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Managing Total Risk & Total Cost: Workers Compensation & Employee Benefits Why Wellness, Why Now? May 17, 2011 Joe Picone, Chief Claim Officer, Willis.

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Presentation on theme: "Managing Total Risk & Total Cost: Workers Compensation & Employee Benefits Why Wellness, Why Now? May 17, 2011 Joe Picone, Chief Claim Officer, Willis."— Presentation transcript:

1 Managing Total Risk & Total Cost: Workers Compensation & Employee Benefits Why Wellness, Why Now? May 17, 2011 Joe Picone, Chief Claim Officer, Willis

2 1 Agenda  Cost of Workers Compensation and Employee Benefits  Today’s Workforce  Employee Benefits vs. Workers Compensation vs. Wellness  The Wellness Solution

3 2 WC Lost Time Claims: Indemnity NCCI, WC Symposium 2010

4 3 WC Lost Time Claims: Medical NCCI, WC Symposium 2010

5 4 WC Medical Costs Rising NCCI, WC Symposium 2010

6 5 “Presenteeism” The measurable extent to which health symptoms, conditions and diseases adversely affect the productivity of individuals who choose to remain at work.

7 6 Why is Health Care So Expensive? (Employee Benefits Version)  Rise in spending for treated diseases (37%)  Innovations / advances in technology  New / better medicines  New treatments  Delivery costs of newborns have increased 5X ( )  Rise in prevalence of disease (63%)  ¾ of all spending in US focused on patients who have one or more chronic conditions.  Chronically ill patients receive only 56% of clinically recommended preventive health services.  27% of the rise in health care costs is associated with increased rates of obesity.

8 7 Why is Health Care So Expensive? (Workers Compensation Version)  Increasing Severity – Decreasing Frequency  Attempts to maximize income by some  Failure to properly manage utilization  Wrong measures: savings vs. paid  Trends in our society:  Obesity  Age  Cultural  Mental Health

9 8 Time and Effort You Invest When Buying  A Car?  A House?  A College?

10 9 How much time do we take to research our own health decisions? Have you ever… NeverYes, onceYes, >once Brought internet info to medical visit to discuss? 60%20% Taken notes during a visit to help remember what the doctor or nurse said? 55%21%29% Brought along friend/family as your advocate? 44%21%35% Brought along a list of questions to ask? 28%23%49% During a visit, have you ever held back questions because… You were unsure how to talk about your medical problems or how to ask your question? 59%19%22% The doctor seemed rushed? 59%16%25% Source: NBGH online survey, September 2007 N=1,558

11 10 Today’s Workforce

12 11 Some Facts About Today’s Workforce: Current Americans GI Generation ,000,000 Silent Generation ,000,000 Baby Boomers ,000,000 Generation X ,000,000 Millennials ?80,000,000 *US CENSUS 2006

13 12 More Facts About Today’s Workforce: Current Workforce SilentBorn before 19465% Boomers % Gen X % Millennials %

14 13 Why It’s Important to Understand Generational Differences Boomers are larger than two previous generations One out of every three adults over 21 is a boomer Boomers have tremendous work ethic 10,000 Boomers per day are turning 50 13,000 people will reach the age of 60 every day for the next 20 years Boomers will work longer than in past By 2050, the median age worldwide will be 38, up from 28 in 2000 and 24 in In the US, the median age in 2050 will be 41, in Italy it will be 53!

15 14 The Workers: What are they like? Generation Shaping Events Traits Baby Boomers TV, Cold War, Space Race, MLK, JFK, Vietnam, Civil Rights, Prosperity, Rock N Roll Work Ethic, Driven, Entitlement, Optimism, No to Status Quo, Health and Wellness Generation X Latchkey Kids, Single Parents, Reagan, Berlin Wall, MTV, Computers, Parents Divorce Rate Risk Takers, Independent, Task Driven, Consumers

16 15 Fact: We have an aging workforce that:  Likes to work hard - motivated  Independent  Will retire later  Will be dependent on dual incomes  Are entitlement dependent  Are generally optimistic about how long they will live and how they will live  Have been hit hard by recent recession in home values and savings for retirement

17 16 What We Anticipate Will Happen To Our Workforce Low claim frequency High claim severity Increased falls Longer healing times More severe musculoskeletal disorders Certain claim types will increase

