Sally Stephens

Tuesday, 30 August 2005 12:25

The age of human capital

Over the past several decades, management has dramatically increased productivity by investing in technology and continuously training employees to keep their skills and knowledge base up-to-date.

At the same time, most employers have largely ignored and even diminished the greatest untapped resources of performance gains and competitive advantages — the health, well-being and functionality of their employees.

There are major challenges to worksite health and productivity. The average age of workers is increasing, and with each year the cost of health care increases by 3 percent. Keeping in mind that at least 25 percent of health care costs are preventable, it only makes sense that program design affects use patterns and costs.

The reality is that productivity costs are much bigger than absenteeism and disability. Presenteeism — being physically present at work but being less than optimally productive — makes up about 20 percent to 60 percent of all costs for 10 leading health conditions, and in many cases costs are higher than medical. The magnitude of the demonstrated loss of productivity time is startling, with a number of medical conditions and lifestyle behaviors contributing to between three and 11 hours of lost work time each week per employee.

A new movement has emerged. Health and productivity management, defined by the Institute for Health and Productivity Management as “the integrated management of health and injury risk, chronic illness and disability to reduce employees’ total health-related costs including direct medical expenditures, unnecessary absence from work and lost performance at work (i.e. presenteeism).”

This model applies a proactive approach to better health for individuals by integrating health-management programs to optimize health care delivery and costs. It is all about maximizing human capital investments and producing the best functional outcomes that lead to productivity gains for employers. There is no question that employee health is a capital investment, not an expense. The following are key elements of health and productivity management.

  • Comprehensive focus
  • Well-integrated interventions
  • Metric-driven refinements
  • Prevention-centric focus
  • Use of active recruitment strategies and techniques
  • Strategic alignment
  • Systems approach to interventions
  • Health as a major strategy for human capital enhancement
  • Strong economic focus

So how do health and well-being issues impact the bottom line? Numerous health risk factors have been associated with an increase in short-term absence, including obesity, stress, physical inactivity, smoking, alcohol consumption and poor sleep. Research suggests the impact of these have upon absence levels range from 15 percent to 23 percent of total absence time, and if addressed, would reduce absenteeism levels by some two to three days per employee per year. With interventions, results show reductions in absenteeism ranging from 14 percent to 30 percent in such organizations as DuPont and Coors.

Below are three ideas for improving employee productivity.

  • Implement a population health management benefit that keeps the majority of employees who are mostly healthy most of the time in that category.
  • Provide targeted disease management to minimize total costs for the increasing numbers of chronically ill workers by keeping them as functional as possible.
  • Engage employees in active management of their own health through tailored behavioral change programs, as well as instruction in medical self-care techniques.

We are in a time when health and productivity management is not just nice to have for organizations, it is an area that has a clear and demonstrable business imperative. The new evidence is that health and performance optimization is the new model for global business competitiveness.

Sally L. Stephens, R.N., is president of Spectrum Health Systems. Stephens 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

Wednesday, 17 March 2004 11:31

Health risk management

Regardless of how well an organization develops and maintains a competitive advantage through financial performance, its human capital remains the core of its success. An organization's ability to attract, retain, protect, motivate and renew quality people is the most critical factor for long-term viability.

Part of that ability includes offering attractive health care benefits. But health care costs are on the rise. In 2003, the nation's health care costs reached $1.7 trillion, more than 14 percent of GDP. And, with an average 15 percent annual increase in health insurance costs, most benefit consultants predict that health insurance costs will double within the next five years; some say within the next three years. So how long can your organization sustain these kinds of increases?

Chronic conditions -- which create a greater demand for health care services -- play a key role in rising costs.


* Approximately 125 million Americans have chronic conditions; almost half of these have two or more. More than 64 million Americans have one or more forms of cardiovascular disease -- including high blood pressure -- that cost our nation $298 billion in direct and indirect costs each year.


* 18 million Americans -- 5 million of them undiagnosed -- have diabetes, at an annual cost of $132 billion.


* The Centers for Disease Control and Prevention (CDC) finds that treatment for obesity-related illnesses is a major driver of surging U.S. health care costs, carrying a $93 billion annual tab, $12 billion of which is charged to employers.


* According to the CDC, obesity-related health conditions, such as diabetes and heart disease, are gaining on smoking complications as the costliest preventable illnesses in the nation. Chronic diseases cause approximately 70 percent of all deaths in the United States each year, and a large portion of these diseases-- including lung cancer, diabetes, heart disease and stroke -- are considered preventable.


Seeking answers

Double-digit increases in health insurance costs, combined with a troubled economy, are challenging financial and benefits managers to be more creative in designing their health plans. Most employers believe that changing plan design by increasing co-pays and deductibles and reducing benefits is not the only answer for controlling costs in the future.

Many are turning to health risk intervention programs as a way to proactively manage health care costs while improving the health of their employees.

Once considered a "warm and fuzzy" benefit, health improvement programs are now considered the last resort for stabilizing health insurance costs.

Today, more employers recognize that employees themselves represent a huge opportunity to reduce health care costs. They offer wellness or health management programs that encourage employees to lead healthier lifestyles, and disease management programs that target employees with conditions that can be improved with self-care efforts.

These programs, in which employees work one-on-one with a personal health coach, help create a structured process within which an individual can make a lifestyle change.

The health educator or personal health coach assists the participant in developing a plan of action to work on behavioral changes, which include short- and long-term goals. The coach provides focused, personalized coaching over the phone based on the participant's personal needs and stage of change.


Getting results

Most people really do want to change a bad health habit. Unfortunately, many have other life issues, such as financial concerns or problems with their children or relationships that prevent them from focusing on their health.

The coach can help remove some of these barriers to change by bringing the service directly to the participant. The goal isn't to provide participants with a quick fix; instead, the coach gives them the tools and education they need to understand their problems and continue a healthier lifestyle.

The return on investment for health improvement programs can be high; however, not all the return can be measured in dollars. Other benefits include reduced absenteeism, increased productivity and increased employee satisfaction.

Health improvement programs will continue to offer employers highly effective tools to stabilize health insurance costs and to protect their most valuable asset: their employees. Organizations that create an environment that supports their employees in living healthy lifestyles can make a difference.

Sally L. Stephens, RN, is president of Spectrum Health Systems. Stephens and her husband 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

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