University of Michigan Health Management Research Center

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University of Michigan Health Management Research
Center

• Wellness is not a Luxury

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UM-HMRC Corporate Consortium

• Steelcase
• Progressive
• Crown Equipment
• Delphi Corporation
• Southern Company
• Foote Health System
• University of Missouri
• Medical Mutual of Ohio
• St Lukes Health System
• Cuyahoga Community College
• International Truck and Engine
• United Auto Workers-General Motors
• Wisconsin Education Association Trust
• Southwest Michigan Healthcare Coalition
• Australian Health Management Corporation

• Kellogg
• US Steel
• JPM Chase
• We Energies
• General Motors
• Affinity Health Plan
• Florida Power Light

The consortium members provide health care
insurance for over two million Americans. Data
are available from eight to 18 years. Meet on
First Wednesday in December in Ann Arbor
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Health Management in the Workplace
1. Health Status 2. Life Expectancy
3. Health Care Costs 4. Productivity a.
Absence b. Disability c. Workers
Compensation d. Presenteeism e. Quality
Multiplier 5. Recruitment and Retention
6. Company Visibility 7. Social Responsibility
1981, 1995, 2000 D.W. Edington
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Costs Associated with Risks Medical Paid Amount x
Age x Risk
Annual Medical Costs
High
Med Risk
Non-Participant
Low
Age Range
Edington. AJHP. 15(5)341-349, 2001
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Do-Nothing Strategy
The flow of Risks is to High-Risk
The flow of Costs is to High-Cost
Costs follow Risks and Age
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Costs and Changes in Costs According to Risk
Levels and Changes in Risk Levels
2 Time HRAParticipants (N796)
High Risk 1122
Low Risk 680
1985 Risk Level Annual Costs 1985-1987
High Risk 1409
High Risk 1414
Low Risk 993
Low Risk 748
1988 Risk Level Annual Costs 1988-1990
Average annual medical claim costs. High
risk status is classified as having 3 or more
high risks from the 10 health practice
measures. Edington, Yen, Witting, The Financial
Impact of Changes in Personal Health Practices,
JOEM, 1997
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Excess Medical Costs due to Excess Risks
Edington, AJHP. 15(5)341-349, 2001
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Association of Excess Costs due to Excess Risks
Wright, Beard, Edington. JOEM. 44(12)1126-1134,
2002
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Likelihood of Association with Other Risks
Percentages show those at high risk for a
particular health measure who have at least four
other health risks. Population 16,879
LifeSteps active screened participants
Baunstein, Yi, Hirschland, McDonald, Edington.
Am. J. Health Behavior.25(4)407-417. 2001
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Wellness Score and Costs over 3 Years
N27,799 Wellness Score 81.1 Mean Cost 5,150
1996
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Change in Costs follow Change in Risks
Cost increased
Cost reduced
Risks Reduced
Risks Increased
Overall Cost per risk reduced 215 Cost per
risk avoided 304 Actives Cost
per risk reduced 231 Cost per risk avoided
320 Retireeslt65 Cost per risk
reduced 192 Cost per risk avoided 621
Retireesgt65 Cost per risk reduced 214 Cost
per risk avoided 264
Updated from Edington, AJHP. 15(5)341-349, 2001.
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Cost Savings Associated with Program Involvement
from 1985 to 1995
Annual Increase 12.6
Annual Increase 4.2
Zero or One HRA (N804) Two or More HRAs (N522)
Programming Year
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Healthcare charges by BMI
Healthcare charges increase 304.5/BMI unit
increase (BMI 24-44)
Annual Costs
Average Risks
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Where are the Opportunities for Population Health
Management?
Medical Care Management Opportunity
Disease Management Opportunity
Health Promotion Opportunity
Medical and Drug Costs only
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The Economics of Total Population Engagement and
Total Value of Health

• Total Value of Health
• Sickness Costs
• Drug Costs
• Absence Cost
• Disability Costs
• Workers Comp Costs
• Recruitment and Retention of Members

Health Risks
Low or No Risks
Disease
increase
increase
decrease

Where is the Investment?
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Six Key Componentsof a Successful Program

• Leadership
• Culture
• Health Risk Appraisal Screening Coaching
• Low Risk Maintenance
• Incentive
• Measurement and Evaluation

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Scorecard

• Percent Participation (Engagement) 80 to
  95
• HRA Three Coaching sessions Two other
  sessions
• Percent Low-Risk 70 to 85
• Percent of the eligible population
• Estimated Cost of Program 400
  Dollars per Eligible employee
• Estimated Annual Savings (medical/pharmacy)
  800
• 0 in Y1 to 1200 in Y4 1600 Max savings
• Dollars per Eligible Employee

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Sound Bites
1. The Do Nothing strategy is
unsustainable.
2. Refocus the definition of health from
Absence of Disease to High Level Vitality.
3. Total Population Management is the
effective healthcare strategy and to capture the
Total Value of Health
4. The business case for Health Management
indicates that the critical strategy is to Keep
the Healthy People Healthy (keep the low-risk
people low-risk).
5. The first step is, Dont Get Worse and
then Lets Create Winners, One Step at a Time.
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Key Research Learnings (Continued)
1996 Changes in risk drive changes in cost when
targeted according to specific risk
combinations resource optimization
1997 Benchmarking by wellness score and company
health score
1998 Risk and cost moderation is related to
participation
1998 Program opportunities are in preventive
services, low-risk maintenance high-risk
intervention and disease management

• Presenteeism introduced as a measure of
  productivity and
• influenced by risks and disease
  

2000 Define the total value of health to an
organization
2001 Establish the natural flow of risks and
costs
2002 Focus on the person and not the risk or the
disease
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Key Research Learnings from HMRC
1980 Implement and disseminate HRA from
CDC/Carter Center to Move from
Mortality outcomes to medical, pharmacy and time
away from work as our primary outcome
measures 1990
1991 High risk persons are high cost (prospective
data) a.) Individual risks b.)
Cumulative risks (0-2, 3-4, 5 or more)
1993 Absenteeism shows the same relationships to
risks as medical costs
1993 Excess costs are related to excess risks
1994 Changes in costs follow changes in risks
(medical and pharmacy)
1995 Risk combinations are the most dangerous
predictors of cost
1996 Low risk maintenance is an important program
strategy
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The world we have made as a result of the level
of thinking we have done thus far creates
problems we cannot solve at the same level of
thinking at which we created them. -
Albert Einstein
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Moving the Paradigm From
The Cost of Healthcare (Treating disease)
To
The Total Value of Healthcare (Managing health
status) To
Health is Free
(Healthcare Costs lt Total Benefits)
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• Cure peoples ills and make them healthy for a
  day.
• Teach them to stay well and keep them healthy for
  a lifetime.
• Chinese Proverb