Archive for Employee Health Management
by Scott MacStravic
May 12, 2008 at 12:42 pm · Filed under Employee Health Management, Health Management
In the early days of health management (HM), whether for employees (EHM) or insured populations (PHM), insurers were among early adopters of the outsourcing approach thereto. Since insurance plans had plenty of work to do in marketing their offerings, paying claims, and managing utilization of care, they were quite willing to outsource HM to the growing number of specialized vendors of disease management (DM) or health & wellness programs (HW).
But there are increasing signs that insurance plans are reconsidering this decision, and “in-sourcing” HM as a major strategy and revenue-generating addition to their insurance offerings. For one thing, they have the large populations that can create the kinds of economies and qualities of scale that enable HM to be effective and efficient. For another, they are faced with employer clients who want, even insist on HM as a key element in their relationships with insurance plans.
Both CIGNA and Aetna, for example, have long offered their own in-house HM programs, beginning with DM, and adding on HW and risk behavior/condition management efforts over time. The majority of employers, according to one survey, look to their insurance plan to provide HM services, and employers typically prefer to deal with only one supplier of such services, rather than having to juggle many. [L. Butcher “Wellness Programs: No Longer Just an Add-On” Managed Care Magazine, Feb 2008]
Wellpoint’s president of its Health Management subsidiary considers “health optimization” to be the future of the health insurance industry, according to this article. Employers are making HM a key consideration when they select which insurers to do business with, and any plans that lack a commitment to and capability for HM, with its full effects on healthcare costs but worker productivity and performance even more important, will be at a competitive disadvantage.
Employers often develop their own internal HM programs, but many prefer to outsource this function. For one thing, many are not large enough to have sufficient numbers of employees with similar health issues to enable internal programs to be cost-effective. And for another, employers are barred from knowing as much about their employees’ health, as individuals, which makes it that much more difficult to match their programs to individual risk/reward potential.
This matching challenge is perhaps the key to successful HM strategies and interventions. Unless HM providers can match interventions to the personal characteristics, preferences, and risk-reward potential of individual employees, they are essentially “flying blind” when it comes to ensuring positive and competitive levels of investment returns for their employer clients. And employers are legally prohibited from knowing much of the information needed for such matching.
Wellpoint, for example, has 1500 staff already in its Health Management subsidiary, and has spent millions developing its “360o Health” program. It is intended as a holistic health optimization strategy for employers, and Wellpoint envisions adding another 599 staff to meet growing demand for this service among its employer clients. Health plans are even offering their HM services to employers who are not clients, though this may also be an effective strategy for gaining additional health insurance clients, once these HM services have proven effective.
As one sign of the times, Blue Cross/Blue Shield of Minnesota just announced that it is dropping its contract with Healthways, Inc. Nashville, Tennessee, as it readies its own internal program for rollout next year. The intent is to offer a similar nurse-based phone coaching program, but aimed at not just DM participants, but at employees who are medically at risk, but not yet ill. It will be able to use the BC/BS claims database to identify patients at risk of non-compliance, for example, and intervene immediately to identify and address the reasons therefor.
As in other examples of insurers taking over the HM function, BC/BS will compete with their former HM supplier for its own employer clients, and potentially for other employers as well. While Healthways is large enough to easily absorb the loss of the direct contract, if the trend persists, all HM specialty suppliers may find competition from insurers a major challenge. [S. Alexander “Blue Cross Dropping its Contract with Healthways” StarTribune.com, May 8, 2008]
Like all HM suppliers, of course, insurance plans are faced with the challenge of delivering and demonstrating significant and consistent positive ROI for their employer clients. Employers initially adopted HM investment as a worthwhile idea in its own right, and formal evaluation of financial returns has yet to become universally adopted. But it is clearly headed in that direction, and proving results will increasingly become essential to survival in the HM market.
The HM market is, at present, filled with hundreds if not thousands of different models and techniques for each of its elements, as discussed in the already posted series of articles on “The Name of the Game in EHM is Variability”. But it is certain that there will be intense efforts, by individual employers, consortiums thereof, and institutes developing for the purpose, to determine which are the best practices, and to publish this information for all to see. Then we will learn how well insurance plans compete with both specialized HM suppliers and employers, themselves, some of whom are already marketing their services to their peers. [“Employer Cooperation in EHM” May 5, 2008]
by Scott MacStravic
May 5, 2008 at 11:28 am · Filed under Employer CEOs, Employee Health Management
When I began my efforts in employee health management (EHM) fifteen years ago, the hospital system where I was responsible for strategy and marketing began the strategy with onsite health fairs for large employers. These gave us as well as the employers involved their first overall indications of the state of their employees’ health, other than that delivered by their health insurance premium increases and claims reports.
Because a fairly significant effort and expense was required in organizing each health fair, with volunteers and paid staff from our system, plus internal promotion efforts by the employer, the fairs were limited to large employers at first, those with thousands of employees in most cases. But there was also significant interest among smaller employers, with only hundreds or even dozens of employees.
We found it possible to organize reasonably efficient screening and educational efforts for smaller employers by inviting a number of them to participate at the same time and place. By conducting the efforts at large office buildings or campuses, for example, we could serve many employers at once, creating sufficient numbers to make it reasonable, and relying on the identification of the different employers for each employee who participated for analytical purposes.
A recent example of employer cooperation in ongoing coaching and monitoring of EHM participants has emerged in Milwaukee, Wisconsin. The QuadMed onsite clinics, which emerged as a separate business for the Quad/Graphics printing company when its own clinics proved successful are being shared by a number of employer clients in the area. These clinics are owned by the employers, while they are operated by QuadMed at the employer sites.
