Archive for Employer CEOs
by Scott MacStravic
May 12, 2008 at 11:08 am · Filed under Employer CEOs, Health Plan/Payer CEOs, Business of Health, Variability in PHM Series
Given the large number of PHM suppliers already available, and growing numbers of hospitals, physicians, and other suppliers joining still, the number of options across the seven elements of PHM is enormous. If there were as few as five options available for each element, to say nothing of different mixes of elements for the same purpose, there would be 75 = 16,807 different mixes of the options to consider. In practice, of course, insurers and employers, like consumers when faced with too many choices, first strive to limit the number to a manageable few, perhaps no more than five sets.
This may be accomplished by looking for particular vendors, as outsource suppliers or at least basic models for a DIY option. ON the other hand, some PHM investors have divided up the strategy, and even particular interventions among multiple suppliers, using one for the assessment element, and others for interventions, or one for interventions, and another for evaluation. If each different supplier offers different options for each element, that could greatly increase the mix of options available, even if only a few suppliers are considered. Moreover, suppliers are increasingly adding numbers and types of interventions, in order to be able to offer options graduated in cost and effectiveness to the risk/reward potential of different programs and participants.
One development should reduce the difficulty of making choices in this “overstocked” world. Predictive modeling is improving in its accuracy all the time relative to the risk/reward issue. And since different element options, as well as different suppliers, bring with them different charges and typical costs for their clients, these may more accurately be compared to the risk/reward of the population under consideration, and for targeting prospective participants, thereby improving the chances of investments turning out well.
But the biggest boon to payers will come only when sufficient studies are made of the relative cost and returns on investment of the methods available in the market. It may take decades to do this for each option in each element, but it should not take more than a few years of concerted effort to compare different suppliers, along with more successful DIY efforts. The key is to retain a focus on results and returns, rather than be satisfied with thinking that investing in PHM is a good idea for its own sake.
Employers are probably somewhat more averse to “rigorous evaluation”, when it adds significantly to costs, than are insurers, at least as regards PHM investments. Managers spend relatively little time measuring things, as long as the key items in their balanced scorecard are going well. And if they are not going well, they may have to conserve their funds anyway, so would be unable to invest in measurement. Insurance, with its core competencies of underwriting and risk management, are at least more engaged in measuring things.
One study, for example, has found that only a small minority of employers even measure employee absences, much less presenteeism, despite the fact that both cost them a lot and can be reduced, with presenteeism many times more expensive and potentially rewarding than health-related absence alone. [W. Lynch & H. Gardner “Our People Are Our Greatest Asset… But No, We Don’t Track Their Performance or Attendance” Health as Human Capital, Dec 17, 2006]
Another found that only 38% of employers surveyed in 2007 measured the ROI at all from their PHM investments, though this was up from 23% in 2006. Many seem satisfied that it is an inherently good thing to do, or are confident that it is yielding a positive ROI, at least in the long run, and don’t wish to waste money proving it. [Wellness: Saving Lives and Money” 2007 Willis Survey (Willis America Employee Benefits North America (request: willisebsurvey@willis.com)]
Investing on faith alone will certainly not last long. Finance executives and governing bodies are sure to begin questioning at least any large investment in PHM, so CEOs and whoever else champions PHM should be prepared to prove the business case. In all the cases where efforts have been applied, the business case has been proven, and usually based on the most conservative figures, such as not including full productivity and performance benefits, or not including healthcare cost reductions. [S. Nicholson, et al. “How to Present The Business Case for Health Care Quality to Employers” Applied Health Economics and Health Policy, 4:4 2005 209-218]
Many results have no doubt seriously understated the full economic value of their PHM efforts because they neither counted productivity impairment or its “non-disease/risk” causes nor invested in interventions related thereto. There is ample evidence, for example, that conditions rarely included in disease management programs, including emotional disorders, allergies, arthritis, and chronic pain cause far more productivity impairment than to the most managed diseases. Moreover, poor nutrition, fitness/activity levels, stress, lack of sleep, poor hydration, for example, have been found to be far more valuable when corrected to productivity benefits than to reduced disease and healthcare costs.
