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University of Michigan Health Management Research CenterUniversity of Michigan Health Management Research Center
Health Management as a Serious Health Management as a Serious Business StrategyBusiness Strategy
THE UNIVERSITY OF MICHIGANHEALTH MANAGEMENT RESEARCH
CENTER
THE UNIVERSITY OF MICHIGANHEALTH MANAGEMENT RESEARCH
CENTER
Dee. W. Edington
University of Michigan Health Management Research CenterUniversity of Michigan Health Management Research Center
UM-HMRC Corporate Consortium
UM-HMRC Corporate ConsortiumKellogg
JPM ChaseProgressiveWe EnergiesGeneral Motors Foote Health SystemMedical Mutual of OhioSt Luke’s Health SystemCuyahoga Community College Blue Cross Blue Shield Rhode IslandUnited Auto Workers-General MotorsWisconsin Education Association TrustSouthwest Michigan Healthcare CoalitionAustralian Health Management
Corporation
Crown Equipment Delphi AutomotiveSouthern Company
Florida Power & LightAffinity 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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New way to do Health and Productivity ManagementIn the United States and Throughout the World
X
UM-HMRC Ann Arbor
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1. Total Case: Research to Business Case to Application Workshop
-Eight hours of presentation and interactive discussion
2. Total Case: Business Case to Application Workshop
-Four hours of presentation and interactive discussion
3. Business Application Seminar: (120 minutes)
4. Business Application Presentation: (75 minutes)
5. Business Application Presentation: (60 minutes)
6. Executive Summary Presentation: (30 minutes)
Next Generation Health Next Generation Health Management, Champion Management, Champion Companies, Zero TrendCompanies, Zero Trend
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Agenda
Health Management as a Serious Health Management as a Serious Business StrategyBusiness Strategy
Michigan PHA: September 21, 2006
Introductory CommentsIntroductory Comments
• Do-Nothing StrategyDo-Nothing Strategy
• Business Concepts to Build the Business Business Concepts to Build the Business CaseCase
• Next Generation ProgrammingNext Generation Programming
Slides available via e-mail attachment
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Introductory Comments
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Health Management as a Business Strategy
Along the way, “…someone moved the cheese…”
Health or Economics?
Healthy People or Productive People?
Why are You Here?
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Two Questions
1. Why do I have Health Insurance?
2. Who is in the center of the Healthcare
Industry?
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“The Total Value of Healthcare” (Managing health
status) To
“The Cost of Healthcare” (Treating disease) To
Moving the Paradigm From
“Health is Free” (Healthcare Costs < Total Benefits)
Adopt the Quality Strategy: Fix the Systems
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Section I
The Do-Nothing Strategy
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The Natural Flow
of Health Risks and Behaviors
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Health Risks and BehaviorsHealth Risk Measure
AlcoholBlood PressureBody WeightCholesterolExisting Medical ProblemHDLIllness DaysLife SatisfactionPerception of HealthPhysical ActivitySafety Belt UsageSmoking Stress
High Risk Criteria
More than 14 drinks/weekSystolic >139 or Diastolic >89 mmHgBMI 27.5Greater than 239 mg/dlHeart, Cancer, Diabetes, StrokeLess than 35 mg/dl>5 days last yearPartly or not satisfiedFair or poorLess than one time/weekUsing safety belt less than 100% of timeCurrent smokerHigh
OVERALL RISK LEVELS
Low Risk 0 to 2 high risksMedium Risk 3 to 4 high riskHigh Risk 5 or more high risks
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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
Mean of three years between measures
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The Natural Flow
of Health Care Costs
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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
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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 disease
Minor Disease
No Disease
Musich,Schultz, Burton, Edington. DM&HO. 12(5):299-326,2004
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$2,098
$4,530
$5,813
$7,123
$4,401
$3,216
$1,550
$2,667
$3,364
$4,718
$3,069$2,480
$1,351 $2,110
$2,912
$3,894
$2,605 $2,200
$1,122$1,523 $2,081
$2,941
$1,851 $1,641
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
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
Low Risk
Medium RiskHigh Risk
Non--Participant
Edington. AJHP. 15(5):341-349, 2001
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Are We Willing to Accept the Consequences of the
Do-Nothing Strategy?
