How population health management can save you big money

The Integrated Benefits Institute recently reported that poor health costs the U.S. economy nearly $600 billion per year, with a significant chunk of that cost coming from lost productivity.

But employers are fighting back. One way is by incorporating population health management (PHM) into a benefits package. PHM is an increasingly popular and powerful tool that helps employers to rein in employee health care costs.

Smart Business spoke with Marion McGowan, Ph.D., chief clinical officer and senior vice president of population health at UPMC Insurance Services Division, about how PHM can help lower health care costs and raise employee productivity.

What exactly is PHM?

Population health refers to the specific illnesses or health problems that exist within a targeted group, such as the employees of a particular company. Managing population health involves developing interventions, incentives and other strategies that lead to better individual health.

Interestingly, this trend represents a sea change among employers. In today’s workplace, making use of PHM extends the responsibility and interests of the employer beyond just providing salary and benefits.

Why is PHM important to employers?

Many employers see improving workforce health as a key to long-term cost management. Healthy employees translate into more productive employees. With the right PHM program, employers often see more engaged employees who enjoy increased levels of job satisfaction. The goal is to try to prevent those who are well from becoming ill, while improving the quality of life and enhancing health outcomes for those who have developed chronic conditions.

Should employers ask their health insurance company about PHM?

Employers absolutely should ask about PHM. They need to know the value they’re getting and that their employees are getting the right care. The chief cost drivers in any insurance plan are the sickest employees.

A good PHM strategy can help anticipate the needs of the employees who use health care the most. It can also tailor interventions to help curtail unplanned and costly care, and help employees with chronic conditions get the preventive care they need before it becomes more expensive for everyone.

What if your health insurer doesn’t provide this? Can employers still buy it?

There are two types of PHM. One is an integrated program and the other is a stand-alone. The integrated approach connects data, such as pharmacy, dental, vision and disability information to an employer’s population health platform. That platform may include clinical and disease-management programs. Analytics transform health data into real insights that give a more complete picture of employee health. It also helps identify potential gaps in care. This allows for earlier intervention for people who are at risk for health issues or who may have chronic conditions.

How does that approach compare with the stand-alone management?

A stand-alone PHM program is a vendor solution that provides data analytics, care coordination and employee engagement tools. This type of PHM identifies and stratifies the risk in the employer group with the goal of improving clinical outcomes and financial results. These stand-alone PHMs tend to be costly and aren’t always the most effective route.

In terms of overall employer costs, is it worth it to invest in a PHM program?

Growing evidence suggests the investment is worth it. The ROI for a PHM program ranges from $1.40 to as much as $13 in benefits per dollar spent on the program.

Does a PHM program make sense for smaller companies?

Because of the dollars large employers have at their disposal, they are most involved in PHM programs. But it’s arguably even more important for small companies. In a small company with only a few employees, one person with a chronic disease can skew the cost curve and risk pool dramatically.

Whether it’s a large corporation or small family-run business, every employer has the opportunity to positively affect the health of its employees.

Insights Health Care is brought to you by UPMC Health Plan