The cumulative effect of year-after-year increases has produced record-high costs for employers, employees and retirees. Even during these tough economic times, employers appear to be committed to maintaining workers' health benefits. Despite these challenges, employers have never been more interested in workforce health and well-being as a business value that can give them a competitive edge.
These companies are investing in workforce health with significant cost savings and productivity gains. What are these companies doing differently to achieve results that lead to a competitive edge? Employers know they need their health benefit programs operating efficiently so the money they invest in the workforce receives a high return on investment.
Controlling health risks presents a very large opportunity for companies to spend valuable health dollars in targeted areas. It is estimated that close to 90% of all healthcare cost are due to preventable illnesses. Employers seeing high returns on their health benefit investment have adopted a philosophy of becoming a healthcare risk manager which means finding, managing and ultimately reducing the risk related to the health plan.
A healthcare risk manager addresses controllable health risks similar to what is done in workers' compensation programs. In order to have a successful workers' compensation program all safety risks need to be identified and appropriately managed. In the healthcare setting this risk can be identified through data mining of claims and predictive modeling tools. A reduction in controllable risk dollars has a significant impact on the bottom line of an employer's healthcare expenditure.
HEALTHCARE RISK MANAGEMENT
A healthcare risk manager is cognizant of the health risks and health needs of their workforce through actionable data. Data becomes actionable when employers take advantage of sophisticated data analytics that succinctly identify risk through the review of medical claims data, pharmacy data and other sources of health data like health risk assessments. This data is not only the foundation for risk management but is also an essential element in building a targeted and effective wellness program.
Each company has their own demographic, chronic illness and lifestyle choice risk factor challenges. Once these are known and quantified the company can be scored using a Healthcare Index. This Healthcare Index provides a number reflective of the state of health or illness in the workforce.
A Healthcare Index of 1.0 would reflect average or normative healthcare costs related to the population being measured. A company with a healthcare index above 1.0 has either illness burden and/or demographic challenges. These challenges once identified can then be managed through wellness programs specifically designed for that population.
EFFECTIVE WELLNESS PROGRAMS
Offering corporate wellness programs use to consist of health fairs, lunch and learn meetings, special discounts to health clubs and perhaps a wellness handbook. In 2010, corporate wellness has become far more sophisticated. There is no one size fits all when it comes to designing a wellness program. Wellness does not mean the same thing to a twenty six year old as it does to someone forty eight years old with three chronic conditions and several medications.
This is why employers need to use their data to stratify the risk of the workforce and then design effective wellness programs. There are several keys to an effective wellness program but in general an employer needs to design an integrated, comprehensive, multi-year approach to preventive health and wellness strategies. To begin with most employers will need an effective chronic disease management program as the center piece to wellness.
For most companies, 80% of healthcare dollars will be spent on 20% of the workforce that have one or more chronic conditions. Managing the risk of this population is paramount to a successful wellness program. This risk can be identified by the medical claims and pharmacy data. Successful chronic disease management programs include nurse coaches specifically trained in motivational techniques.
Most individuals with chronic conditions need either additional education about their condition or someone to keep them motivated to make the necessary changes in their life. In addition, an effective chronic disease management program should be able to stratify the risk of the chronically ill population to dedicate more nurse coaching time to those with higher risks.
The employer should receive reports that show how the risk is being managed. This does not just mean who participated in the program. The reports should show how many of the chronically ill have met established standards of care for their condition(s). Only when people get the care they need for their condition is risk being appropriately managed. In addition employers need to have baseline risk data.
The purpose of this data is to identify risk factors before they turn into expensive claims. This aggregated data can also be used to design targeted wellness programs focused on the particular health risks of the workforce such as smoking, obesity or high cholesterol. This can be accomplished by the use of an effective health risk assessment tool. An effective health risk assessment tool is attractive and easy to use.