18 17 Common Age-Related Injuries Changes with AgeType of Injury Loss of StrengthStrains and sprains; tendonitis Loss of muscular flexibilityStrains and sprains; falls Diminished postural steadinessSlips, trips, falls; fractures, sprains, strains Reduced grip strengthRepetitive motion disease; tendonitis, bursitis, epicondylitis; carpal tunnel syndrome Reduced balanceFalls, Slips Reduced nervous system responsesDecreased reaction times, being struck by objects; fractures, dislocation, death Reduced cardiovascular capacityGreater risk for heart attack and stroke Reduced visual capacityGreater exposure to safety hazards, falling injuries

19 18 The years ahead could be the best for your workers… Laura Ingalls Wilder wrote her first book at the age of 65. Colonel Sanders took to franchising Kentucky Fried Chicken Restaurants, starting at age 65. Orville Redenbacher launched famous popcorn at age of 63. Ronald Wilson Reagan became President of United States at age of 70.

20 19 Can we agree on one major point? Our Workforce is Getting Older!

21 20 Cost of Obesity: Duke University Medical Center Study –Obese workers filed 2X the number of workers' compensation claims –Obese workers had 7X higher medical costs –Obese workers lost 13X more days of work from work injury or work illness than did non-obese workers. –The average medical claim costs per 100 employees were $51,019 for the obese and $7,503 for the non-obese. –John Hopkins and NCCI released similar studies 20

22 21 Obesity & Workers Compensation Duke Study Claims Per 100 FTEs Lost Work Days per 100 FTEs Truls Østbye, MD, PhD; John M. Dement, PhD & Katrina M. Krause, MA (2007). Obesity and Workers' Compensation Results From the Duke Health and Safety Surveillance System, Arch Intern Med.167:

23 22 Claims most strongly affected by Body Mass Index (BMI):  Lower extremity  Wrist or hand  Back  Pain/inflammation  Sprain/strain  Contusion/bruise  Falls/slips  Lifting  Exertion Obesity & Workers Comp Truls Østbye, MD, PhD; John M. Dement, PhD & Katrina M. Krause, MA (2007). Obesity and Workers' Compensation Results From the Duke Health and Safety Surveillance System, Arch Intern Med.167:

24 What shape were we in?

25 What shape were we in?

26 What shape were we in?

27 What shape were we in?

28 What shape were we in?

29 What shape were we in?

30 What shape were we in?

31 What shape were we in?

32 What shape were we in?

33 32 Can we agree on two major points? Our current workforce is (1) older and, (2) more obese when compared to past years.

34 33 Non-English Languages Spoken at Home 33 “Ljestve moraju biti ispravno osiguran prije….” That was an important safety message but did you understand it?

35 34 Can we now agree on three major points? Our current workforce is (1) older (2) more obese and (3) is experiencing an increase in cultural (fear) barriers.

36 35 What has the “Employee Benefits” Side Identified as the Top 2 Drivers of Overall Health Care Costs? Stress Mental Health More workers are absent from work because of stress & anxiety than because of physical illness or injury

37 36 Work-related Stress is a Growing Health Concern  33% of the 40.2 million workdays lost by illness and injury are from stress, anxiety, and depression.  Stress can be a hidden trigger behind cardiovascular problems, musculoskeletal disorders, obesity, depression, and violence. National Safety Council - News Release September 21, 2005

38 37 Impact of Mental Illness Recent economic trends have affected stress levels  Recession  Layoffs, foreclosures, loss of investments & savings  Impact on disposable income  Increased risk of stress-induced health concerns  Depression  Anxiety  Compulsive behaviors (over-eating, excessive gambling, spending)  Substance abuse Substance Abuse and Mental Health Services Administration, April 2009

39 38 Effect of Single Risk Factors on Sick Leave Absenteeism Mental Health Back Pain Stressed No Exercise Obesity 0%100%50%150% N = 35,451 Source: Serxner, S., et al., (2001). The impact of behavioral health risks on worker absenteeism. JOEM, 43(4), % 140% 131% 118% 116%

40 39 Can we agree on four major points? Our workforce is (1) older (2) more obese (3) more chance of encountering a language barrier and, (4) has more mental health issues.