We have a long way to go, and far too many choices of how to get there at the moment. What is needed is a concerted and coordinated effort — funded by governments, insurers, and employers – to evaluate the hundreds of options available, or at least screen for the most probably good ones, then rigorously evaluate these to identify and publish information on what are truly best practices. This may begin with what is already being done in sickness care, measuring and reporting who is best, or least bad in this far too expensive side of “health care”. It would make far more sense for it to be done where health can be improved, along with the quality of life for all people, as well as money can be saved by everyone who now pays for sickness care.
And one thing that is certainly clear, given the enormous variations in how PHM is designed, delivered, and evaluated, is that there is no way on earth to determine scientifically if “PHM works”. The definitions and applications of “PHM” are so variable, and of “works” equally so, making any attempt to arrive at a single conclusion about it ridiculous and impossible to begin with. The same has always been true of its separate components – disease management, health/wellness promotion, risk behavior and condition prevention and correction – in addition to whatever combination of these is included in PHM. It may be understandable that academic institutions and governments strive to “test the hypothesis” of whether PHM works, but any such attempt is doomed by the extreme degree of variation in what “PHM” is, and how “works” is measured.
by Scott MacStravic
May 5, 2008 at 2:33 pm · Filed under Employer CEOs, Population health management, Variability in PHM Series
The first purpose of the assessment process is to determine the size of the PHM challenge and of potential gains from implementing a PHM strategy. The assessment process is then also used in the evaluation process, to identify changes in measured “success” dimensions against the baseline data. But another key use of the data is to identify and select which members of the population make the most promising targets for participation in which PHM intervention, together with how many available interventions will likely justify their investment.
This step begins with identifying the baseline costs, both direct and indirect when applied to employee populations, linked to individuals and the health-related factors each has been found to have. Usually, without extensive multivariate analysis and predictive modeling, the “potential” is estimated based solely on the baseline costs. But the real predictor of potential economic gains lies in the particular PHM interventions that will be applied on a DIY or outsourced basis. And this information is peculiar to each PHM strategy, intervention, and supplier, rather than any generalizable average for PHM as a whole.
Moreover, when measurement problems such as side-by-side comparison “self-selection bias” and before/after “regression to the mean” effects have been overcome, there remains the inherent difficulty of predicting realistic potential cost impacts or other benefits based on past data. While past data may accurately describe the past of the very population to be addressed by PHM, it does not translate easily into predictions of the future. And while a given PHM supplier’s own past performance may be “statistically valid and reliable”, it may not be a sound basis for accurate prediction of results in a new population.
Within these limits, PHM investors and suppliers will want to determine which and how many population members represent the best risk/reward potential for which particular PHM interventions. Some suppliers and employers have employed a completely customized approach to PHM, where each individual either chooses each’s own goals or is assigned a coach who will customize the intervention to the individual’s mix of challenges, and address as many of each’s individual problems as possible. Experience suggests that individuals can handle more than one, but rarely more than two or three, so the number of problems to be addressed is normally small.
In many cases, there is one specific problem that is the basis for the PHM intervention to which members of the population will be invited. This does not mean that the intervention will have a very narrow focus, however, though it may. A smoking cessation program normally focuses exclusively on enabling participants to quit, but may have to address a wide range of perceived barriers and related issues, including stress and weight management along with the smoking behavior, per se. And diabetes disease management interventions routinely include attention to blood pressure and cholesterol levels, in addition to blood glucose.
While the baseline costs linked to individuals may guide targeting to some extent, the psychographic data indicating the probability that each will make a needed change and achieve success thereby, together with PHM suppliers’ demonstrated performance will add significantly to how “informed” the choice of targets can become. In many cases, the supplier may guarantee results for particular population segments, interventions, or success dimensions, making the targeting that much better informed.
Targeting necessarily includes consideration of how PHM suppliers charge, and what additional costs may be incurred by targeting more and particular segments or individuals for interventions. When the supplier charges on a “per population” of flat fee basis, it will not add fee costs to include as many members of the population in any given intervention, though most charge a fee for each separate intervention, which will multiply costs by the number of interventions selected, rather than the number of members participating.
