Look at leading, not lagging, indicators to cut health care costs
"As you think about health care, understand it's more than the cost of medical delivery," said Thomas Parry, president of Integrated Benefits Institute. "Outcomes that matter -- absence, performance, productivity -- have a bigger hit on year earnings than health care costs."
Parry's comments followed the release of IBI research showing poor health costs the U.S. economy an estimated $576 billion annually, of which $227 billion is from lost productivity alone. An estimated $26 billion of illness-related absenteeism and presenteeism is attributable to work-related injuries and illnesses.
The research, Parry says, is germane to employers focused on health care costs. Investing in health and wellness programs that target specific problem areas in a company is critical.
"[Employers] need to think about this broadly, and you have to think really hard about what you measure. That's a key part," he said.
How to measure.
Vendors often bombard their clients with tremendous amounts of information on the premise that more is better.
With technology and mobile apps, there's an avalanche of data coming your way, Parry said. But identifying and analyzing data effectively does not need to be as cumbersome or confusing as some may think.
Employers are shaking their heads, wondering how they are going to think about this, Parry said. "We've said don't get trapped in the details. Don't start at the most granular level to bring it together; flip it over and think from the top down."
Parry and his colleagues have identified 10 dimensions of population health, each with a single measure. "You can bring them together and put them on one page," he said. "That becomes your dashboard for communicating with your senior management and areas where you need to drill down."
As an example, one of the dimensions is program participation. The degree can be measured by the participating employees as a percent of eligible employees.
"Let's say you are able to measure and find out a very small percent of employees are participating. That's a red flag," Parry said. "You've got to drill down and understand why."
The 10 dimensions are grouped into three categories:
- Leading indicators, which demonstrate health status and provide a basis for health management strategy development.
- Care indicators, which demonstrate health activities and typically reflect early outcomes of strategic plan implementation.
- Lagging indicators, which demonstrate health outcomes and generally are the last of the groups to change.
"The fact of the matter is employers typically focus on a lagging indicator such as health care costs and have tried to manage them through plan design changes and shifting costs to employees," Parry said. "You can only impact lagging indicators by focusing on the other two."
Advice for employers.
By understanding the health dimensions and what is driving them, employers can more effectively invest in health management strategies. Employers also need to do a better job of engaging employees in the process.
"Essentially employers have said to employees, you need to be healthier so we can save money," Parry said. "They haven't said, 'here's what this means to you; not only a healthier life, but your life as a professional and your wage earning capacity.' As we help employees understand what this means to them and that they've got skin in the game, then it aligns. So both parties can say, here's what in it for me."
Parry says workers' comp managers need to revise their traditional ways of thinking and focus on the value of where they are putting their money. "What's happened is as costs have increased, CFOs have become more involved in the discussion -- 80 percent are part of the decision about benefits," Parry said. "CFOs say, 'I've got a finite pot of money here and now these investments in health care' ...you need to know the full outcomes of health and business health."
Read more at the WorkersComp Forum homepage.
November 19, 2012
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