Quad/Graphics, itself, plus clients Briggs & Stratton Corp. and Miller Brewing Co. are “sharing” their onsite clinics with each other’s employees. This includes both the kinds of primary care services that employees and their dependents may need, and any EHM services offered at the clinics as well. By multiplying the locations available, the arrangement makes it easier for dependents, especially, as well as workers on their days off, to access a site nearest to their homes.
With the high price of gasoline, this also reduces the travel costs and time for employees and dependents, and makes it more likely that they will use early detection services such as mammography, for example. Modest co-payments of $5-6 per visit make these sites highly competitive with either retail clinics or physician’s offices in the area. And the more the onsite clinics are used, the more information is included in QuadMed’s data base about each employee or dependent involved. [E. Sanders “Companies Agree to Share Workplace Health Clinics” Business Journal Serving Greater Milwaukee, Apr 25, 2008]
It would not take much to permit smaller employers to cooperate in an onsite medical clinic located in a large office building or campus in the same way that health fairs are made accessible to them. Employer identification for each patient served would enable the billing of services to the proper employer, while offering convenience of location and minimal lost time from work seeking care in return, for employer and employees.
By aggregating a number of employee populations as potential participants in both normal primary care and EHM services at such a convenient location, employees could conveniently get coaching and risk condition or disease state monitoring services. This convenience is already offered by at least one EHM provider, Sutter Health Partners in Sacramento, California, for example, using visiting coaches and biometric screening. Making it permanently available at onsite medical clinics would be that much more convenient.
Such clinics have already been shown to save on the costs of medical care, per se, compared to emergency rooms or urgent care centers, as well as private primary physicians, to say nothing of the time, travel, and out-of-pocket costs saved by employees who use them. Cooperatively supported clinics could be developed by a group of employers working in concert, or by onsite clinic development and operating firms, such as QuadMed, Whole Health Management, Ceridian Health or CHD Meridian.
In general, results from onsite clinics have proven to be significant and positive, since the nearby convenience both promotes employee participation in EHM and saves time away from work for obtaining routine medical care. The clinics often result in earlier identification and intervention for acute and chronic diseases, as well, because of their convenience for workers. Sharing the costs of operation and calculating the direct and indirect savings achieved will be more complicated with cooperatively owned clinics, but there should be enough economic benefit for all.
A special advantage to onsite clinics can be in verification of workers’ qualifying for EHM incentives. The clinics can test employees to be sure they meet goals relative to health behaviors (e.g. testing for nicotine or drug use) and conditions (weight, blood pressure, sugar, cholesterol, etc.) They should also be helpful in biometric screening and ongoing progress tracking in support of employees’ (and dependents’ or retirees’ where applicable) participation and success.
by Scott MacStravic
April 30, 2008 at 1:19 am · Filed under Business of Health, Employee Health Management
In their insightful books, “Discover Wellness: How Staying Healthy Can Make You Rich” and “Discover Wellness at Work: The Ultimate Solution to the Health Care Crisis”, the authors make the case for adding yet another member to the “C-suite” = a Chief Wellness Officer. They also make the case for each individual becoming a “CWO” for each’s own health and care use.
In addition to making a strong case for focusing on wellness, in order to reduce the “drag” of the $2 Trillion-a-year sickness care system on our economy, global competitiveness, and health (given the horrifying numbers of medical errors, adverse drug events, nosocomial infections, and other negative impacts of sickness treatment). But in addition to other arguments for individuals becoming wealthy and employers helping them to do so, they cite the many ways in which this can make both employees and employers rich!
Well, “rich” may be too strong a word, but they make some pretty good economic arguments, citing the many ways in which people can gain by being or becoming healthier, in addition to the ways that employers can do the same for their firms. While we have had relatively modest success at best in persuading or educating individuals and populations toward better health, perhaps making them rich, or at least considerably better off financially, will make the idea as popular among employees as it is becoming among employers.
There are clear connections between health and wealth, though these are rarely covered in full by most who have described them. The more obvious ones arise from avoiding direct out-of-pocket costs due to being sick. These include not only the lost time/pay from work that many suffer if they have no disability or sick leave, but the increasing portion of sickness care costs workers are being asked to pay, from higher premiums to deductibles, co-insurance and co-pays. Even if they get disability pay, it is normally only a portion of what they would be making if working.
To these must be added the indirect costs of “unhealth” on what employees earn in the first place. If they are paid on a productivity or performance basis, sick employees naturally produce less or perform worse than they would if healthy. With chronic conditions, as well as risks such as obesity, they lose productivity/performance-based compensation, to say nothing of promotions and raises that would likely have been offered to them had they been healthy.
Moreover, pursuing unhealthy lifestyles often costs a lot of what would otherwise be “discretionary income”. Cigarettes can easily impose an “addiction burden” of thousands of dollars each year. Alcohol and drug use adds widely-ranging amounts as well. Eating unhealthy fast food compared to healthy home-cooked or employer-subsidized meals can add thousands of dollars to the annual food bill. Of course, mitigating these costs may be the out-of-pocket costs that individuals incur in joining fitness clubs, buying exercise equipment, wearing out walking shoes, etc. Fortunately, employers often subsidize or obtain discounts from sellers on such items, thereby reducing costs to employers.
Moreover, employers are increasingly offering employees bonuses for participating in wellness programs, with amounts often in the $1000-2000 range each year. Or they may impose similar-sized penalties, in the form of premium share, or other increases in sickness care costs. Healthy employees can far better afford to take the risks involved in Consumer-Directed Health Plans, and if they keep their sickness care costs low, they can save on insurance premiums, as well as build up hundreds of thousands in tax-free HSA accounts in preparation for their retirement.