When the supplier charges per participant, perhaps with graduated fees based on the risk/reward potential it determines for each and the different intensity/expense for the graduated interventions, it is the number of members targeted for each intervention that will represent the upper limit on fees. Moreover, payers will likely incur additional costs, per member, per participant, or even per successful participant (e.g. when incentives are offered for success rather than participation alone), which have to be considered as well. And while payers may recommend steps their clients should take that incur costs, the client will have the last word on which kinds of support it provides and what it will pay for what.
There will always be the unknown costs of participation or success incentives that will have to be paid, but this will typically be substantially less than the economic gains associated therewith. The past performance of the supplier applied to the baseline costs and economic value of members of the actual population to be addressed should help in ensuring that the client’s total costs are kept lower than the client’s benefits. Controlling the number of members targeted and number of interventions invested in based on risk/reward vs. predicted or controllable costs, is the best overall approach to take.
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 1:14 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 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 18, 2008 at 1:30 pm · Filed under Employer CEOs, 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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. (www.cianbro.com)
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 18, 2008 at 1:24 pm · Filed under Employer CEOs, Employee Health Management, Health Management
There are two major matching challenges in EHM:
- matching intervention to control groups in order to make evaluation of results scientifically valid and reliable; and
- matching the risk/reward potential and preferences of individual EHM participants to interventions that are most likely to deliver the desired results and return on investment (ROI)
To some extent, the two challenges can interfere with each other. When matched control vs. intervention groups are needed, pure science would argue that the population of interest should be split in half in order to achieve comparable samples. This automatically reduces the potential gain through a successful intervention by half, since it would reduce the number participating in that intervention by that much. This would likely be enough to discourage employers from doing any matching, since their success and financial gains would be so markedly reduced.
One employer, at least, got around this dilemma by choosing as its control group employees who were like participants in the EHM intervention in all important respects, save that they worked for another employer. This enabled rigorous matching of controls to the members of the intervention group, while still enabling the vast majority of its employees to participate, thereby maximizing the gain that was found to have resulted. [B. NAydeck, et al. “The Impact of the Highmark Employee Wellness Program on 4-Year Healthcare Costs” JOEM 52:2 Feb 2008 146-156
Matching the intervention to what has the best chance of succeeding with each individual participant, while adding greatly to the probability and amount of gains likely, will also add to the costs of the intervention, hence threaten ROI ratios in particular, and amounts as well, though not as dramatically. To make the best matches, a lot has first to be learned about individual participants. Then, this learning must be applied to customizing the interventions, making it more difficult to achieve economies of scale, as well as threatening the scientific rigor of the evaluation.
The science of learning which prospective participants have the greatest risk of future costs, in both the immediate and long terms, has been dramatically improved in recent years. The science of learning how best to predict the chances of success for individuals, and for tailoring the intervention to a mix of what can be justified considering that chance, and what will most likely realize that chance, is still in the dark or barely light ages.
Fortunately, the examples of the technology being used to predict costs can guide the development of technologies used to optimize chances of success. A host of insurance firms, for example, have decades of history in using technologies to gauge the risk of individuals. This same technology should prove equally useful in predicting the likelihood of EHM success.
Instead of using predictive modeling (PM) to “underwrite” populations, select who should be rejected or charged more because of their health risks, the growing number of insurance firms that are in the EHM business could use it to select the best prospects. PM technologies would have to be further developed to determine the best method for intervening with individuals, predicted costs vs. success, but the technology is certainly capable of doing that.
