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Health Management as a Serious Business Strategy

THE UNIVERSITY OF MICHIGAN HEALTH MANAGEMENT
RESEARCH CENTER
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Health Status as a Serious Business Strategy U.S.
Workplace Wellness Alliance May 9, 2008 The
Mission Regain Vitality in Corporate America
5 The Do-Nothing Strategy The Failed
Focus 10 The Health Status Strategy The
Emerging Focus 10 The Solution The Culture of
Health Strategy 10 Slides
available
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Since September 1, 2003 400 Presentations
45,000 People 20,000
Organizations To change the conversation
around heath
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To Change the Conversation

From Health as the Absence of Disease to Health
as Vitality and Energy
From the Cost of Health Care to the
Total Value of Health
From Individual Participation to
Population Engagement
From Behavior Change to
Culture of Health
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The Mission Regain Vitality in Corporate
America
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Health Continuum for Individuals or a Population
PrematureSickness, Death Disability
High-Level Wellness, Energy and Vitality
ChronicSigns Symptoms
Feeling OK
Edington. Corporate Fitness and Recreation. 244,
1983
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Key Thoughts
Objective Shareholder value from creative and
innovative products from healthy and productive
people
Strategy Culture of Health Program to drive
Objective Partners health plans benefit
consultants primary care physicians
pharmaceutical companies health enhancement
companies

Outcomes to get to Zero Trend 90-95
participation and 75 to 85 low-risk
Keep the
healthy people healthy
Dont get worse
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UM-HMRC Ann Arbor
X
x
USWWA Washington
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Section I The Do-Nothing Strategy The Failed
Focus
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Estimated Health Problems
UM-HMRC Estimated Medical Economics Report
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Estimated Health Risks
OVERALL RISK LEVELS Low Risk 55.3
Medium Risk 27.7 High Risk
17.0
UM-HMRC Estimated Medical Economics Report
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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
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Total Medical and Pharmacy Costs Paid by Quarter
for Three Groups
Musich,Schultz, Burton, Edington. DMHO.
12(5)299-326,2004
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Costs Associated with Risks Medical Paid Amount x
Age x Risk
Annual Medical Costs
High
Med Risk
Non-Participant
Low
Age Range
Edington. AJHP. 15(5)341-349, 2001
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(No Transcript)
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The world we have made as a result of the level
of thinking we have done thus far creates
problems we cannot solve at the same level of
thinking at which we created them. -
Albert Einstein
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Section II The Health Status Strategy The
Emerging Focus
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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
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Distribution Age, Costs, Risk Status
of Population and Costs (All Covered Lives)
Low Risk

N1.2M individuals in total population. N300K
in risk population
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Business Concept Excess Costs follow Excess Risks
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Excess Medical Costs due to Excess Risks
Edington, AJHP. 15(5)341-349, 2001
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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
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Excess Disability Costs due to Excess Risks
Wright, Beard, Edington. JOEM. 44(12)1126-1134,
2002
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Excess On-The-Job Loss due to Excess Risks
14.7
Burton, Chen, Conti, Schultz, Pransky, Edington.
JOEM. 47(8)769-777. 2005
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Business Concept Total Value of Health to an
Organization
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Association of Risk Levels with Corporate Cost
Measures
Wright, Beard, Edington. JOEM. 44(12)1126-1134,
2002
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Business Concept Manage the Person not the
Risk or the Disease
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Self-Reported Diabetes Associated with Levels of
Body Mass Index
Percent with Diabetes
High
Med Risk
Low Risk
BMI Levels
Musich, Lu, McDonald, Champagne, Edington. AJHP.
18(3) 264-268, 2004
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Business Concept Eliminate Silo
Thinking Consider the
Total Value of Health
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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
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Business Concept Change in Costs Follow Change
in Risks
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Change in Costs follow Change in Risks
Cost increased
Cost reduced
Risks Reduced
Risks Increased
Overall Cost per risk reduced 215 Cost per
risk avoided 304 Actives Cost
per risk reduced 231 Cost per risk avoided
320 Retireeslt65 Cost per risk
reduced 192 Cost per risk avoided 621
Retireesgt65 Cost per risk reduced 214 Cost
per risk avoided 264
Updated from Edington, AJHP. 15(5)341-349, 2001.
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Business Concept Change in Costs Follow
Engagement
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Cost Savings Associated with Program Involvement
from 1985 to 1995
Annual Increase 12.6
Annual Increase 4.2
Zero or One HRA (N804) Two or More HRAs (N522)
Programming Year
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Yearly Average Disability Absence Days by
Participation
Pre-Program
Program Years
Schultz, Musich, McDonald, Hirschland,Edington. JO
EM 44(8)776-780, 2002
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Business Concept Change in Costs follow Dont
Get Worse
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Association Age, Costs, Risk Status
of Population and Costs (All Covered Lives)
Low Risk

N1.2M individuals in total population. N300K
in risk population
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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
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Section III The Solution The Culture of
Health Focus
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The Economics of Total Population Engagement and
Total Value of Health

• Total Value of Health
• Sickness Costs
• Drug Costs
• Absence Cost
• Disability Costs
• Workers Comp Costs
• Recruitment and Retention of Members

Health Risks
Low or No Risks
Disease

Where is the Investment?
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Total Population Management
Sickness Care Management
Opportunity
Condition Management Opportunity
Wellness Opportunity
Medical and Drug Costs only
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Creating and Maintaining a
Culture of Health and Productivity
Driven from the Leadership (Management and
Union) Vision of a Culture of Healthy,
Productivity and Well-Being Environment
Aligned with a Culture of Heath
Measurement and Incentives for Quality
Improvement Incentives Measurement
Driven from the Population
Individual-Based Strategies Health Risk
Appraisal System Population-Based
Strategies
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Create an Integrated and Sustainable Approach
Long Term StrategyShort Term Solutions
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Summary
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Sound Bites
1. The Do Nothing strategy is
unsustainable.
2. Refocus the definition of health from
Absence of Disease to High Level Vitality.
3. Total Population Management is the
effective healthcare strategy and to capture the
Total Value of Health
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, Dont Get Worse and
then Lets Create Winners, One Step at a Time.
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Key Thoughts
Objective Shareholder value from creative and
innovative products from healthy and productive
people
Strategy Culture of Health Program to drive
Objective Partners health plans benefit
consultants primary care physicians
pharmaceutical companies health enhancement
companies

Outcomes to get to Zero Trend 90-95
participation and 75 to 85 low-risk
Keep the
healthy people healthy
Dont get worse
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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
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