It has already been shown that giving people a “scorecard” to use in keeping track of how much better off they are for engaging in EHM efforts is a good way to keep them interested and participating. Making that scorecard a financial one is almost sure to be more powerful than scorecards based on “health age”, “health-wellbeing scores”, etc. and similar direct health measures. It can also represent a continuous threat, since money gained and likely to be gained in future can easily become lost if employees or their family members “relapse” into unhealthy habits and sickness costs.
The idea of a CWO for individuals, with a helpful partner chosen from among a wide range of health professionals to help, is matched by the idea for a CWO in business and other organizations. Such an “officer” would at least be useful for keeping track of the full scope and amount of economic value that employers tend to gain through EHM. Since the vast majority of employers count less than half of the economic benefit they are already gaining, and that among those who count it at all, this could make both a challenging and worthwhile career in business.
Understandably, given their training in chiropractic medicine, the authors make pretty good arguments for looking past physicians as prospects for the CWO position in business, or the preferred partner for individuals who act as their own CWO. Given the growing shortage of primary physicians in this country, it is unlikely that we can afford to spare any more to become CWOs or even partners for individuals, though hundreds are already doing so in “concierge medicine”. Of course, how employers and the insurers that serve them decide who would make the best CWO is up to them, as is true for consumers as well.
On the other hand, the authors are not promoters of chiropractic alone as an appropriate background for CWOs. They note that other Complementary and Alternative Medicine (CAM) providers, as well as physicians, may be well qualified. Physicians, of course, when they are paid by insurers, rarely can afford to take the time for “cognitive therapy” related to wellness, while consumer-paid CAM providers can afford as much time as consumers are willing and able to pay for. And physicians in the concierge model of medical practice have proven how well they can promote patient health and reduce sickness care. (e.g. www.mdvip.com)
Doctors of naturopathy are another logical option, since they take a holisitic and proactive approach to patient care, much more so than most medical doctors. The combination of holistic health vs. solely disease focus, and proactive vs. reactive approaches to health, is what is needed for a CWO or personal health management partner. There is probably too little evidence yet to identity which background is likely to produce the best CWOs, since the idea is so new, but we can hope that science will come to our aid there, as it has tried to do in sickness care, and help employers and consumers choose the best qualified and most successful providers.
by Scott MacStravic
April 30, 2008 at 1:14 am · Filed under Employer CEOs, Employee Health Management
Perhaps the biggest impact of looking at employee health management (EHM) rather than general population health management (PHM) is the difference it makes in what make the best investments. When the sole concern is reducing sickness care costs in an insured population, it makes pretty obvious sense to look at sickness risk factors and chronic diseases. But when the concern expands to include reducing all factors that impair or impede productivity and performance among employees, the scope of investments can expand dramatically.
For example, while chronic conditions such as diabetes, asthma, coronary heart disease, congestive heart failure, and chronic obstructive pulmonary disease may be the biggest causes of preventable sickness care costs in a population, they are likely not to be the best investments for employers. Other factors, such as depressed feelings, stress, smoking and alcohol addictions may be far greater impairment factors because of their higher frequency than chronic diseases in employees.
While it is possible to separate the impact of diseases on sickness care costs, merely by analyzing the diagnostic codes involved, it is anything but easy to identify the impact of individual impairment factors. When such factors are identified, they almost never occur alone, but are part of a set of factors that vary widely across individuals in their mix and severity of impact. Depression is a common co-morbidity for diabetes and heart disease, but stress is a common “co-impairment factor” for a wide range of others, including overweight/obesity, poor sleep, nutrition and fitness levels, as well as depressed and anxious feelings.
When productivity/performance impairment is found through objective measurement, or self-reported by employees, it usually comes in people who have multiple factors at the same time. Their overall impairment normally gets counted as linked to every factor reported, and counted multiple times. This multiple counting can be overcome by either dividing the total amount of impairment by the total of all prevalence figures for all the factors, or by separating out the individual factors in some way.
Dow Chemical Company, for example, asked each employee to identify which was the primary impairment factor affecting each, so as to count the effect of each factor only once. But this under-counts the overall impact of each factor, by not recognizing the potential that some add to the effects of others, even if not primary, while over-counting the effects of some which are most often labeled primary, but whose impact is exaggerated by what may be many secondary accompanying factors.
If the true effect of individual factors can be identified, along with the true effects of EHM programs targeting each such factor, employers would have a far better chance of selecting the most promising target factors and individuals for EHM investments. Moreover, EHM vendors could use the identification of the factor that has the greatest impact on individuals’ impairment in recruiting employees for participation in the program that will affect it the most.
As long as individual employees see themselves as benefiting predictably and significantly if they improve their productivity/performance, they should be as motivated to devote their efforts to the program that will achieve such an improvement. Particularly for employees who are paid, either wholly or in part, on the basis of their productivity/performance, it would make explicit economic sense for them to enroll in the EHM program that will simultaneously do them and their employer the most good.
Employers must always be kept from knowing which employees are impaired by which factors to what degree. They always have access to whatever productivity/performance data is already available through their ongoing employee reviews or data, but are prohibited from identifying confidential health information about their employees that may be responsible for lower than desired performance. But as long as employees give permission to EHM vendors, with the understanding that identifying the most powerful impairment factors affecting each and the most promising EHM programs for each, the employees stand to benefit as much as the employer.
Employers can use what they learn about the effects of particular factor-specific EHM interventions and the effects they have on overall employee productivity/performance to graduate the incentives they offer to employees that achieve specific health goals, such as quitting smoking, or reducing their blood pressure, sugar, and cholesterol, for example, or improving their nutrition, fitness and sleeping habits, controlling their stress or managing their chronic disease. As long as employees’ achievements can be verified, employers should be confident that they, too, are benefiting.
