Next Generation Health Management as a Serious Business Strategy

1

Next Generation Health Management as a Serious
Business Strategy
Dee. W. Edington
THE UNIVERSITY OF MICHIGAN HEALTH MANAGEMENT
RESEARCH CENTER
2
UM-HMRC Corporate Consortium

• Steelcase
• Progressive
• We Energies
• General Motors
• Crown Equipment
• Foote Health System
• Medical Mutual of Ohio
• St Lukes Health System
• Cuyahoga Community College
• International Truck and Engine
• Blue Cross Blue Shield Rhode Island
• United Auto Workers-General Motors
• Wisconsin Education Association Trust
• Southwest Michigan Healthcare Coalition
• Australian Health Management Corporation

• Kellogg
• JPM Chase
• Gulf Power
• Brush Wellman
• Delphi Automotive
• Florida Power Light
• Affinity Health System

The consortium members provide health care
insurance for over two million Americans. Data
are available from eight to 18 years. Meet on
First Wednesday of each December in Ann Arbor
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Health Management in the Workplace
1. Health Status 2. Life Expectancy
3. Disease Care Costs 4. Health Care Costs 5.
Productivity a. Absence b. Disability
c. Workers Compensation d. Presenteeism
e. Quality Multiplier 6. Recruitment and
Retention 7. Company Visibility 8. Social
Responsibility
1981, 1995, 2000, 2006 D.W. Edington
4
UM-HMRC Ann Arbor
Rhode Island a Healthy State?
x
X
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Next Generation Health Management as a Serious
Business Strategy

• Building an Integrated, Sustainable Business
  Strategy
• (Next Generation Programs,
  Champion Companies, Zero
  Trends) Four Hours
• Complete Strategy and Next Generation Three
  Hours
• Fundamental Strategy and Next Generation Two
  Hours
• Business Strategy and Next Generation 90
  minutes
• Short Business Strategy and Next Generation 60
  minutes
• Executive Summary 45 minutes
• Executive Summary of Executive Summary 20
  minutes

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• Agenda
• Health Management as a Serious Business Strategy
  
• Providence RI November 20, 2006
• Introductory Comments 5
• Do-Nothing Strategy 10
• Business Concepts to Build the Strategy 10
• Next Generation Programming 25
• Champion Company, Zero Trend
• Summary 5
• Slides available via e-mail attachment

7
Introductory Comments
8
Key Thoughts
Objective Shareholder value from creative and
innovative products from healthy and productive
people
Strategy Next Generation Program to drive
Objective Partners company employee health
plans benefit consultants primary care
physicians pharmaceutical companies.

