And while most financial and benefits managers evaluate claims data or tweak the plan design in an effort to reduce the impact utilization has on the bottom line, they do not routinely factor indirect costs into health care financing.
The cost drain
C. Daniel Mullins, Ph.D., Center on Drugs and Public Policy, states that "annual indirect health care costs have been estimated at $837 billion, twice the $418 billion figure many cite as the direct cost of health care."
Many employers have struggled to fight not just absenteeism but the phenomenon of presenteeism, defined as "being at work but not fully effective." Presenteeism is considered just as costly, if not more so, than absenteeism.
Recent studies have shown that presenteeism can have a greater impact on productivity than absenteeism and short-term disability. Employees who come to work when ill can cost more in the long run from increased health, mental health and short-term disability utilization.
So why do employers largely ignore the indirect costs when considering the overall cost of health care plans? Most likely because many of the factors that affect a worker's ability to perform effectively are not so easy to identify or manage.
Outside forces that affect work include:
* Acute illness, such as colds, flu, headaches or injuries
* Worries from financial, family or health problems
* Poorly managed chronic diseases
* Uncontrolled stress, anxiety and depression
* Poor health habits that affect energy levels
Most people do not purposefully mismanage their health. Often, outside issues force employees to put their health on the back burner. They struggle with financial difficulties and worry over relationships and family problems.
Taking care of ailing parents or dealing with troubled teenagers can cause an individual to fall into unhealthy habits. Some employees fear they will lose their job if they take the time off work to go to the doctor or to deal with these issues.
In 2001, a Yale University study found that employees with chronic depressive symptoms were seven times more likely to show decreased workplace effectiveness than those without symptoms. According to Dr. Benjamin Druss, "the impact of depression on function at work was substantially higher than its association with missed days at work, suggesting that previous reports of absenteeism may represent only a small cost of depression in the workplace."
The good news is that presenteeism is controllable and preventable when employers understand and try to manage the factors that affect an employee's ability to be fully present on the job.
Where to start
Conduct a baseline health risk appraisal and follow up evaluations at least yearly. Consider these other measures as well.
* Provide health screenings and consultations, which can assess how well employees are feeling and functioning.
* Offer health improvement programs in which employees can work with a health advocate to assist them in better managing chronic conditions or making lifestyle changes.
* Provide onsite educational programs in key risk areas.
* Offer smoking cessation programs.
* Educate employees on the effects of over the counter medications.
The goal for employers should be the development of healthy, fully functioning workers. A change in mindset, in which the delivery of health care is viewed not as an expense but as a productivity-enhancing tool, needs to occur.
Quality preventive and wellness services that are convenient and cost-effective for employees will minimize the impact of presenteeism in the workplace. Each intervention that improves employee health can incrementally enhance productivity.
The potential bottom-line benefit for forward-thinking organizations is significant when they take bold steps to improve presenteeism. Empowered employees will feel more involved in their work and workplace. They will begin to believe that they are the organization's most valuable assets. Sally L. Stephens, R.N., is president of Spectrum Health Systems. Stephens and her husband, Mark, founded Spectrum Health Systems, an independent health management company, in 1997 to provide Fortune 100 quality health risk management programs to middle-market employers. Reach her at (317) 573-7600 or email@example.com.