Difficulties will arise with respect to self-reported impairment and recovery, whenever there are incentives to be gained. It would be a simple matter for employees to report that they are sleeping better, exercising more, have their stress under control, eating better, have reduced their alcohol intake to no more than some set limit per day. But employers may prefer verification to paying off for good reports, alone.
Some verification is relatively simple: weight loss can be checked by a scale, smoking cessation by testing for nicotine, fitness by a test, etc. But many are not easily verified, while productivity/performance improvement, per se, should be verifiable at least to some degree. And as long as employees figure out a way to produce more and perform better, they should be eligible for rewards. The EHM provider need only make sure that enough employees improve enough through participation in the best interventions to make such improvement possible.
If employees learn that improving their stress management can increase their productivity by 10%, for illustration, and employers learn that stress is a major impairment factor for the entire workforce, employers can work on reducing stress levels they impose on workers, while helping workers cope with stress. This may involve a combination of an EHM provider’s stress management program, employer-sponsored training in time management, and improved scheduling of efforts so that demands and deadlines are reasonable rather than oppressive.
It is clear that predictive modeling is approaching the point where the most promising individual impairment factors will soon be able to be identified as directly and simply as can the most expensive sickness. Once this is achieved, the potential for enabling both employers and employees to make the best possible decisions about where to focus their investments of money and effort will be greatly improved, and thereby, the success of EHM investments in general.
by Vijay Goel
April 26, 2008 at 10:25 pm · Filed under Podcasts + Videocasts, Consumer Engagement, Employee Health Management, Treatments and Therapies
Interviewed Evan Falchuk, President of Best Doctors, on their product allowing consumers to get additional information and options regarding diagnosis and treatment options.
The interview took place at the World Health Care Congress and the podcast is below.
This post is crossposted at Consumerfocusedcare with a full transcript of the conversation
Interview with Evan Falchuk:
Download
by Scott MacStravic
April 26, 2008 at 11:18 am · Filed under Employer CEOs, Employee Health Management
The “Customer Advocacy Score” is becoming common as part of marketing and business intelligence for a wide range of firms. It is particularly useful for firms which rely on a large portion of repeat, even continuing customers, in industries where customers are ‘highly involved” in their supplier relationships because of the importance of the products or services provided. Banks and other financial service firms, and healthcare providers fall easily into this category.
In population or employee health management (PHM or EHM), insurer and employer clients are sure to be highly involved in their supplier relationships, because of both the amount of economic impact available through these strategies, and the amount of trust that and cooperation that is essential between them and their supplier. Clients share all kinds of sensitive information with such suppliers, to say nothing of the even more personally sensitive information shared by their employees, where health-plan member or employee trust is essential to gaining adequate participation in PHM or EHM.
A 2007 survey by Forrester Research, Inc. involving more than 10,000 Europeans in seven countries found that only 27% of respondents rated their own banks high in terms of “customer advocacy”, the same percentage as in 2006. Customers that rate banks’ customer advocacy high are far more likely to turn to that bank for other products and services, while banks with high scores outgrow their lower-scoring rivals significantly, without having to rely on mergers and acquisitions. [J. Compton “Advocacy Strengthens European Banking Relationships” 1to1 Weekly, Dec 17, 2007]
The score is based on where customers place their bank on a continuum from “Does what is best for its bottom line, regardless of its impact on customers” to “Does what is best for customers, regardless of its effect on its bottom line”. Firms whose customers’ score them toward the latter pole are considered to have far better scores than those whose customers score them toward the former. [B. Doyle “Customer Advocacy 2006: How Consumers Rate Their Banks, Brokerages, and Insurers” Forrester Research Business View Trends, May 22, 2006]
For healthcare organizations (HCOs)considering entry into the PHM/EHM market, learning how prospective clients, i.e. insurance plans or employers, rate them on customer advocacy, particularly in comparison to other suppliers already active in the market, may help in deciding whether to make the entry, and which prospects to try first. Learning how consumers rate the organization may also prove helpful, since if they don’t rate the HCO well on this dimension, it is unlikely it will be able to enroll many targeted plan members or employees in an intervention program, even if the client is won over. And without high participation, success is both less likely and sure to be less delightful for clients.
Since HCOs have been sources of double-digit inflation in sickcare costs for a long time, both employers’ and insurers’ views of them may be somewhat jaundiced. Employers may be a far better prospect, in any case, since they can gain far more in economic benefits – through improved productivity and performance, turnover reductions, and even increased customer satisfaction and loyalty – while insurers are focused on reducing healthcare expenditures. Moreover, since reducing insurers’ expenditures tends to cost dollar for dollar in HCOs’ revenue, this class of payer is nowhere near as attractive. By contrast, employers gain more by reducing productivity and performance impairment than by cutting healthcare costs, so need not affect HCO’s sickcare revenue nearly as much.
Where HCOs are successful in gaining employer clients, checking their perceptions of the HCO’s commitment to their interests vs. the HCO’s own should be a good predictor for retention vs. defection of these clients. Learning why consumers as well as clients rate the HCO high or low will also help in either maintaining good ratings or improving poor ratings, and thereby gaining an improvement in future attraction of new or retention of current customers. Learning why they rate rival suppliers good or bad on the scale will also provide useful “competitive intelligence” about the market.