This is the Way Americans Have been Living their Lives
for 60 Years
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Section II
Key Business Concepts
To Build the Business Case
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Business Concept
Total Value of Health Status
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Relative Costs of Poor Health: Total Value of
Health
Presenteeism AbsenteeismAbsenteeismSTDLTD
Direct Costs:
Medical & Pharmacy
Indirect Costs:
Edington, Burton. A Practical Approach to Occupational and Environmental Medicine (McCunney). 140-152. 2003
Worker’s Compensation
Time-Away-from-Work
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Same Risk and Behavior Factors
Drive
All the Outcome Measures
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$1,157
$1,278
$1,336
$1,418
$1,460
$1,592
$1,593
$1,607
$1,750
$1,756
$1,817
$2,416
$2,557
$3,434
$5,145
$691
$1,428
$1,473
$1,434
$1,421
$1,415
$1,374
$1,416
$1,310
$1,144
$1,277
$1,318
$1,228
$1,234
$1,303
$1,129
$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000
Zero Risks
Alcohol Drinks >14 weekly*
Safety Belt Usage <100%
Current Smoker
Cholesterol>239
Job partly or not satisfied
Life partly or not satisfied
Health Age
Stress (high)
20% or more overweight*
Physical Activity <1x/week*
Physical Health (fair or poor)
High BP (SBP >139, DBP >89)*
Use Medication/Drugs*
Existing Medical Problem*
Illness Days >6/yr*
Low Risk
High Risk
Medical/Drug Cost Comparison by Risk Status
*p<.05.
Yen, Witting, Edington. AJHP. 6:46-54, 1991
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Total Disability Cost by Risk Status 1998-2000 Mean Annual Costs
Wright, Beard, Edington. JOEM. 44(12):1126-1134, 2002
$1,273
$1,216
$1,051
$1,051
$2,175
$1,088
$1,163
$1,103
$1,071
$1,164
$1,215
$1,544
$1,057
$1,355
$1,585
$390
$860
$964
$1,006
$1,021
$846
$1,005
$977
$896
$1,015
$993
$997
$965
$1,020
$950
$850
0 500 1000 1500 2000 2500 3000
No risks
Stress (high)**
Life partly or not satisfied**
Safety Belt Usage <100%**
Alcohol Drinks >14 weekly*
Illness Days >6/yr**
Physical Activity <1x/week*
Current Smoker**
20% or more overweight**
Cholesterol>239
High BP (SBP >139, DBP >89)
Existing Medical Problem**
Physical Health (fair or poor)**
Health Age 2**
Job partly or not satisfied**
Use Medication/Drugs 1**
Low Risk
High Risk
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20%
21%
23%
23%
23%
23%
24%
24%
24%
24%
25%
27%
23%
22%
21%
21%
21%
21%
21%
21%
20%
20%
18%
24%
12%
0% 5% 10% 15% 20% 25% 30% 35%
Zero Risks
High Cholesterol
Alcohol Drinks >14/wk
High BP*
BMI>=30.0**
Physical Activity <1x/wk**
Poor Physical Health**
Current Smokers**
Job Dissatisfaction**
Safety belt Usage <90%**
High Stress**
Life Dissatisfaction**
Use Relaxation Medication**
Low Risk
High Risk
Estimated Loss of Productivity by Risk Status
*p<.05, **p<.01
Burton, Chen, Conti, Schultz, Pransky, Edington. JOEM. 47(8):769-777. 2005
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Business Concept
Excess Costs follow Excess Risks
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$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
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$175 $292
$757
$0
$500
$1,000
$1,500
Low Risk (0-2Risks) N=685
HRA Non-Participant
N=4,649
Medium Risk(3-4 Risks) N-
520
High Risk (5+Risks) N=366
Excess Costs
Base Cost
Excess Disability Costs due to Excess Risks
$491$666
$783
$1,248
Wright, Beard, Edington. JOEM. 44(12):1126-1134, 2002
36% of Absence, STD, Worker’s Comp
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6.2%12.2%
0.0%
10.0%
20.0%
30.0%
Low Risk (0-2 Risk N=17,947
Medium Risk (3-4Risks) N=6,959
High Risk (5+ Risks)N=3,469
Excess Costs
Base Cost
Excess On-The-Job Loss due to Excess Risks
Burton, Chen, Conti, Schultz, Pransky, Edington. JOEM. 47(8):769-777. 2005
14.7%
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Business Concept
Total Value of Health Status to an Organization
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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
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Business Concept
Stratification of the Population
for Intervention
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Stratification In the Health Stratification In the Health Promotion OpportunityPromotion Opportunity
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 disease
Minor Disease
No Disease
Health Promotion Opportunity
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Predictability to be at High Cost
0.100.07
0.08
0.14
0.18 0.18
0.19
0.75
0.83
0.79
0.64
0.570.54
0.52
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
base t1 t2 t3 t4 t5 t6
Time
%
Low intervention (71%)
High Intervention (29%)
Sp=(1-0.10)=0.90
Sp=(1-0.07)=0.93
Sp=(1-0.08)=0.92
Sp=(1-0.14)=0.86
Se=0.75
Se=0.83
Se=0.79
Se=SensitivitySp=Specificity
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Business Concept
Change in Costs
Follow Change in Risks
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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
