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More Integrated Systems Investing In EHM

by Scott MacStravic

Employee health management (EHM) has always been a logical arena for investment by healthcare organizations (HCOs) of all kinds, since they are employers facing a constant and worsening labor shortage and high labor costs. By protecting and improving the health of their workforces, HCOs can not only reduce their health, workers compensation, and disability insurance costs, but increase worker productivity and performance. And as more of their revenue becomes dependent on their overall performance, the more they can improve their workforce performance, the better their revenue situation will be, in addition to their cost situation.

There is, of course, the problem that EHM derives part of the savings it generates by reducing the incidence and prevalence of disease and injury, and thereby, the use and expenditures for “sickcare”, upon which HCOs depend for the vast majority of their revenue. So while offering EHM to their own employees makes eminently good sense, offering it to other employers would seem to be directly counter to HCOs’ financial interests.

But there are many, and an increasing number of HCOs whose missions and visions for their future recognize that preventing disease and injury is in the best interests of the communities they serve, and may be in their best long-range interests, as well. With all payers for sickcare services looking for ways to dramatically reduce their payment obligations, it is clear that sickcare is not in the “best of health” as a future market, while healthcare, in its truest sense, certainly is. If HCOs do not join in the general move to proactive management of health, it will likely become only a bystander and victim of others doing so.

It is certain that in the most optimistic of scenarios for the future, sickcare will continue to be needed. But if the volume and intensity of sickcare utilization and expenditures can be significantly reduced, then payers will be able to afford being at least about as generous as they are now in paying for it. If not, and particularly if payers become widespread and heavy purchasers of healthcare instead, HCOs that depend solely on sickcare revenue may be in serious trouble. Already prestigious HCOs such as the Mayo Clinic are significantly engaged in EHM, with Mayo serving 70 or so employers in the US with its proactive health management services.

Sutter Health, an integrated health system of 26 hospitals plus medical practice affiliates such as the Palo Alto Medical Foundation, has been engaged in EHM for both its own 41,000 employees and employers in its markets, beginning in 2001. More recently, it developed Sutter Health Partners as a separate division responsible for employer-focused EHM services as both a revenue-generating and employer relationship management (ERM) strategy. It offers a “Live Well for Life” program to employers in the Northern California market where it operates, using the same double entendre meaning of “for life” as I did as the Chief Marketing Officer for Provenant Health Partners in Denver, where we developed the tagline “Your Partner for Life.”

Sutter offers customized turnkey EHM programs to area employers, based on onsite convenience. The programs include onsite biometric screening tests to assess and evaluate progress among participating employees, in addition to an online health risk assessment survey. Personal coaching, including a personal meeting with the coach assigned to each participant, and ongoing meetings at least quarterly thereafter, are offered along with wellness topic and exercise classes at the worksite for participants’ convenience, as well as the high personalization possible through face meetings.

Coaching, support and monitoring communications are also carried out online and by phone to supplement onsite meetings. Based on an average annual employee compensation of $40,000 a year, fairly low among employers who invest in EHM, including Sutter, itself, Towers Perrin has predicted first-year savings for employers of almost $1000 per participant in the EHM program, of which over three-quarters are in absenteeism, disability and presenteeism cost reductions, with less than one-quarter in medical/sickcare costs. [“What LIVE WELL FOR LIFE Can Do for You” SutterHealthPartners.com (downloaded Oct 2007)]

Moreover, these savings are predicted to increase each year thereafter, from $1000 to $1700 per participant per year, adjusted for inflation. Cumulative savings per participant over that period would be over $3500 per participant including medical costs, absenteeism and presenteeism. For employers with higher average annual compensation per employee, or where the value of employees is greater than their annual compensation, total positive economic impact would be that much greater.

The Sutter program combines assessment, coaching interventions that motivate and support employee health behavior change, with measurement of results and return on investment. Sutter has reported results such as:

* Moving 25% of workers from high- to low-risk status with respect to blood pressure readings, with a Towers Perrin estimated cost savings of $706 for each employee affected
* Moving 27% of workers from high- to low-risk for cholesterol level, with estimated savings of $492 per worker
* Sedentary Lifestyle risk down by 16%, with savings of $738 per affected worker
* Body Mass Index risk down 11%, with estimated savings of $1295 per worker.

Instead of estimating productivity impacts based on employee self-reports of their own productivity levels, Sutter uses research-generated correlations between specific types and numbers of health risk reductions and productivity levels. Combined with biometric verification of changes in risks, this enables an objective basis for gauging productivity improvements, rather than the often overstated levels of productivity impairment and improvement that employees have been known to report. [G. Pransky, et al. “Performance Decrements Resulting from Illness in the Workplace” JOEM 47:1 Jan 2005 34-40]

While onsite coaching adds to EHM costs, Sutter Health Partners’ CEO and Sutter VP for New Product Development, Margaret Sabin argues that it is more effective as well. She reports that participants who have been involved in other kinds of EHM communications say that other methods are nowhere near as beneficial and effective. Participants cite the coaching 10% more often than they do the up to $500 per year incentives available as the reason they have changed to healthier behaviors. (phone interview on Oct 29, 2007)

Like most EHM programs, Sutter’s Live Well for Life efforts focus mainly on weight, stress, and risk management, along with physical activity and nutrition as key elements in a healthier lifestyle. They empower each participant to formulate reasonable and sustainable personal health goals, and support them with coaching via personal onsite visits, as well as online and phone interactions, combined into at least six 20-minute contacts over five months, in addition to participants’ self-directed learning and behaviors.

Sutter charges for its HRA and biometric assessment efforts on a per employee basis, then for its coaching and classes on a per participant basis. This minimizes the cascading effect of per employee charges, which multiply costs per employee by the inverse of the participation rate, e.g. doubling them at 50% participation, quintupling them at 20%. Sutter also reports that its clients achieve from 60 to 80% participation, meaning they get far more out of the program than do employers who only achieve 10-30%, which is more like the average for employee participation in wellness programs.

In addition to saving employers money on total labor costs, the Sutter program helps strengthen, and even initiate good employer relations, with examples of new business for Sutter Health medical and hospital care arising thanks to relationships begun with Sutter Health Partners relationships. And Sutter has been offering its own employees the same program for many years, realizing savings similar to those its employer clients enjoy. While there will always be a degree of conflict between the financial interests of sickcare services and EHM, there are equally solid common interests in terms of both internal EHM applications and the improved relationships with employers it makes possible.

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