In any case, learning how the HCO is rated by prospective clients as well as consumers, will greatly assist in making decisions about the PHM/EHM market. Learning how its own employees rate it on “employee advocacy” can also help in deciding whether to invest in internal EHM, or even in an outsourced program, since trust in the HCO as an employer will be key in achieving high participation in either case. Helping employer clients to check their scores on this same dimension will also help in their decisions, and perhaps justify the high level of employer support required when HCOs are suppliers and the employers the clients.
by Scott MacStravic
April 23, 2008 at 3:59 pm · Filed under Employer CEOs, Employee Health Management, Health Management
There are four simple ways to deal with any differences between voluntary and default participants, though the effectiveness of each will vary in each EHM situation:
- Minimize per participant costs
- Find out what the different success rates are for voluntary vs. default participants
- Offer success incentives
- Offer choices vs. predetermined EHM programs
1. If default participants deliver lower gains per participant, then EHM providers and clients should make sure that the costs per participant are still less than such gains. One approach is to use charges and costs that apply per population, rather than per participant. When fees are set and costs incurred on this basis, and there are no added costs based on how many participate, increasing participation rates will always end up doing at least as well and usually doing better by using the default option. As long as even one more participant than would have enrolled voluntarily succeeds, results will be better.
On the other hand, if EHM providers charge per participant, then the default option may result in too many participants and too high costs for the average gain per participant to overcome. The provider’s or employer client’s past experience should reflect what the average gains per participant have been under the most common scenarios:
* Voluntary enrollment
* Voluntary enrollment with incentives
* Default enrollment
If default enrollment strategies in the past have reduced the average gain per participant to levels that yielded lower ROI ratios and amounts than the two voluntary alternatives, then either costs/charges per participant should be lowered, or the option should not be chosen.
2. Assuming that EHM providers have worked with both voluntary and involuntary participants before, each should be able to describe what the different success rates for each have been, so that the expected benefits vs. costs for both cohorts can be at least estimated. Providers may be willing to guarantee some minimum ROI, for example, putting the onus on them to make sure that the EHM program works well enough among all participants to achieve desired results.
If past experience has indicated that success rates per participant have been higher for voluntary participants, but the success gains for default participants have been high enough to justify their inclusion, given costs per participant, then the default option may make sense. Basing the decision on the EHM provider’s experience, rather than the client’s means there is the risk that the client’s situation and population at risk may be different, so extrapolation from such experience may be inaccurate. A pilot test of the client’s population may be used to check this possibility, or the provider may be willing to guarantee acceptable results with the default option.
3. The use of adequate success incentives rather than participation incentives should encourage significant effort among default participants. Whenever enrollment in the EHM program is by automatic, default with opt-out choice, paying incentives for participation doesn’t make much sense anyway, while incentives for achieving whatever is defined as success can motivate both voluntary and default participants. Such incentives will add to the costs of each success, however, so their amounts will have to be sufficiently less than the average gain per success to ensure positive ROI ratios and adequate ROI amounts.
The gamble involved in success incentives is that they will have to be paid to those who would have succeeded anyway, as well as those who would not. So EHM providers and their clients should compare scenarios involving only voluntary participants and no success incentives compared to default participation with success incentives to see which delivers the best mix of ROI ratios and amounts. Another option is to base the success incentive on improved productivity and performance, rather than health behavior/status improvements, so that the employer will see that the direct economic gain from success justifies the incentive.
4. Even though enrollment in the overall EHM program may be automatic by default, and the usual choice for employees is to participate or not, the provider and employer client may offer those automatically enrolled a choice as to which of multiple EHM interventions for which each is eligible each prefers. This may mitigate negative effects of “forced” enrollment. Moreover, when employees voluntarily choose a particular EHM intervention, they tend to be more committed to their choice than when they have none. This may improve the success rate among participants, with or without incentives that add to costs per success.
When EHM programs are focused on productivity/performance impairment factors, rather than just diseases to be managed or risks to be reduced, chances are that virtually every employee in the workforce will be eligible for more than one among the combined diseases, risks and impairment factor programs offered. One EHM provider’s database of over 200,000 employees, for example, reflects that only 2.45% of employees had 0-1 impairment factors, while 43.02% had at least one risk or disease condition. [“Productivity Dashboard” HealthMedia.com Jan 23, 2007] Chances are the vast majority of employees can be offered a choice among at least two different EHM interventions, making at least that aspect of EHM participation “voluntary”.
By employing one or a mix of these strategies, any negative effects of default participation in EHM programs should at least be mitigated, if not eliminated entirely. Only one of the four adds to costs, unless the employer has to sign up for more EHM initiatives in order to offer enough employees a choice between at least two when choosing that strategy. And a combination of more than one strategy should improve the overall success rates and ROI outcomes for both provider and client.
by Scott MacStravic
April 23, 2008 at 3:57 pm · Filed under Employer CEOs, Employee Health Management, Health Management
The default option is the technical term for arrangements in which people do not have to actively choose to participate in some program – they are automatically enrolled therein, with the option to decline. This saves the costs of efforts to obtain their participation, and usually results in far higher rates of participation than do arrangements where people have to enroll themselves. It has a number of applications in healthcare, as well as with employees, such as automatic enrollment in retirement plans. [S. Halpern, et al. “Harnessing the Power of Default Options to Improve Health Care” New England Journal of Medicine 357:13, Sep 27, 2007 1340-1344]
This same concept has also been adopted by some EHM providers. It has been highly effective in increasing enrollment in EHM programs, compared to those where individuals must actively opt in. Providers using this approach have reported participation rates in excess of 95%, where rates in most such programs rarely reach even 30% without incentives being offered and paid for enrollment. But incentives add significantly to costs, and make the achievement of desired ROI ratios much more difficult, though they may help with ROI amounts.