Outcomes to get to Zero Trend 90-95
participation and 75 to 85 low-risk
Keep the
healthy people healthy
Dont get worse
9
Moving the Paradigm From
The Cost of Healthcare (Treating disease)
To
The Total Value of Healthcare (Managing health
status) To
Health is Free
(Healthcare Costs lt Total Benefits) Adopt the
Quality Strategy Fix the Systems
10
(No Transcript)
11
Section I The Do-Nothing Strategy
12
Business Case The Natural Flow of Health Risks
and Behaviors
13
Health Risks and Behaviors
OVERALL RISK LEVELS Low Risk 0 to 2 high
risks Medium Risk 3 to 4 high risk High Risk 5
or more high risks
14
Risk Transitions Time 1 Time 2
High Risk (gt4 risks)
Medium Risk (3 - 4 risks)
Average of three years between measures
Low Risk (0 - 2 risks)
Modified from Edington, AJHP. 15(5)341-349, 2001
15
Business Case The Natural Flow of Health Care
Costs
16
Cost Transitions Time 1 Time 2
N356,275 Non-Medicare Trad/PPO
Modified from Edington, AJHP. 15(5)341-349, 2001
17
Total Medical and Pharmacy Costs Paid by Quarter
for Three Groups
Musich,Schultz, Burton, Edington. DMHO.
12(5)299-326,2004
18
Business Case The Natural Flow of Risks and Costs
19
Costs Associated with Risks Medical Paid Amount x
Age x Risk
High Risk
Medium Risk
Low Risk
Edington. AJHP. 15(5)341-349, 2001
20
This is the Way Americans Have been Living their
Lives for 60 Years
Can You Afford the Economic Consequences of the
Do-Nothing Strategy?
21
Section II Key Business Concepts To Build the
Business Case
22
Business Concept Eliminate Silo
Thinking Consider the
Total Value of Health
23
Relative Value of Health to the Organization
Total Value of Health
Medical Pharmacy
Workers Compensation
Presenteeism
Absenteeism
STD
LTD
Time-Away-from-Work
Edington, Burton. A Practical Approach to
Occupational and Environmental Medicine
(McCunney). 140-152. 2003
24
Business Concept Excess Costs follow Excess Risks
25
Excess Medical Costs due to Excess Risks
Edington, AJHP. 15(5)341-349, 2001
26
Excess Pharmaceutical Costs due to Excess Risks
1,121
754
750
567
526
443
345
Burton, Chen, Conti, Schultz, Edington. JOEM.
45(8) 793-802. 2003
27
Excess Disability Costs due to Excess Risks
36 of Absence, STD, Workers Comp
Wright, Beard, Edington. JOEM. 44(12)1126-1134,
2002
28
Excess On-The-Job Loss due to Excess Risks
14.7
Burton, Chen, Conti, Schultz, Pransky, Edington.
JOEM. 47(8)769-777. 2005
29
Business Concept Total Value of Health to an
Organization
30
Association of Risk Levels with Corporate Cost
Measures
Wright, Beard, Edington. JOEM. 44(12)1126-1134,
2002
31
Business Concept Risks Travel Together
32
Cluster Analysis
Cluster 1 Risk taking (N6688)
Cluster 2 Low Risk (N3164)
Cluster 3 Biometrics (N3100)
Cluster 4 Psychological (N3927)
Health Measure
Smoking Alcohol Physical activity Safety belt
usage Body mass index Systolic blood
pressure Diastolic blood pressure Cholesterol H
DL cholesterol Self-perceived health Life
satisfaction Stress Illness days
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
Baunstein, Yi, Hirschland, McDonald, Edington.
Am. J. Health Behavior. 25(4)407-417, 2001
33
Business Concept Costs are Associated with the
Wellness Score
34
Relationship Between Annual Medical and Pharmacy
Costs and Wellness Score
One Point in Wellness Score Equals 56
Annual Medical Costs
Wellness Score
Yen, McDonald, Hirschland, Edington. JOEM.
45(10)1049-1057, 2003.
35
Business Concept Stratification of the Population
for Intervention
36
Stratification In the Health Promotion Opportunity
Health Promotion Opportunity
37
Predictability to be at High Cost
38
Business Concept Proof of Concept
(Necessary and Sufficient) 1. Improve Health
Status Transitions 2. Decrease Healthcare Cost
Trend 3. Decrease Productivity Loss 4. Improve
Overall Trends for all Outcomes
Business Case is pretty good but not yet perfect.
We need Champion Companies!!!!
39
Business Concept Change in Costs follow Dont
Get Worse
40
Medical and Drug Cost (Paid)
Slopes differ P0.0132
Impr slope117/yr Nimpr slope614/yr
per employee , Improved374, Non-Improv103 HRA
in 2002 and 2004 ImprovedSame or lowered
risks Medical and Drug, not adjusted for
inflation
41
Business Concept Bend the Trend
42
Financial Services (Healthcare Spend)
Slope 150/yr Year 1 255 Year 2 118
Year 3 82
per employee
GOOD, but too slow!!
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Section III Health Management Next Generation
Programming Champion Companies
Zero Trend The Question is What will Work?

44

• Three Key Business Beliefs
• Individuals Can Maintain Low-Risk Health Status
  even as they Age
• An Employer and its Partners can Help its Members
  Obtain and Maintain Low-Risk Health Status
• The Major Economic Benefit is in Paying Attention
  to Individuals with Low-Risk Health Status

45
Business Concept
Partners to get to Next Generation, Champion
Company and Zero Trend

• Company (Private or Public or non-Profit)
• Management Union
• Health Plan
• Benefit Consultant
• Primary Care Physicians
• Pharmaceutical Companies
• Individuals

Health Systems???
46
Where are the Opportunities for Population Health
Management?
Medical Care Management Opportunity
Condition Management Opportunity
Health Promotion Opportunity
Medical and Drug Costs only
47
Business Concept Next Generation Programming for
Champion Companies to Achieve Zero Trend
Integration and Sustainability
48
Next Generation Health Management Program
Vision from Senior Leadership Worksite
Environment
Population Programs Website Low-Risk
Maintenance Know Your Numbers Physical
Activity Nutrition Awareness Wellness
Modules
Individual Stratification
Coaching Sessions Health
Advocate Triage to Resources
Health Risk Appraisals
Incentives
Measurement
49
Next Generation 1. Senior Leadership Vision
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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

51
Next Generation 2. Environmental Strategies
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Environment Interventions (Culture)

• Management and Leadership of the Company and
  Unions
• 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
• Other Benefit Design

53
Next Generation Benefit Design to Promote
Consumerism

• Move from Entitlement to Consumer
• Incentives follow Actionable Behaviors
• Provide Transparency
• Appropriate Physicians
• Appropriate Health Systems
• Appropriate Pharmaceutical Solutions
• Promote Maintenance of Health Status