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Change in Presenteeism follows Change in Risks
-6.0%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
2 1 0 1 2
Pe
rce
nt
red
uc
ed
pe
rce
nt
inc
reas
ed
Risks Reduced Risks Increased
Burton, Chen, Schultz, Edington 48:252-263, 2006.
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Business Concept
Change in Costs
Follow Engagement
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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%
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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
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Section III
Health Management as a Serious Business Strategy
Next Generation Program
Healthy Companies
Zero Trend
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Three Key Business Beliefs
1. Individuals Can Maintain Low-Risk Health Status even as they Age
2. An Employer and a Health Plan can Help its Members Maintain Low-Risk Health Status
3. The Major Economic Benefit is in Paying Attention to Individuals with Low-Risk Health Status
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Strategies for
Population Management
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Where are the Opportunities Where are the Opportunities for Population Health for Population Health
Management?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 disease
Minor Disease
No Disease
Health Promotion Opportunity
Disease Management Opportunity
Medical & Care Management Opportunity
Medical and Drug Costs only
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Total Health Total Health & &
ProductivityProductivity ManagementManagement
Create an Integrated and Sustainable Approach
On-site Medical• Diabetes education pilot• Injury and medical management
Health Advocate• Provide Direction• Get the Care You Need• Coaching & Outreach
Health Plan DesignEnvironmental Design
Behavioral Health• Work/Family•Work Life Plus
Health Portal• Stay healthy• Health information• Make informed choices
Health Risk Assessment • Assess and track health behaviors• Maintain health• Address health risks
Fitness Centers• Low risk maintenance• High risk reduction
Wellness Programs• Active expansion• Retiree communications/awareness program
Disease Management• High Acuity (identified high cost disease)
• Low Acuity (identified lower cost disease; lifestyle behavior focus)
Case Management
• STD, LTD• Workers’ Compensation• Scattered Absence
Absence Management
Long Term Strategy—Short Term Solutions
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Health Management as a Serious Business Strategy Worksite Environment
Values and BeliefsWorkplace Policies
Benefit Design
Population
Website Health PoliciesSpecial Promotions Employee Assistance Risk Reduction ActivitiesLow-Risk Maintenance Know Your Numbers Physical Activity Nutrition Awareness Medical Facility
Individual(Stratification by
Individual)
Coaching Sessions Low-Risk Maintenance
Disease Management High-Risk Reduction
Health Advocate Triage to Resources
Health Risk Appraisals
Incentives
Measurement
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Environment Interventions (Physical, Psycho/Socio)
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
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Next Generation Benefit Design to Promote Consumerism
• Values, Mission,… “What’s the Point
• 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 of
Individual Based Programs
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Individual Stratification and Coaching
Trend Management System Prioritized Risks Probability of being High-Cost
Cluster Technology Coaching for all People: Low-Risk, High-Risk
and Conditions Develop Self-Leaders; Intrinsic Coaching Health Advocate with triage to other resources
(Behavioral Health, EAP, Family Physician,…)
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Coaching Strategy for Individual Intervention
Contact each individual
Unlimited contacts (one-on-one, web, telephonic) By level of probability of being high cost Pay attention to cluster and prioritized risks
Use variety of contacts (one on one, telephone and e-mail for sustainable engagement
* Frequent evaluation of coach/client participation and satisfaction
Use situational and whole person approach
Engage individual in positive actions. Ask but don’t tell. Use triage, health advocate strategies, develop self-leaders and available resources
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Next Generation of
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
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Incentives
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Incentives
Hats and T-Shirts
Cash, debit cards($25 to $200)
Premium Reductions/Premium Plan($600 to $2000)
Benefit Options (Co-pays, Deductibles, HSA contributions, …)
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Measurement: 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!!!!