As described earlier - Promoting Success vs. Participation in EHM - incentive costs applied to all participants are automatically multiplied by what can be many times, depending on the success rate among such participants, which can vary from 0% to 100% in theory, and often vary by at least half that amount in fact. A $100 incentive paid to all participants becomes an added cost of $500 per successful participant in a smoking cessation where only 20% quit. And since the desired economic gains in a smoking cessation program arise from quitting, it makes it that much more difficult to achieve a positive and satisfying ROI ratio when the ROI denominator increases by $500 per success.
Participation vs. Success
In the evaluation of EHM programs, there has always been the potential for self-selection bias when the healthcare, disability and workers compensation costs, absenteeism and presenteeism rates, and other measures of success among participants are contrasted to non-participants as the basis for gauging the gain made by such programs. This bias reflects the self-evident possibility, even likelihood, that individuals who voluntarily choose to participate in such programs may be more motivated to make the behavior/lifestyle changes needed for success than are non-participants.
This bias can be identified and used to adjust simple side-by-side comparisons between participants and non-participants by measuring the costs of both in both baseline and participation periods. If non-participants’ costs were higher to begin with, and declined even though they did not participate, then only the decline in costs among participants between their baseline and participation periods that is greater than the decline among non-participants should be counted as probable effects of their participation. But if individuals are automatically enrolled, there may be too few people in the non-participant group for statistically significant differences to be found.
It is not the statistical significance that will concern most employers who invest in EHM, however, but the economic significance. If 95% of all employees targeted for participation enroll, and as a result, the total number who succeed in reducing their costs, improving their productivity and performance, etc. the employer is likely to be well pleased, regardless of whether or not statisticians are. It is the potential for the success rate being lower in the “default option’ case that should worry them.
If people who voluntarily enroll in a given EHM program are likely to be more motivated and ready to change, and as a result yield a higher success rate, then it follows that people who are automatically “default” enrolled, with the possibility of opting out, will not be as highly motivated as those who make the effort to actively enroll themselves. In such cases, the success rates of default participants would probably be lower than among those who would have voluntarily enrolled.
For example, those who actively/voluntarily enrolled may involve only 20% of those eligible, but deliver value based on a success rate of 50% among them, while the total of those enrolled by default involve 95% of those eligible but achieve a success rate of only 20%. This overall rate comes from the 50% success rate among those who would have actively enrolled if given the opportunity, plus a lower success rate among those enrolled by default. The success rate for those “involuntarily enrolled” can be determined, given these figures.
If the voluntary 20% of participants achieved a success rate of 50%, and the overall success rate for all participants was 20%, then of the total, 50% x 20% = 10% or half the successes came from those who would have voluntarily enrolled. With an overall success rate of 20%, this means that only 10% or half the successes came from the 75% of participants who would not have voluntarily enrolled, but were enrolled by default. This means that the success rate for those 75% was only 10% divided by 75% = 13.33%.
On the other hand, it may also be the case that those who are most likely to voluntarily enroll are already healthier than the average member of the population, precisely because they are more motivated and concerned about their health. In such a case, the success rate among default participants may be lower, while the success gain, the economic benefit to the employer, may be higher. Since it is the gain due to success, not just the sheer proportion of participants who succeed, that determines the overall economic impact for employers, a higher success gain, even with a lower success rate, may prove to be better than a higher rate and lower value.
In the example used above, if the 20% voluntary participants have a 50% success rate with a $400 average success gain for each, they contribute 50% x $400 = $200 per participant to the total gain. If the 75% “default” participants, thanks to being at higher risk and more impaired to begin with, contribute as much as $200 divided by their 13.33% success rate = a $1500 average gain per success, their gain per participant will just as great as that for the voluntary group. In any case, as long as their average gain per participant is greater than their cost per participant, they are adding to the net value of the EHM investment by participating.
As long as the average success gain among default participants is positive, on average, the EHM client is ahead. By the same token, if the average success gain per voluntary participant happens not to be positive, due to their being “too” healthy in the first place, then their participation can be a drain on the overall gain when a default participation strategy is used. The only way to discover the effects of the default strategy is to use it and compare its results to that of voluntary enrollment options, both with and without incentives.
by Scott MacStravic
April 22, 2008 at 2:20 pm · Filed under Employee Health Management
Gaining employee (and dependent plus retiree, where applicable) “ownership” – a strong commitment to and high levels of engagement in EHM efforts — is a key essential when it comes to optimizing results. How many employees enroll, actively participate, and persist in both participation and behavior change, is the major factor in determining the size of cost reductions and productivity/performance improvements achieved, and thereby the return on investment realized.
Achieving total employee engagement is anything but simple. It is affected by a wide range of factors, affecting employer and employees, themselves, and the kind of relationship existing between them. The extent of employee trust in their employer, commitment to their job and getting results, confidence in successful results for themselves and their family, as well as the range of program offerings and incentives offered for participating in them will make big differences. The following list of ideas offers some options.
1. Choose a Good Name – the name workforce health management may have been a good one for consultants or suppliers to use when selling employers on the idea, but it is not a good one for the employer to use in selling the idea to employees. They rarely like being “managed”, and may think they are being managed enough already. Moreover, since it is their private information, and personal behavior that are involved, they may feel great concern about you even knowing about such things, much less managing them.
Successful program names should emphasize what the employees, themselves, will get out of participating. “Healthy Living”, “Simple Steps to a Healthier Life”, and one of my favorites “Healthy Lifestyle Rewards” are good examples, but these and any others that might be imagined should be checked first for trademark infringement risks. Representatives of employees in focus groups, or the entire workforce may also contribute ideas, perhaps in a contest to name the program, in order to create a sense of ownership and uniqueness up front.
