The Impact of Employee Wellness on 4-Year Healthcare Costs

May 14, 2009

Brian Day, Ed.D

Health Plan Informatics

Where do our Healthcare Dollars Go?

Rising Healthcare Costs

• Cardiovascular Disease– Over 80 million cases and over 870,000

people who die of heart disease and stroke each year

– Economic burden: $448 billion a year including direct and indirect costs.

National Center for Chronic Disease Prevention and Control [2008]

Rising Costs

• Chronic diseases increase labor costs through many means, including health care costs, but also through productivity losses from missed work, decreased on-the-job effectiveness, and turnover when an employee becomes too ill to return to work.

• Since 2001, the cost to employers of providing health insurance has increased by 78%. Data suggest that, for chronic diseases, the cost of productivity losses exceeds the cost of health care by as much as 4-fold.

Kaiser Family Foundation 2007Loeppke R, et al 2007

Rising Costs

Diabetes

• 23.6 million cases and over 200,000 deaths from complications from the disease each year.

• Economic burden: $174 billion a year including $116 billion in medical costs and $58 billion for lost work days and productivity.

National Center for Chronic Disease Prevention and Control [2008]

Rising Costs

• Cancer

– 553,000 deaths and 1.3 million new cases each year.

– Economic burden: $217 billion a year including $89 billion in medical costs and $130 billion for lost work days and productivity.

National Center for Chronic Disease Prevention and Control [2008]

Rising Costs• Smoking and Substance Abuse

– Substance abuse costs the US more than $346 billion per year

– Illicit drug use alone costs $116 billion

– Alcohol-related problems cost the U.S. approximately $185 billion each year.

– Smoking: Approximately 438,000 deaths each year. Economic burden: Over $96 billion in medical costs and $97 billion in indirect costs.

National Center for Chronic Disease Prevention and Control [2008]

National Institute of Alcohol Abuse and Alcoholism The George Washington University Medical Center

Rising Costs

• The total cost of obesity in the U.S. is estimated at $92.6 billion annually

– Medical expenditures for obese workers, depending on severity of obesity and sex, are between 29%–117% greater than expenditures for workers with normal weight.

– Obesity is believed to be associated with more chronic disorders and worse physical health-related quality of life than is smoking or problem drinking

– Estimates of the number of years of life lost as a result of obesity range as high as 20 years of life lost for certain age and racial/ethnic groups.

CDC (2004, 2009)

Highmark’s Investment

Reinvigorating Highmark’s Employee Wellness Program

• In 2002, Highmark’s internal wellness initiative was reinvigorated. – Incentive of $50 – Strong endorsement of senior

leadership– Participants rose from 547 to

2,888– Significant impact on HRA-

based risk as measured by annual aggregate reports

Fitness Center, October,2003

PittsburghFitness Center, October,2004

Camp Hill

Preventive Health Services (PHS) Offerings

• Worksite Programs– Personal Nutrition

CoachingSM

– Eat Well for Life ISM & IISM

– Discover Relaxation Within ISM & IISM

– HOPESM

– Diabetes Awareness & PreventionSM

– Clear the AirSM

– Weight Watchers at Work

– Physical Activity

Preventive Health Services Campaigns

• 10,000 Steps ChallengeSM

• Bands on the RunSM

• Drop 10 in 10SM

• Color Your PlateSM

• Maintain Don’t GainSM

Highmark Employee Participation

40%

50%

62%

80%

90%

2002 2003 2004 2005 2006

Employee Wellness Participation by Year

The Impact of Highmark Employee Wellness Programs on

4-year Healthcare Costs

Journal of Occupational and Environmental Medicine, Feb 2008

Objective of the study

Determine the Return on Investment (ROI) of Highmark’s Wellness

programs using a rigorous scientific methodology

Methodology

• 1,892 employees included (18%)

• Matched participants using age, gender, 2001 claims, and Charlson score to a similar cohort

• Growth curve analysis

• Examine claims trends for 2001-2005

Costs of Wellness

Wellness Program Costs, Highmark Inc., inflation-adjusted to 2005 dollars

Naydeck, et. al, JOEM 2008

# Used Total # Used Total # Used Total # Used Total GD Total

HRA & Incentive 1892$243,731 1303$143,111 1308$140,785 1355 $142,605

Online 201 $1,142 247 $1,372 248 $1,300 512 $2,575

Group 34 $1,544 56 $3,077 56 $3,010 0 $0

Nutrition Coaching 2 $66 23 $740 51 $1,585 111 $3,420

10,000 Steps 244 $2,441 413 $3,851 223 $2,061

Fitness Center 407 $25,603 495 $29,939 879 $50,958

Highmark Challenge 112 $348 910 $2,766

Maintain Don't Gain Newsletter 85 $182 93 $192

Wellness Program Costs $246,483 $176,343 $181,000 $204,577

Cost per participant $130.28 $135.34 $138.38 $150.98

Net Savings (Estimated Savings - Wellness Program Costs) $87,398 $157,538 $152,881 $129,304 $527,121