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Measurement, Evaluation and Decision Support
1. Participation and Employee Satisfaction
2. Reduction in Health Risks
3. Return on Investment
4. Decisions Based upon Program Results
5. Total Value of Health (Health Care Cost/Productivity Measures)
6. Proof of Concept (Beat Natural Flow/Bend the Trend Lines)
7. Shareholder Value
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Summary
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Health Management: Next Health Management: Next Generation Programs, Generation Programs, A Serious A Serious
Business StrategyBusiness Strategy
Risk & Disease Identification
Know Target Population
Success ScorecardParticipation: 80%-95%% Low Risk Population: 75+%
Outcome MeasuresEffective Programs Equal
Benefits
Manage the Person, Not the Risk or the Disease
Key Key
StrategiesStrategies
Total Population Management
Environmental – Policies, Procedures, Benefits Aligned
Individual –
Low-Risk Maintenance, Risk Reduction, Referral, Follow-up
Population -
Engagement
Other – Incentives, Measurement
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Thank you for your attention.Please contact us if you have any questions.
Phone: (734) 763 – 2462Fax: (734) 763 – 2206
Email: dwe@umich.edu
Website: www.hmrc.umich.edu
Phone: (734) 763 – 2462Fax: (734) 763 – 2206
Email: dwe@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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25 Years of Key Learnings
from the
University of Michigan
Health Management Research Center
(1980 to 2006)
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Key Research Learnings from HMRC
Key Research Learnings from HMRC1980 1980 HRA -Implement and disseminate HRA from CDC/Carter Center
to Outcomes measure -Move from mortality outcomes to medical, pharmacy and time away from work as our primary outcome measures
1990 Consult and implement -Wellness Programs in 20+ companies
1996 Low risk maintenance -an important program strategy
1995 Risk combinations - the most dangerous predictors of cost
1994 Cost changes follow risk changes (medical and pharmacy)
1993 Excess costs are related to excess risks
1993 Absenteeism -shows the same relationships to risks as medical costs
19911991 High risk persons are high cost –(prospective data) a.) Individual risks b.) Cumulative risks (0-2, 3-4, 5 or more)
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Key Research Learnings (Continued)`
Key Research Learnings (Continued)`
1996 Resource optimization -Changes in risk drive changes in cost when targeted according to specific risk combinations:
1997 Benchmarking -By wellness score and company health score
1998 Participation –Relates to risk and cost moderation
1998 Program opportunities -In preventive services, low-risk maintenance, high-risk intervention and disease management
1999 Presenteeism -Introduced as a measure of productivity and influenced by risks and disease
2000 Total value of health -Define to the organization
2001 Natural flow –Established for risks and costs
2002 Focus on the person – Primary and not the risk or the disease
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Key Research Learnings (Continued)
Key Research Learnings (Continued)
2002 Cost changes follow risk changes -Time away from work
2003 Improved population health status -Result from Employer sponsored programs
2004 Percent participation and percent low-risk -Proposed as the important elements of a Health Management Scorecard
2004 Proof of Concept -Must bend the cost trends
2005 Pre-retirement participation -Influences post-retirement participation
2005 Interventions -Susceptible to severe “step down” participation
2005 Presenteeism -Changes in costs follow changes in risks
2006 and beyond ~Health Management -A Key Component in Health Consumerism~