University of Michigan Health Management Research Center Health Management as a Serious Business...

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


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



New way to do Health and Productivity ManagementIn the United States and Throughout the World

X

UM-HMRC Ann Arbor


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


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


Introductory Comments


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?


Two Questions

1. Why do I have Health Insurance?

2. Who is in the center of the Healthcare

Industry?


“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


Section I

The Do-Nothing Strategy


The Natural Flow

of Health Risks and Behaviors


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


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


The Natural Flow

of Health Care Costs


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


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


$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


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


Section II

Key Business Concepts

To Build the Business Case


Business Concept

Total Value of Health Status


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


Same Risk and Behavior Factors

Drive

All the Outcome Measures


$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


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


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


Business Concept

Excess Costs follow Excess Risks


$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


$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


36% of Absence, STD, Worker’s Comp


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%


Business Concept

Total Value of Health Status to an Organization


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%



Business Concept

Stratification of the Population

for Intervention


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


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


Business Concept

Change in Costs

Follow Change in Risks


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


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.


Business Concept

Change in Costs

Follow Engagement


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%


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


Section III

Health Management as a Serious Business Strategy

Next Generation Program

Healthy Companies

Zero Trend


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


Strategies for

Population Management


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


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


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


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


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


Next Generation of

Individual Based Programs


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,…)


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


Next Generation of

Population Based Programs


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


Incentives


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, …)


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!!!!


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


Summary


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


Thank you for your attention.Please contact us if you have any questions.

Phone: (734) 763 – 2462Fax: (734) 763 – 2206

Email: [email protected]

Website: www.hmrc.umich.edu

Phone: (734) 763 – 2462Fax: (734) 763 – 2206

Email: [email protected]

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


25 Years of Key Learnings

from the

University of Michigan

Health Management Research Center

(1980 to 2006)


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)


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


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~

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