2. Involve Employees Throughout – asking for and using, plus making sure employees know you are using their ideas on particulars of the strategy up front and regularly once begun is another good approach. This can be especially helpful relative to sensitive issues such as information privacy and security, as well as any incentives planned. Enabling employees to participate in decisions can save you from overlooking some key factors, or making big mistakes, as well as promoting their sense of ownership in the overall strategy.
3. Enable Choices – employees will almost always respond more positively and commit more enthusiastically to personal behavior changes if they have some choices about which and how. Enabling them to choose their own program, if they are (as most will be) likely targets for more than one intervention. Giving them a choice of incentives, and options for qualifying for these can be particularly helpful. Blue Shield of California, for example, offered its employees a way to qualify for rewards by meeting any 8 out of 10 criteria.
4. Offer Incentives – though this adds to costs, it also adds significantly to participation, and it shows that you appreciate the value that employees’ health behavior changes can contribute to your bottom line, not merely to their own health and life quality. Incentives have been shown to boost average participation from as low as 10-20% to as high as 80-90%. Using a sharp pencil helps – to be sure the amount of incentive payments offered will not threaten the overall gains achieved, of course. Consumer-Directed Health Plans with health spending accounts already owned by employees can offer significant incentives without adding to costs. And they may give employees a sense of ownership with respect to their overall health and healthcare spending.
5. Recognize the Personal Gains Employees Achieve – this should add little to costs, but promoting employees’ and their families’ awareness and appreciation of how much they are gaining through participation can enhance both recruiting and retaining them in programs. Offering a log or diary, plus charts of personal health and life quality — including personal financial gains, such as fewer lost days with less than full pay, savings from not buying cigarettes, etc. – is likely to stimulate more enthusiasm than reports of reduced labor costs or health insurance premiums for the employer.
6. Promote “Teamness” – if you already have a strong team culture, perhaps offering team-based performance evaluation and bonuses, or “flat” management structures, this will help by itself. But promoting team competitions over pounds lost, miles walked, even incentives for team participation, can help as well. Any recognition or rewards that fall at the team level will tend to promote both “peer pressure” on reluctant participants, and peer support to aid in overall achievements. Logan Aluminum in West Virginia, for example, operates with a “team concept” culture that has helped it achieve significant improvements in employee health and operating costs.
7. Paying for Performance – can be the safest and most effective incentive for at least some employees, those who are most confident in their own ability to succeed in changing their behavior and health/risk status. This is far safer, in terms of federal regulations, than is paying for participation, health behavior or status change, and can be geared directly to proven financial benefit. It is also likely to be cheaper, since rewards are only paid after proven gains have been achieved.
8. Participate as Employer – if the employer shows its own commitment to employees’ health by making changes in working conditions that help promote health and productivity, that will show it is serious about it, and recognize that it is part of the solution vs. part of the problem. The Jackson Kelly law firm, for example, modified employees’ workstations to be ergonomic, changed to indirect lighting and implemented a “white noise” program to calm its often hectic work environment. [C. Good “Wellness Matters” (Case Study) Wellness Councils of America 2005]
Visible championing of the EHM program and participation in it by the CEO and other executives, as well as managers and supervisors can promote similar responses in employees. Mike Huckabee’s visible exercise efforts and loss of over 100 pounds provided a major stimulus in the “Healthy Arkansas” program for state employees and schoolteachers, for example. Seeing executive take the stairs vs. elevators, choose healthy meals in the cafeteria, and otherwise clearly indicate support for the program can go a long way.
9. Share Gains with Employees – a pay-for-performance system, for example, can amount to an explicit “gainsharing” method for doing so. Or you can offer explicit examples of sharing in gains when recruiting participants. It may be safer, of course, to pay rewards unexpectedly after gains occur, in order to avoid disappointment among employees if gains are not as large as hoped. The Jackson Kelly law firm, for example, once it learned that it got a 21% decrease in health insurance premium after years of double-digit increases, forgave the dependent share of premiums for three months as its way of sharing its gain.
10. Share the Firm with Employees – the ultimate example of employee ownership and gainsharing is illustrated at Cianbro Corp. in Pittsfield, Maine, where the formerly Ciancette-brothers-owned company became totally employee owned in 2004. The firm’s “Healthy Lifestyle Program”, uses employee wellness teams to help design programs, and has 86% of eligible employees participating. Its annual premium increases have remained significantly lower than the industry average since it initiated its program, and it is one of few construction firms planning to actually add employees in 2008.
Any one or mix of these ten ideas should make a measurable difference in employers’ ability to attract and retain employees in the first place, as well as in recruiting and sustaining them as participants in workforce health management programs. Clearly, each employer will have to consider the likely cost vs. benefits of each when choosing which and how many to try, but these ten offer at least a good place to begin considering ways to promote the success of EHM programs.
by Scott MacStravic
April 22, 2008 at 2:19 pm · Filed under Employee Health Management
The use of incentives in employee health management (EHM) has become widespread as employers recognize their value in promoting employee participation rates. Incentives of anywhere from $25 to $600 can increase participation in health risk assessments and screening activities from an expected 10-20% of employees up to 80-90%, for example. Incentives for participation in focused initiatives based on problems identified through assessment surveys and screenings are also common, with similar effects on participation rates among those targeted.
Of course, since incentives have proven so effective in promoting one desired behavior – participation in assessments and interventions – perhaps they can be used with comparable effect to change employees’ behaviors with respect to the EHM objective, itself. Incentives for not smoking, or quitting tobacco use if present, are common, in the form of both rewards and punishments, with a number of employers refusing to hire smokers, for example. Incentives for weight loss are common, with some up to as much as $50 per month for employees who achieve and maintain a loss of 30% of body weight. (www.incentahealth.com) In this way, they function as both reward for desired behaviors and their outcome, and as a threat of significant lost income if the behaviors and outcome are not sustained.