41 40 Why Wellness and WC Have Not Mixed  Many employers haven’t seen correlation  Wellness typically focuses on Employee Benefits only  Some companies keep WC in Risk Management and Employee Benefits with HR…Wellness Message Not Shared  Carriers slow to make correlation

42 41 Strongest Force in Universe – Resistance to Change Why don’t people change? Think of one “risk” factor you could eliminate: –Why don’t you eliminate it? –What are cons of not making change? –What are pros of making change? –What support can you get?

43 42 Why don’t people change?

44 43 Rate Your Driving Skills Excellent Above Average Average Below Average Poor

45 44 Optimistic Bias “An earthquake of 9.2 won’t hit here?” “The Titanic is the greatest ship ever made, it’s unsinkable.” “I’ll quit tomorrow or soon.” “I don’t have the time to exercise.” “It’s so hard to eat good when you’re traveling.”

46 45 Health Risks & WC Costs Low OWS Smoking Poor Health No Exercise Low Life Satisfaction 0%1000%500%1500% 1989% 1243% 836% 556% 255% N = 3,388 X 4 Years Source: Musich, S., et al., (2001, June). The Association of Health Risks with Workers’ Compensation Costs, JOEM, P %

47 46 Surviving the Perfect Storm; D.R. Anderson, PhD Source: StayWell Data analyzed by University of Michigan N=43,687 Analysis of Risks, Age and Cost

48 47 The Wellness Solution Converging healthcare trends affecting employers:  Ballooning costs – demand for new solutions  Increased focus on productivity  Talent retention / competition  Consumerism, cost sharing  Aging workforce Shifting costs does not always lead to lower costs or help address the problems causing increasing costs

49 48 ROI in Worksite Health Promotion

50 49 Why Now? "There's no question that workplace wellness is worth it. The only question is whether you're going to do it today or tomorrow. If you keep saying you are going to do it tomorrow, you'll never do it. You have to get on it today." - Warren Buffett 1.Focus on productivity – doing more with less 2.Proactive cost-containment approach 3.Investment in human capital 4.Increased stress levels due to economic climate

51 50 Wellness Implementation Barriers Still Remain Willis Wellness Survey The op three barriers to implementing a wellness program:  Budget constraints61%  Not enough time/staff to devote42%  Employees in various geographic locations25% Think investment - not cost.

52 51 What are Employers Doing? Willis Wellness Survey Weight management64% Physical activity65% Smoking cessation71% Medical screenings49% General health website52% Disease management47% Periodic health fairs41% Health risk assessments50%

53 52 Management’s Perspective Willis Wellness Survey  94% of leadership is committed to improving employee health.  94% of management believe that employee health can be directly linked to absenteeism and productivity.  86% of management are committed to improving the work-life balance of employees.

54 53 Wellness Strategy Group Health ProgramsWorker’s Compensation Loss Prevention Wellness Programs Health Risk Assessments/Screenings Wellness Committee Create a safe working environment Ergonomic Assessment, safety audits, pre-work stretch Safety Committee Loss Reduction Condition Management Education: medical self-care, consumerism Behavior change programs Claims management Education: safety practices & procedures Transitional return-to-work Provider Discounts Risk Transfer Fully insured alternatives Coordination of Benefits Defined Contribution Insurance Contract review Retrospective plans Risk Financing Direct Contracting, Networks, Tiered plan Program Design Benefit Structure/Pricing

55 54 Willis – Wellness Strategy Willis Tools & Resources  Turnkey wellness  Diet content  Fitness content  Health coaching  Virtual health fair  Reward tracking  Reward delivery Productivity Moral Employee Engagement Work-Life Balance Absenteeism Turnover Healthcare Cost Workplace Accidents Wellness Strategy Goals

56 55 Worksite Wellness A strategic business initiative designed to maximize the health of the workforce.  Policies & Cultural Support  Early Identification of Risk  Behavior Change  Ongoing Efforts to Maintain & Improve Health  More than a Vendor Relationship

57 56 Conclusion  Do Homework: Analytics on Obesity, Aging, Mental Health Impact, Cultural Barriers  Know your Demographics: Risk Pool  Combine Disability, Medical and WC data  Bridge Gap: Joint Strategy with Workers Compensation and Employee Benefits  Wellness Strategic Risk Planning Session  Measure ROI

58 Managing Total Risk & Total Cost: WC & Employee Benefits Why Wellness, Why Now? April 12, 2011 Questions?


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