret Chan at the EURO Regional Committee, Lithuania, Sept 2015

“many of the risk factors for NCDs arise from the behaviors of multinational companies”

“every new cancer drug approved in 2014 by the US FDA cost more than $120 000 per patient per year”

“who really governs the policies that shape our health? […] governments mak[e] policies that are heavily influenced by corporate lobbies”


How can we use market forces & the power of corporations to advance global health?


We need to embrace shared value for health

Employee health drives productivity, retention, morale and lowers healthcare costs

This will be the focus of the talk by Brett Tromp, Discovery Ltd. on 4 Dec

Companies’ core products and services can benefit or harm health

This is the primary focus of the current presentation

Company investment in community health can benefit companies and communities*

This will not be elaborated on in this meeting

*Source: “Beyond The Four Walls: Why Community is Critical to Workforce Health” by the Vitality Institute, July 2015

Definition: Shared value is a management strategy focused on companies creating measurable business value by identifying and addressing social problems that intersect with their business, creating new opportunities for companies, civil society organizations, and governments to leverage the power of market-based competition in addressing social problems. (Shared Value Initiative) Three components are applicable to health:


How can metrics & reporting drive change for good?


Why are metrics important?

"What gets measured gets done, what gets measured and fed back gets done well, what gets rewarded gets repeated." John E. Jones


Growing recognition of non-financial measures as “material” to sustained profitability but health is weakly covered

Integrated Reporting platforms are increasing in number and relevance with a focus on environment, social, governance and corruption.


“A problem cannot be solved in the same consciousness in which it arose” – Einstein

Companies who lead the indices of reporting bodies are increasingly valued by investors and consumers.


IIRC Framework implicitly includes health

Health impact of Products & Services

Employee Health & Well-Being


Human capital is embedded in existing frameworks. Health aspects, not so much (yet!)

For details of components, see Annex

Health as a Human Right

• Health is a fundamental human right and includes a state of complete physical, mental and social well-being and not merely the absence of disease of infirmity.” (WHO)

The private sector has a unique opportunity to ensure these conditions are met.


“Human capital is one of the 6 capitals in the IIRC framework, and a critical aspect of it is the health of a company’s employees. The healthier employees are, the more productive they are – and that’s for the benefit of all stakeholders.” –Mervyn King




INPUT


Many companies already report on the importance of employee health

What are some of the data points being reported?

• Employee healthcare costs (83%)

• Positive value of workplace health promotion (73%)

• The importance of CEO leadership for health (30%)

Source: Vitality Review of 10K reports on SEC Website 2009-2014, review of 122 companies from 13 sectors.

“Successful organizations understand that employee health and well-being are enhanced when a culture of health is ingrained into the organization’s norms, values and beliefs. McKesson Corporation has adopted effective and sustainable health promotion programs that help employees and their families improve their health. At the same time, these programs save money and provide high value on investment.”

- Dr. Ron Goetzel, President and CEO of The Health Project

INPUT


Portfolio of ACOEM award winners vs. Standard and Poor’s 500 (S&P 500, 500 large companies with stock listed on the NYSE or NASDAQ)

Source: Fabius et al. (2013). The link between workforce health and safety and the health of the bottom line. JOEM. 55 (9), 993-1000.

Effective workplace health programs show solid financial returns to investors

The portfolio of companies that won awards for nurturing a “Culture of Health” outperformed the market over a 13 year period

INPUT


What type of “Input” Health Metrics are needed?

KEY: • Leadership and Culture = Governance • Programs, Policies and Practices = Management • Health Risks and Outcomes = Evidence of Success





OUTPUT


How do the products and services of diverse corporate players influence health?


Health issues related to core products and services

• Consumer services: “A challenging business environment—from increasingly health-conscious consumers will force companies to innovate their products and services” Sodexo

• Retail: “The health and wellness movement has developed from a niche trend to a highly-developed profit driver” METRO/MACRO

• Food and beverage: “Health, wellness and nutrition have emerged as major growth categories and will remain in the spotlight as a growing number of consumers become aware of the relationship between diet and health” Unilever

• Health care equipment: “…critical to improving the quality of life of patients with chronic diseases…” Abbott

• Pharmaceuticals: “Payers are increasingly evaluating clinical efficacy, comparative-effectiveness and cost-benefits...to determine pricing” Roche

Source: RobecoSAM DJSI 2015 Industry Group Leaders

OUTPUT


How do core products & services from diverse sectors influence health? (Part I)

Sector Company Revenue (millions)

Employee Population

Consumer reach

Retail Tesco 101,580 500,000 Over 80m shopping trips every week

Walmart 485,651 2,200,000 260m customers/week

Food & Bev.* Nestlé 100,116 339,000 Maggi alone is in 1/3 households globally

PepsiCo. 66,683 271,000 3b consumers

Alcohol* AB InBev 47,603 154,026 459m hectoliters in 2014

Heineken 25,668 76,163 137,983m hectoliters of beer sold in 2014

Tobacco* BAT 42,506 57,000 667b cigarettes sold, 2014

PMI 29,767 82,500 120m smokers

Motor Vehicles Volkswagen 268,567 583,423 10.21m cars sold in 2014

Toyota 247,703 338,875 10.23m cars sold in 2014

Social Media Facebook 1,550 9,199 1.55b monthly active users

LinkedIn 300 6,000 87m unique visitors in 2014

* Denotes a sector dependent on RETAIL to get their product to consumers


How do core products & services from diverse sectors influence health? (Part II)

Sector Company Revenue (millions)