The drawback for incentives is that they add to the costs of EHM investments, and thereby affect the denominator (amount of investment) as well as the numerator (amount of financial gains) used in calculating return on investment (ROI). This will automatically reduce the ROI ratio, unless the payoff from the incentive yields the same ROI ratio by itself as does the EHM program, without incentives.
[To illustrate: if the EHM program, per se, yields $3,000 in economic gains for a $1000 program investment, the ROI ratio will be $3:1. If incentives are used, and add $1000 to the overall investment, making the total $2000, while increasing the amount gained to $5000, even though the net gain (gains minus investment) increases to $3000 from the original $2000, the ROI ratio will be only $5000/$2000 = $2.5:1. The most logical investment decision, of course, would be the one that delivers the greatest net economic value while still yielding an acceptable ROI ratio, so the employer should choose the “with incentive” alternative, however.]
Economic consequences alone have proven to have a major impact on employees’ use of short-term disability income replacement claims. The probability of a “disability event” among wage-paid employees in one study was calculated to range between <1% to 7% for male and female workers at different ages, when they had no income replacement at all (as roughly one-third of employees do) to between 20% and 28% if they had 100% income replacement. [W. Lynch & H. Gardner “Money Matters in Decisions about Disability” Health as Human Capital Sep 25, 2005]
Not merely the probability of filing a disability claim, but even the duration of the absence per claim also varied depending on the extent of income replacement. For workers getting only 25-50% of their income replaced, 75% of them had returned from work after 50 days on long-term disability. For those getting 75% or more of their income replaced, it took 50% more days, i.e. 75 days in total, for the same 75% of workers to return from disability leave. [W. Lynch & H. Gardner “Hoping for Absolutes in a Subjective World” Health as Human Capital, Sep 17, 2006]
Essentially, the probability of having a claim is roughly four times greater at high income replacement than at low/none, and the duration 1.5 times greater, meaning the overall cost to employers varies by a factor of six (1.5 x 4). This is a comparable impact to that found for incentives within the normal range of $-0- to $250, which is roughly from 20% to 80%. So perhaps it might work best to rely on incentives alone to yield the intended health lifestyle or behavior change that EHM investments are intended to produce. [W. Lynch & Gardner “Aligning Incentives” Health as Human Capital Jan 20, 2008 (hhcf.blogspot.com)]
Of course, there are serious difficulties with respect to paying incentives for employees to get them to change their health behaviors. Some have been deemed to result from “addictions” or genetic variations, meaning that to pay those who change, but not those who merely participate in an effort to change, could be deemed unlawful discrimination. Already, the federal government has indicated that if smokers are paid to quit, for examples, non-smokers have to be eligible for comparable rewards.
The same applies to health status results of EHM participation. It could be claimed, for example, that obesity is a disease, or the results of genetic differences, which would make discriminating against the obese or for healthy-weight employees would also be deemed illegal. But there is at least one form of discrimination that seems to be legal, though union contracts may limit even that – paying employees based on their productivity or overall performance. Since EHM is intended, and has been shown to significantly improve employees’ productivity and performance, it could be that pay-for-performance systems, by themselves, would deliver sufficient incentives to yield both health behavior changes and improvements in motivation that would yield more than equivalent overall value.
Paying on the basis of performance on an ongoing basis — as opposed to subjective annual performance ratings, so that employees realize the benefits of improving their performance as soon as they do so, and based on metrics they accept – has been shown to dramatically increase productivity. In one case, where workers were shifted from hourly wages to output-based pay, overall productivity increased by 44% in the first year of the new system. And the cost to the employer for this improvement was only a 10% increase in overall worker compensation. [E. Lazear “Performance Pay and Productivity” American Economic Review 190:5 Dec 2000 1346-1361]
Of course, it might be that the effects of a boost in compensation based on expected improvement in health or motivation or both, thanks to an EHM program, would not be enough to achieve high levels of participation in such programs. The rewards, after all, are uncertain, and result from a lengthy “value chain” stretching from employees enrollment and participation in the program to changing their health behaviors to improving their health, and then to improving their performance. It might be necessary, or at least helpful to offer some kind of modest incentives for participation, alone.
But by focusing incentives on the ultimately desired outcome of improved performance, employers can calculate precisely what they will be getting for their investment. The increases in compensation based on EHM-related improvements in output or performance can be calculated as a “gainsharing” of the value of those improvements to the employer. The share might be as little as the less than 25% share in the above pay-for-performance example, or wherever the employer chooses. But because it is a share of “found money”, it would automatically yield a positive ROI, the extent of which would be largely decided by the employer when choosing the gainsharing split. (The costs of the EHM program, itself, would have to be factored in as well, of course.)
Employers who are skeptical of the financial benefits available in EHM could experiment with the performance-based incentive option, since it would require the least amount of incentives to try. They could then add modest “intermediate” incentives for participating in the assessment process, or in a particular health initiative, to see how much difference that makes. But by using a gainsharing approach, they should be able to both avoid the restrictions of government regulations, and the costs of high levels of incentives based on participation effort, alone.
In the long run, of course, extrinsic incentives may have diminishing impact on employee health behaviors, status, and performance. On the other hand, since performance-based incentives would be reduced if performance declines, there would be the continuing effect of employees wishing to at least maintain the level of performance and compensation they are already getting. People will often exert more effort to keep from losing something than they would to gain an equivalent value.
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