Guest post: Quantifying the Cost of Lost Productivity — And You Thought Direct Medical Costs Were High!
What is the cost of lost productivity due to poor employee health? Actually most employers have no way of knowing since productivity is typically not measured or tracked. But a new tool called the Blueprint for Health: A Framework for Total Cost Impact provides the answer.
The cost of lost productivity actually is higher than direct medical costs. For an employer with 10,000 employees and an average, annual compensation level of $40,000, the cost of absence and on-the-job impairment is approximately $41 M. This compares to medical costs of $28 M (for employees only). Total health-related costs are therefore $69 M.
Would you like to know how to quantify the cost of lost productivity for your employer or health plan group? Would you like to understand the benefits of focusing on lost productivity?
The Blueprint for Health is a tool that provides you (the employer or health plan) an estimate of total costs based on your unique employee/member demographics. Knowing the contribution of healthcare, absence, and job impairment costs, knowing the skewness of the cost distributions and understanding the amount of movement between cost categories from year to year can help an employer or health plan:
- Gauge the overall impact of all health-related costs to the bottom line.
- Know the various factors that impact these costs including condition prevalence, age, gender, geographic location, exempt/non-exempt status and deductible level.
- Identify and prioritize areas for improvement that will have the most impact to overall costs.
- Make the business case for including productivity in a company’s overall healthcare strategy.
The Blueprint estimates the full implications of cost including medical expenses, absences, and work impairment. The estimates are produced from a set of eight employer/insured group inputs and are based on actual aggregated data from a large multi-employer data repository.
The Blueprint is available at no cost to you. — just click here.
Here’s a detailed example of how the Blueprint works: The Blueprint highlights the disparate distributions of absence, presenteeism, and medical costs. In Graph 1, 6.1% of employees (the top 2 rows summed) account for over 46% of total medical costs while 59.7% account for under 15% of total medical costs. Clearly, the average cost of $2,807 is not a very good descriptor of this group.
(double-click for a larger version)
The distribution for absences is even more skewed with Graph 2 showing that less than 5% costing over 50% of total absences. If you’re using averages to describe absence of your employed population, you’re missing the target by a wide margin.
On the job work impairment (presenteeism) has a much larger impact on estimated days lost than absence—189,600 per year. Graph 4 shows that the people who account for most of this loss are the 25.8% who are impaired between 10% and 50%. This impairment may be due to a medical condition that is not being effectively managed, eg. a diabetic who is not under control for appropriate insulin level or someone with an undiagnosed or untreated condition like depression.
Click here to access the Blueprint for Health.
President, Riedel & Associates
The Blueprint for Health was developed by the Health As Human Capital Foundation and Riedel & Associates Consultants, Inc. in collaboration with the American College of Occupational and Environmental Medicine and the National Business Coalition on Health with funding from an unrestricted educational grant from Sanofi-Aventis.
This is not new information. The issue is what do you do with it?