Tailored interventions have proven themselves, at least in the few cases where they have been tried. A customized asthma intervention program, for example, was able to increase the number of symptom-free nights among participants, reduce ER use by 37%, and enable three times as many patients to have their asthma under control as an undifferentiated educational effort. [“Tailored Asthma Intervention Shows Promise” Yahoo! News, Apr 10, 2008 ]
Tailoring has already been partially applied in EHM, with populations typically divided into low, medium, and high-risk segments, and differentiated interventions based on the costs vs. potential of such segments used in EHM, even with just healthcare cost reductions in mind. Once EHM includes the total economic benefit of its success — counting healthcare, disability and workers compensation claims along with absenteeism and presenteeism reduction, plus productivity and performance improvements – a far more accurate and optimistic expectation of its value should enable better matching.
While matching interventions to predicted gains and participant characteristics that affect their success chances based on a few segments is better than nothing, it is nowhere near as promising as is matching by individuals. There are likely to be far more than three different cohorts of participants, since the factors that determine probability, extent, and best method to achieve success are likely to measure in the dozens, if not more. And differentiating for dozens of segments, or even tailoring to individuals will cost more, it is likely to yield more, as well.
If there are three or even four of five segments, the intervention must be geared to a probable gain that reflects only the average of all. Since half of the members of the segment will normally promise above average returns, while half promise below, the use of the same intervention for everyone within that segment is simply the same as a one-size fits all approach, multiplied by three, four or five.
Using interventions designed for cohorts of one each will have a far greater chance of succeeding, plus should ensure that success for no member of the population never costs more than it is worth. And if the gains for every individual participant exceed the costs for that participant, the overall results must be success, where with segments, it depends entirely on how well the intervention works with the roughly half of the members of the segment who have better than average potential.
The interventions and costs for individuals can be set based on whichever intervention yields the best combination of probability of success times economic gain potential, not simply some standard amount below potential, in order to ensure acceptable results. Planning everyone’s intervention to cost 10%, 30% or even 50% of the potential, while ensuring, in theory, a positive ROI, would simply ensure the precise gain as the ROI ratio chosen delivers. Picking the best combination of gains times probability could do far better, by not ensuring costs must be any set amount.
The technology of PM is already close to being where it needs to be in order to achieve individual participant matching. All that is needed is to learn enough about which interventions work best in EHM based on the characteristics of participants, not just of the interventions. This may take some years to perfect, but it is something that we ought to be working on already.
by Scott MacStravic
April 1, 2008 at 11:02 am · Filed under Employer CEOs, Employee Health Management, Health Management
In an earlier posting on “The Challenge of Authentication” (Jan 7, 2008), I noted the importance of authenticating the participation, behavior changes, health improvements, and economic gains achieved by employees in order to make employee health management work better for employers. The payment of incentives without methods to ensure that employees deserve them would be an open invitation to gaming of the system, and underperforming EHM initiatives.
But authentication is equally important to employees, themselves. For example, if employees sense that they can gain incentives, or even if it is only other less honest employees who do so, without making the necessary effort, that can reduce their motivation to invest time and effort in achieving real change. As a result, they will not achieve, or at least achieve less than optimal results for themselves, in terms of personal health and life quality, as the normal “side effects” of improving their health behaviors.
For example, if they do not actually quit smoking, but merely report that they have, in order to gain a few hundred dollars in incentives, they will gain those dollars, but miss the greater financial gains available from not having to buy increasingly expensive tobacco products. These gains can easily amount to a thousand dollars and more in avoided expenditures, which could be tracked and recorded in their personal EHM record of accomplishments.
Qualifying for incentives without having to achieve actual changes in behavior, health status, or productivity and performance at work will also cheapen the value of the incentives, themselves. Since the impact of extrinsic incentives tends to diminish with time, from being perceived as a reward for “good behavior” to merely an entitlement, gaining incentives without actually having to work for them will surely reduce their impact even further.
But the worst impact of being able to gain incentives without authentic effort and accomplishment is likely to be that employees who do so will not actually experience any personal gains except for the incentives, themselves. They will almost automatically have less respect for their employers, who have allowed them, or even their peers, to fool them into paying for nothing. And they will not experience the personal benefits of better health, or the psychological benefits of achieving actual change.