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Next Generation 3. Health Risk Appraisals
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Health Risk Appraisals

• Comprehensive and Lifestyle Oriented
• Tested for Reliability and Validity
• Evidence-Based
• Tailored Profile returned to Individual
• Recommendations connected to Local Resources
• Counseling

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Next Generation 4. Individual Based Programs
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Coaching Strategies for Individual Intervention
Contact each individual (at least three times)
Unlimited contacts by level of probability of
being high cost within the next two to three
years and cluster
Pay attention to cluster and prioritized risks
Use variety of contacts (one on one, telephone
and web) for sustainable engagement
Use situational and whole person approach
Engage individual in positive actions. Ask but
dont tell. Use triage, health advocate
strategies, develop Self-Leaders and use all
available resources

Frequent evaluation of coach/client participation
and satisfaction
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Business Concept Limitations to Current
Interventions
59
Observed Program Attrition Rates
Percent reduction in next bar
35
22
52
55
36
Lynch, Chen, Edington. JOEM. 48447-454, 2006
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Observed Program Attrition Rates Patients with
Acute/Chronic Episodes
Percent reduction in next bar
56
63
62
Lynch, Chen, Edington. JOEM. 48447-454, 2006
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Business Concept Managed the Person Not the
Risk or Disease
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Intervention for Biometric Cluster (Metabolic
Syndrome)
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Clinical Identification of Metabolic Syndrome
Any three of the following
Defining Level
Risk Factor
gt40 in (gt102 cm) gt35 in (gt88 cm) ?150 mg/dL
lt40 mg/dL lt50 mg/dL ?130/85 mmHg ?110 mg/dL

• Waist Size
• Men
• Women
• 2. Triglycerides
• 3. HDL-C
• Men
• Women
• 4. Blood pressure
• 5. Fasting glucose

NCEP ATP III. JAMA. 20012852486.
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Development and Consequences of Metabolic Syndrome
Where do you want to intervene in the process?
65
Intervention for Psychological Cluster
66
Development and Consequences of Mental Health
Issues (DRAFT)
Where do you want to intervene in the process?
67
Next Generation 5. Population Based Programs
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Population-Based Programs

• Population Programs Orientation
• Pedometers, know your numbers, no weight gain
• Human Resource Orientation
• People skills/Communications
• Health Communications
• Written materials, Online portal, etc
• Environmental Orientation
• Stairwells/Vending, Food Services, Other

69
Wellness Programming for Individuals

• Wellness Modules
• High-Risk Reduction Ergonomics
• Smoking cessation
• Weight Loss Low-Risk Maintenance
• Stress Management Population based
• Physical Activity
• Business Specific Modules
• Communications
• Condition Management Career development
• Blood pressure
• Cholesterol Special Promotions
• Diseases
• Other

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Next Generation 6. Incentives
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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)

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Next Generation 7. Measurement, Evaluation
and Decision Support
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Measurement, Evaluation and Decision SupportKey
Analytics to Drive Success

• Decisions Based upon Program Results
• Process Orientation
• Participation
• Employee Satisfaction
• Reduction in Health Risk or Dont Get Worse
• Individuals prioritized risk
• Lessen Pain and Suffering in Individuals and
  Families
• Population based prevalence
• (Continued)

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Measurement, Evaluation and Decision SupportKey
Analytics to Drive Success

• 4. Total Value of Health (Medical and
  Productivity)
• 5 . Key Analytical Reports
• HRA summary with benchmarks and with costs
• Time 1 and Time 2
• Risk-Cost Reports
• Cluster Analyses
• Productivity
• Time-Away-From-Work
• Presenteeism
• 6. Proof of Concept (Beat Natural Flow/Bend the
  Trend Lines)
• 7. Shareholder Value

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Scorecard

• Percent Participation 80 to 95
• Over a rolling three years
• HRA 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
• Excluding major incentive
• Estimated Savings 800
• Dollars per Eligible Employee

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Summary
77

• Committee to Assess Worksite Preventive Health
  Program Needs of NASA Employees
• The National Academies
• Institute of Medicine
• Food and Nutrition Board

78
Key Thoughts
Objective Shareholder value from creative and
innovative products from healthy and productive
people
Strategy Next Generation Program to drive
Objective Partners company employees health
plans benefit consultants primary care
physicians pharmaceutical companies.

Outcomes to get to Zero Trend 90-95
participation and 75 to 85 low-risk
Keep the
healthy people healthy
Dont get worse
79
Whats the Point?
80
Thank you for your attention.
Please contact us if you have any questions.
Phone [phone] Fax (734) 763
2206 Email dwe_at_umich.edu 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