When your employees are at work but not at their best, the entire company’s productivity suffers. However, many employers don’t realize that the cost of lost productivity can easily outweigh what they spend on direct medical costs.
“Employers should look at health care not as an expense but as an investment,” says T.C. Williams, the manager of channel strategy for Kaiser Permanente. “As such, they should invest in their most important asset: their work force.”
Williams advises companies to partner with a health plan that will help keep the work force at work and, more importantly, actually being productive.
Smart Business spoke with Williams about how your health plan can help you improve the total health and productivity of your work force.
What is presenteeism and why should employers be concerned about it?
Presenteeism is when workers are physically on the job, but because of illness or other medical conditions, are not fully functioning. At this time in the health care arena, employers and consultants are familiar with presenteeism. It is not a revolutionary term. Health plans have brought the topic up to their clients and said, ‘This is something you have to take a look at.’ Studies show that productivity losses cost employers $2 to $3 for every $1 of direct medical costs. In fact, direct medical costs, which include group premiums and pharmacy costs, account for only 24 percent of total medical costs.
Indirect costs, such as long-term disability, short-term disability, absenteeism, worker’s compensation and presenteeism, make up the remaining 76 percent of total medical costs. Presenteeism accounts for a stunning 63 percent, making it the largest contributor to total health care expenditures, much larger than absenteeism or short-term disability (6 percent each) or long-term disability (1 percent).
So, many employers know about presenteeism, but don’t know what to do about it. They may have strategies targeting absenteeism and disability, but with the national average of direct medical costs hovering around $7,000 a year per employee, presenteeism-driven productivity losses could be costing employers as much as $21,000 a year per worker.
What factors contribute to presenteeism?
Although workers often report to work with minor illnesses like colds, researchers have found that chronic conditions are the most likely to be associated with presenteeism. Allergies, depression, asthma, lower back pain, cardiovascular disease, cancer and even overweight/obesity are chronic conditions that prevent employees from being as productive as they could be. For example, the average annual cost of medical expenses and absenteeism related to obesity can range from $460 to $2,500 per employee.
How can employers control presenteeism?
Measuring your indirect health care costs is a good start. There are tools out there that can measure how indirect health care costs are affecting your bottom line. A good starting point is the National Committee for Quality Assurance. NCQA developed an interactive tool that takes specific demographics from an employer and measures how indirect and direct health care costs affect the bottom line.
The calculator (ncqacalculator.com) takes the specific demographics of the employer, applies what it will cost the employer to replace lost productivity, lost labor and the cost of temporary employees, and then looks at sick day wages, chronic diseases, lifestyle choices, immunizations, etc. You plug all that data into the calculator and it spits out the effect of these indirect costs on the bottom line.
Just understanding presenteeism and these indirect health care costs isn’t enough. You need to find the tools to measure them. You need to find a health plan that will not only help you understand and grapple with these indirect cost drivers but will give you direction and tools to address them.
What should employers look for in a health plan to help them (and their employees) avoid the pitfalls of presenteeism?
Health plans that have made the investment in information technology and infrastructure can provide you with tools to address lost productivity so that you can see a direct and positive impact on future health care costs.
The U.S. government has mandated that most Americans have electronic medical records available to both health care providers and patients themselves by 2014. You need a plan that offers these tools now. Some plans offer a personal health record that gives employees secure, online access to their electronic medical records. Plan members can go online to e-mail their physicians, refill prescriptions, schedule or cancel appointments and check lab test results. So instead of leaving work to take care of these tasks, employees can do them online through their personal health records.
A study by the University of California at Berkeley and Stanford University found that patients who communicated with their doctors online were 50 percent less likely to miss work because of illness. When considering a plan, an employer should put online tools up there with price, quality and the extent of network accessibility as major factors in the decision. Having access to these tools enables your employees to address their health care needs while helping them stay at work and productive.
And finally, you need a health plan that can not only give employees the tools and resources to be advocates for their own health care, but also that allows them to bypass unnecessary medical visits and duplicative tests. These factors are important because they can save both you and your employees time and money.
T.C. Williams is the manager of channel strategy for Kaiser Permanente. Reach him at (216) 479-5230 or firstname.lastname@example.org.