As is described by Chip Conley in his book PEAK: “How Great Companies Get their Mojo” from Maslow Jossey Bass 2007, employees can be motivated, at least minimally, by motives related to their needs for survival and belonging. But to engage them at higher levels of productivity and performance, their needs for success, achievement, self-actualization and personal transformation are more powerful. Emotional competencies are where the full value of human capital tend to lie, and will not be engaged without employees feeling that they are really accomplishing something for themselves, their family, and even something larger, rather than merely winning a reward.
Gaining rewards without actual behavior and health status changes will also not even gain employees the respect of their peers, except for the grudging respect given to those who successfully cheat. And it may even diminish the pride their peers gain from real achievement, once all realize that rewards can be won without it. By contrast, real achievement, authenticated for all to recognize, can gain the respect of others, and is more likely to do so than inauthentic accomplishments.
For firms that still operate in what has been called “theory X” management, where it is believed that employees have to be commanded and controlled, do not really want to work, and have to be “conditioned” by extrinsic cues and rewards in order to do anything, the idea of authentication will fit well. But it is equally important in theory Y managed organizations, where it is accepted that people are naturally motivated to work, enjoy controlling their own environments and achieving personal goals.
While “transactional” leadership (theory X) is still the dominant mode, in spite of strong and long-established evidence that “transformational” leadership works far better (theory Y), authentication is essential in both, though operates differently in each. It is the prospect and satisfaction of achieving personal and social, not merely organizational goals that drive employees to invest their best efforts, whether it is in their work responsibilities or EHM.
It is employees’ unique and normally unrecognized personal goals and values that will drive the greatest engagement and effort in EHM. This includes idiosyncratic aspirations and dreams that employers normally know nothing about, and it is not necessary that they know what they are for individuals. But if employees are encouraged and enabled to set their own goals, and to track their own progress toward and achievement of these goals, they will gain that much greater a sense of self-esteem, self-confidence, and self-actualization as a result.
Achievement of even social goals can be a source of motivation beyond self-actualization. Employees who invest in fitness by walking or biking to work will automatically also be contributing to “saving the planet” by reducing vehicle emissions that contribute to global warming. Some may, if invited, agree to donate some of their employer-paid incentives, or personal savings from such cheap forms of “transportation” to work to causes they deem important, giving both incentives and personal savings another dimension of value.
Such authentic investments and accomplishments can work equally well at the team level, if employees are joined in team efforts and incentive schemes. Such joint efforts will enlist the added motivations of social/peer pressure and support in promoting effort and achievement, as well as adding the impact of competition to authenticated efforts and achievements. They can also enable employers to achieve their goals with lower overall incentive payouts, reducing their costs and thereby improving their return on investment.
While extrinsic incentives are often essential or at least helpful in initial stages of EHM strategies and initiatives, they lose impact, or have to be increased over time in order to retain impact. And they always add to the size of the “costs” denominator or offset to ROI levels. In contrast, personal and social motivations can continue to be as strong as ever over time, as long as employees know they are making progress toward or maintaining such goals.
Personal and group recognition will only have meaning if it is meaningful to employees, and if they know they deserved it by achieving authentic improvements. Just as employees can be motivated by a company mission such as “To restore people to full life and health” (Belken pacemaker firm), they can be motivated by personal and social goals where progress toward them through EHM can be authenticated. If the U.S. Army recruiting slogan “Be All You Can Be” can work to enlist people in an unpopular war, authentication of personal and team progress toward becoming all they can be through EHM should be at least as effective for employees.
In many cases, employers can enable employees to authenticate their own efforts, through devices such as pedometers to track walking or running efforts. Progress toward weight loss and blood pressure or sugar level reductions can be authenticated by scales or home testing devices. It has been frequently demonstrated that employees who are able to keep track of their “scores” or effort in some way are significantly more likely to persist in their efforts, so authentication works in that mode as well.
If employers are able to empower employees to authenticate their own effort and progress, as well as monitor both for their own purposes, they should be able to achieve far more, as well as be more confident in their achievements. While simply believing that progress is being made may be enough in the early implementation of EHM efforts, having authenticated progress, achievement, and value will tend to enable employers and employees, both, to better manage their efforts and investments.
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