Employee Population

Consumer reach

Pharmaceuticals* Johnson & Johnson 74,331 126,500 Over 1b lives touched daily

Novartis 59,593 133,413 Over 1b people reached, 2014

Drug Distribution McKesson 181,241 43,500 N/A

AmerisourceBergen 119,569 17,000

Medical Devices General Electric 148,321 305,000 N/A

Medtronic 20,261 92,000

Electronics/Tech* Samsung 195,845 498,000 307m smartphones sold, 2014

Apple 192,795 115,000 800m iOS devices sold by mid-2014

Insurance AXA Advisors 161,173 96,279 103m clients in 59 countries (AXA Group)

Allianz 136,846 147,000 86m clients in 70+ countries

Sports* Nike, Inc. 27,000 62,600 900m units moved annually

Adidas 19,200 53,731 660m units produced per year

* Denotes a sector dependent on RETAIL to get their product to consumers


How do we measure success?

Changes in corporate attributable risks and disease over time and links to increased GDP/profitability.

Selected health risks amenable to reduction through corporate actions

Risk Deaths (2010)

Business Sector Corporate Reach (millions/year)

Actions to Decrease Burden Within a Decade

Hypertension* 9,395,860 Pharma/medical devices/drug distribution

6,384/5,628/5,760 Better screening, treatment, and medicine adherence

Childhood underweight*

860,117 Food/retail 27,240/3,840 Bottom of pyramid innovation

Tobacco* 6,297,287 Tobacco/retail 3,840/3,840 Reduced Risk Products

Alcohol* 4,860,168 Alcohol/retail 4,692/3,840 Road Safety and responsible drinking

High BMI* 3,371,232 Food/retail/pharma/sports 27,240/3,840/6,384/4,920 Healthier nutrition and calorie reduction

Physical inactivity* 3,183,940 Sports 4,920 Active Transport & reduced sedentary behaviors

Dietary lack (fruits & vegetables)

F= 4,902,242 V= 1,797,254

Retail/food 3,840/27,240 Increase average daily portions by 1 (e.g. 2 to 3)

*Denotes link to the Sustainable Development Goals (SDGs)

@VitalityUSA | #VitalityImpact Source: Moses et al. “The Anatomy of Medical Research. US and International Comparisons.” JAMA, 2015.

R&D spend on “health” versus “healthcare” is low


What “Output” health metrics are needed to assess progress?

• All need innovation R&D budget with intent to develop a healthier product, and Health Impact Assessment

• Some sector-specific metrics under development: Food & Beverage: % profits from healthy food; per capita

consumption of healthy versus unhealthy Tobacco: % profits from reduced risk products; per capita

uptake of reduced risk products; decline in traditional categories

Retail: % profits and consumption from healthy products versus unhealthy

Pharmaceuticals: access, coverage and adherence to essential drugs

Life and motor vehicle insurance: impact of insurance products on longevity and on crash/injury rates


IIRC Framework needs to be activated for health




Concluding Thought

“This deal is not built on trust. It’s built on verification.” – President Obama, about the Iran Nuclear Deal


Confluence of Interest

I have met with and in some cases, have been and am paid for strategic advice provided to companies, public agencies, and Foundations mentioned.

In all cases, the focus has been on finding a confluence of interest between health gains and the institutions’ mission.


Thank You [email protected]

@swimdaily


Annex: Details of Human Capital in Reporting

GRI Aspects under Labor Practices and Decent Work Employment (DMA – LA1 to LA3) Labor/Management Relations (DMA – LA4) Occupational Health and Safety Training and Education (DMA – LA5 to LA8) Training and Education (DMA – LA9 to LA11) Diversity and Equal Opportunity (DMA – LA12) Equal Remuneration for Women and Men (DMA – LA13) Supplier Assessment for Labor Practices (DMA – LA14 to LA15) Labor Practices Grievance Mechanisms (DMA –LA16) Aspects under Human Rights Investment (DMA – HR1 to HR2) Non-discrimination (DMA – HR3) Freedom of Association and Collective Bargaining (DMA – HR4) Child Labor (DMA – HR5) Forced or Compulsory Labor (DMA – HR6) Security Practices (DMA – HR7) Indigenous Rights (DMA – HR8) Assessment (DMA – HR9) Supplier Human Rights Assessment (DMA – HR10 to 11) Human Rights Grievance Mechanisms (DMA – HR12)

FASB Topic 420 Exit or Disposal Cost Obligations Topic 710 Compensation Topic 712 Nonretirement Postemployment Benefits Topic 715 Retirement Benefits Topic 718 Stock Compensation Topic 805 Business Combinations IFRS IAS 19 Employee Benefits IAS 26 Accounting and Reporting by Retirement Benefit Plans IFRS 2 Share-based Payment ISO 26000 Clause 6.3 – Human rights Clause 6.4 – Labour practices Sustainability Accounting Standards Human Capital Fair labor practices Employee health, safety and wellbeing Diversity and inclusion Compensation and benefits Recruitment, development and retention

People’s competencies, capabilities and experience, and their motivations to innovate, including their: • alignment with and support for an organization’s governance framework, risk management approach, and ethical values • ability to understand, develop and implement an organization’s strategy • loyalties and motivations for improving processes, goods and services, including their ability to lead, manage and collaborate

*Source: http://corporatereportingdialogue.com/landscape-map/

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Opportunities for Health: Embracing “Shared Value” Approaches/media/Files/Activity Files/Global... · Opportunities for Health: Embracing “Shared Value” Approaches ... complete