1. HEALTH AND PRODUCTIVITY MANAGEMENT H P M THINK GLOBALLY! BY: BRIAN D. HARRISON, MD DATE:9/28/04

2. The Perfect STORM ?????

3. Or the Perfect Opportunity???

6. IT’S TRUE EVERYWHERE- “RISING HEALTH INSURANCE PREMIUMS ARE CREATING A CRISIS!” ( SO WHAT ELSE IS NEW?)

7. THIS IS WHAT’S NEW Increases are higher (15-20% annual) They are occurring on a much higher base When the average family premium was $2,000 a year, 15% = $300 Now family premiums approach $10,000 a year, 15% = $1,500 They use up annual employee pay raises Example – If health insurance benefit = 20% of total pay, and premium increases by 15%, then a 3% annual raise would be gone

11. WHAT’S AHEAD FOR EMPLOYERS? They provide most health care coverage in this country and probably will continue. Some will drop this benefit though. Unreasonable to expect employers to continue to foot the whole bill. The cost of a family premium at $800/month/employee is almost the same as the minimum wage $893/month/employee.

12. WHAT’S AHEAD FOR EMPLOYERS? (Cont) Increasing the price of products to pay for health care would reduce competitiveness. Cutting into profits to pay for more expensive health insurance would be unpopular. The government doesn’t have a solution Most likely the cost will be shifted to employees, by decreasing level of insurance benefit or requiring larger employee contribution

13. WHAT THIS MEANS FOR EMPLOYEES Decreased take home pay. Larger number of “uninsured”, and a new type (still employed, formerly insured). Organized labor strikes over insurance cost subsidies. Retirees– Medicare supplemental coverage unaffordable, Medicare inadequate (the government doesn’t have a solution).

14. COST OF CARE = COST OF PREMIUM Insurers don’t originate the money, they just pass on the bills. Insurers are a conduit for cash, not a source. Those who pay the premiums are the source of the money. Every insured person pays for every other person (including those needing medical miracles).

16. WHY ECONOMIC SOLUTIONS FAIL TO SOLVE THE PROBLEM: It’s not an economic problem It’s a HEALTH problem!

17. What do we expect when we become ill? Medical miracles Free access (to which everyone is entitled) Entitlement even to unproven, experimental care Entitlement to care even if low marginal value compared to cost Demands go up

18. 2003 HEALTH COSTS Total Health Spending ____________________________________ 1.7 Trillion ___________ 7% Annual Growth Chronic Disease Treatment __________________________________ 700 Billion ___________ 10% Annual Growth Pharmacy Services _______________________________ 200 Billion __________ 12% Annual Growth Specialty Pharmaceuticals ______________________________ 30 Billion ____________ 30% Annual Growth

20. (CHANGING DEMAND-cont.) HOW MUCH CORONARY DISEASE CAN BE PREVENTED WITH 2 BILLION DOLLARS PER YEAR?

22. YOU GET WHAT YOU PAY FOR THERE ARE 8,000 SEPARATE BILLING CODES FOR CARE, NONE FOR PREVENTING A DISEASE

25. Health Insurance is a ________? Benefit – a gift you buy to make someone happy; you shop for the best value Commodity – something you buy from the lowest bidder; you buy as little as you must have Investment – considered purchase based on ROI, including risk and return; if it’s good, you want a lot

27. Productivity Model Final Outcome Intermediate Outcome Accountability Improve Health Status Optimize Productivity/ Job Performance Reduce Unnecessary Lost Work Time Employer/ Purchaser Employee/ Patient Provider Health Plan/ Delivery System Improve Organizational Health

28. Productivity Model - Three Parts Disease Management Health Management Demand Management

29. “UNREASONABLE DEMANDS ON A DYSFUNCTIONAL SYSTEM” The demands must change (demand management, disease prevention, wellness) The system must change (disease management, systematized population health, quality improvement, outcomes measurement).

30. (CHANGING DEMAND-cont) WHAT DRIVES THE DEMAND? Illness – The sickest 1% of the population use 30% of the total health care expenditure; the healthiest 70% use only 10% of the cost. However, well people don’t always stay well – we all have a chance at being in that unlucky 1%.

35. Relationship Between Cost and Wellness Score Figure 10 Annual Medical Costs Wellness Score

36. Change in Cost Associated with Change in Risk Risks Reduced Risks Increased

37. HOW TO “THINK GLOBALLY” Learn lessons from research and mega trends. Do “Global Accounting”of profits and losses associated with human capital.

38. GLOBAL ACCOUNTING requires AN INTEGRATED DATABASE Medical and Pharmaceutical claims Health Risk Appraisal scores Absence data Short & Long-Term Disability (STD/LTD) Worker Comp Turnover Direct production data or performance eval

39. BECAUSE YOU CAN’T MANAGE WHAT YOU CAN’T MEASURE

40. Health and Productivity Measurement…. Measure the prevalence of diseases and risk factors (HEALTH INDICATORS) Correlate with cost of losses from absence, STD/LTD, Worker Comp, turnover, presenteeism (PRODUCTIVITY INDICATORS)

41. .... enables Health and Productivity MANAGEMENT Intervene to improve a Health Indicator Measure (or at least calculate) the effect on a Productivity Indicator

42. THIS SETS THE STAGE FOR A VALUE-BASED HEALTH CARE MODEL Employer needs it for productivity, profit, and competitiveness reasons. Employee needs it for cost, comfort, maintenance of health reasons.

43. CREATING WISE CONSUMERS People need information about self care/self treatment. People need information about quality of health care providers and institutions.

44. WHY EMPLOYEES CARE NOW MORE THAN EVER Threat of unemployment Quality of life reasons Out of pocket costs