$1,335,524

$808,403

$1.65Return on Investment

$333,881$1,335,524

Total Savings Estimated 4 Years

Total Costs 4 Years

$333,881 $333,881

Estimated Annual Savings from Model $176.47/person

$333,881

$808,403

2002 2003 2004 2005

RESULTS

0

5

10

15

20

25

30

35

40

45

50

% p

arti

cip

atin

g

Fitness

Center

Highmark

Challenge

Health

Media

10,000 Step

Campaign

Nutrition

Counseling

Group

Program

2002

2003

2004

2005

Program participation

500

1000

1500

2000

2500

3000

3500

4000

2001 2002 2003 2004 2005

Net

Pa

yme

nts

, in

20

05

do

lla

rs

Participants Non-Participants

Annual Growth in Total Payments

Growth in Healthcare Costs Comparison

Highmark Employees

With Baseline Heart Disease Change from 2003-2007(directional t tests)

Medical ConditionWellness Group N 2003 2004 2005 2006 2007 Difference t df p

Concurrent Risk Participant 849 2.25 2.69 2.53 2.69 2.79 0.54 2.07 1542 <.05Control 849 2.42 2.63 2.79 3.16 3.61 1.19

Predictive Risk Participant 849 2.20 2.34 2.35 2.46 2.58 0.37 1.94 1590 <.05Control 849 2.25 2.45 2.48 2.67 2.92 0.68

Charlson Score Participant 849 0.37 0.43 0.45 0.52 0.58 0.21 n.s.Control 849 0.39 0.50 0.50 0.56 0.66 0.26

**Participants with heart disease had a significantly lower increase in concurrent and predictive risk, relative to controls.

Established HRA Plus Employers

With Baseline Heart Disease Change from 2003-2007(directional t tests)

ExpenseWellness Group N 2003 2004 2005 2006 2007 Difference t df p

Medical Expenses Participant 1181 $ 3,335 $ 3,835 $ 3,764 $ 4,210 $ 4,838 $ 1,497 1.69 2356 <.05Control 1181 3,207 3,909 4,386 4,647 5,498 2,288

Inpatient Expenses Participant 1181 375 802 663 793 927 550 2.21 2057 <.05Control 1181 418 804 1,043 1,003 1,582 1,164

Outpatient Expenses Participant 1181 1,158 1,155 1,161 1,241 1,769 608 n.s.Control 1181 1,023 1,159 1,337 1,459 1,619 595

Professional Expenses Participant 1181 1,751 1,861 1,927 2,190 2,231 477 1.91 2317 <.05

Control 1181 1,640 1,858 1,928 2,141 2,486 845

Preventive Service Expenses Participant 1181 120 a 106 104 169 178 58 n.s.

Control 1181 98 a 91 105 110 136 38 Pharmacy Expenses Participant 1163 1,597 1,683 1,741 1,943 1,990 393 n.s.

Control 1163 1,724 1,858 1,903 2,041 2,101 377

a= Wellness groups are significantly different from each other with regard to preventive services (t = -2.19, df=2208, p<.05)

DxCG Risk Category Changes2001-2005

Program Risk Decrease

HRA & Fitness Center 14.4%

HRA & Media, Group, or Individual Programs

12.6%

HRA Only 11.2%

Controls 11.1%

Predicted Risk and Years in WellnessHighmark Employees

1

1.2

1.4

1.6

1.8

2

2003 2004 2005 2006 2007

Year

Pre

dic

tive

Ris

k

0 1 2 3 4

Established Wellness Employers

1

1.2

1.4

1.6

1.8

2

2.2

2003 2004 2005 2006 2007

Year

Pro

spec

tive

Ris

k

0 1 2 3 4

0.9

1

1.1

1.2

1.3

1.4

1.5

1.6

2001-2005

DxC

G p

red

icti

ve r

isk

sco

re

HRA Only HRA & Other HRA & FC Controls

Predicted Risk for Wellness Groups

Preventive Screening Rates

0

10

20

30

40

50

60

70

Controls HRA only HRA/other HRA/Fitness

Scr

een

ing

Rat

e

2001 2002 2005

ROI Calculation

• Savings 4 Years after Baseline (2001) $1,335,524

• Total Costs 4 Years (2002-2005) $808,403

• ROI = 1.65:1

Significant Findings

• Overall savings of $176 PPPY

• Inpatient savings greatest, $182 PPPY

• Preventive screening rates increased for participants

• Incremental risk decreases

• Participants in wellness were not just healthy employees

• ROI of $1.65

Conclusions

• Positive findings for all participation groups

• Savings sustained over multiple years

• ROI does not include increase in productivity and decreased absences

• Positive and conservative ROI – wellness works!

• HRA is a good start