It should also provide educational tools and a curriculum specifically built around the health needs of the person taking the assessment. In order for individuals to manage their own health risks, they need to understand what those risks are. Ideally, the information in the health risk assessment should be shared with the individual's personal physician. The health risk assessment becomes the individual's healthcare portfolio so they can better manage their health risks.
THE EMPLOYERS ROLE IN WELLNESS
An employer must motivate employees by giving them the tools and incentives to help them change their behaviors. For example an effective health risk assessment tool offered with incentives can increase participation in wellness programs. Sometimes people just need a reason to change their behavior. Many companies use nurse health coaches as another way to provide assistance to employees who are trying to change their behavior.
The employee needs to take ownership of improving their health which in turn will reduce the demand for medical claims. Some employers offer two benefit offerings: a wellness and non-wellness benefit plan option. The wellness plan has all the tools integrated into a comprehensive program with lower premiums. This provides an additional incentive for the employee to begin a wellness program.
Well communicated health improvement programs have very positive impacts on recruitment, retention, morale and productivity. When employers partner with employees to share the responsibility of affordable health care costs, because it is everyone's problem, then a culture of health is built within a company.
The value in investing in well constructed wellness programs has been proven in small, medium and large companies. Employers need to seize the opportunity for the only true way to control healthcare costs - prevent illness so the cost spiral does not continue.
About the Author
NANCY C. BLOUGH, JD, MBA Executive Vice President American Health Data Institute Nancy is the Executive Vice President of the American Health Data Institute, a company owned by the Key Family of Companies. Nancy has been with the Key Family of Companies since 1998 in the roles of Chief Operating Officer and President of the Southeast Office TPA. Prior to joining The Key Family of Companies, Nancy was the Director of Strategy and Design, Healthcare Management for Ford Motor Company in Dearborn, Michigan.
Her responsibilities included group medical, workers compensation and disability benefits for active and retired employees of Ford Motor Company. Nancy was also on the Board of Directors of Blue Cross and Blue Shield of Michigan. Prior to joining Ford Motor Company, Nancy was the Deputy State Health Commissioner for the Indiana State Department of Health. Ms. Blough received her MBA, Doctorate of Jurisprudence and undergraduate degree from Indiana University.
Nancy is an adjunct professor in the Belk School of Business at the University of North Carolina Charlotte as well as a member of the Kelly School of Business MBA Alumni Advisory Board. She is licensed to practice law and is a certified mediator. American Health Data Institute (AHDI) is a data warehouse and targeted utilization management partner that combines all the necessary elements for controlling healthcare costs from both the demand and supply side of the healthcare equation.
AHDI utilizes information provided by medical claims, eligibility records and pharmacy as the data source, to generate provider profiles using software from Ingenix, the world's leading healthcare information technology company. AHDI has invested in the underlying infrastructure and technology to build a sophisticated, economically meaningful and scientifically sound database.
AHDI develops analytical business intelligence regarding healthcare expenditures, turning data into intelligence, creating a Healthcare Quality Management Process (HQO). The HQO provides analytical information regarding:
- Healthcare Index
- Key Care Guide's PHD Network - Online health risk assessment
- Chronic Disease Management
- Predictive Modeling and Risk Stratification
- Provider Quality
- Stepped Down Utilization Review Management
AHDI can identify the factors driving your healthcare costs and exactly how much those factors are driving your illness burden, provider costs, and your per employee costs. AHDI can also address how your demand and supply utilization compares to other companies and normative values, whether your provider costs are being driven by per unit or utilization factors, which provider practice categories are contributing to excess cost, and what is the compliance rate of your chronically ill population with the minimum standards of care. With the implementation of AHDI, an employer group can expect positive outcomes in four areas:
- Savings: The Chronic Disease Management Program has demonstrated average savings of 5% for an employer. The use of the Endorsed Providers Bonus Program can save an employer an additional 10%
- Data: Employers currently lack actionable data in order to control health care costs
- Risk Coordination: Employers can reap the benefits of more proactive risk identification and management.
- Consumerism: Employees will be given the tools to become better consumers of health care services.