New Research Shows That Prevention Is Key To Reducing Health Care Costs For All Employees, Even Those With Chronic Conditions
Towers Watson & Co. (NASDAQ:TW)
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ST. PAUL, Minn. and NEW YORK, Nov. 19, 2012 /PRNewswire/ -- A recent study from StayWell Health Management and Towers Watson demonstrates that cost savings associated with health risk reduction begin accumulating in as little as one year, particularly for those with chronic conditions. Furthermore, the study demonstrates that, while a reduction in employee health risks leads to immediate cost savings, the accumulation of additional health risks soon leads to substantially higher medical and pharmacy costs. Such findings are critical for employers as they evaluate their strategies for engaging employees in changing unhealthy behaviors and assess their investments in workplace health management programs.
"This is one of the first multi-employer studies to explore the specific timing of changes in health care costs related to increases or decreases in health risks," said Jessica Grossmeier, Ph.D., vice president of research at StayWell Health Management and a co-author of the study. "The research supports a greater focus on prevention and wellness. It also can help employers better estimate the short-term financial impact of changes in individual and population health risks."
The study, "Association Between Changes in Health Risk Status and Changes in Future Health Care Costs: A Multi-employer Study," was published in the November 2012 issue of Journal of Occupational and Environmental Medicine (JOEM) and is available on the JOEM website.
Although health risks have been directly associated with higher health care costs, and a growing body of research shows that improving health can generate a positive long-term ROI, there has been limited research on how soon cost savings begin accruing and the relative cost impact of health risk accumulation versus health risk reduction.
"This research not only demonstrates the level of savings that can be expected, but it also begins to show how soon employers can expect to begin realizing some change in costs as a result of a change in health risk status," said Steven Nyce, senior economist at Towers Watson and lead author of the study. "This is crucial information for employers that have made a commitment to improving the health and productivity of their workforce. It also should enable employers to attract more senior management support for investing in these programs."
Specifically, the study authors suggest that employers can benefit from understanding the following key findings:
- If you reduce health risks, lower costs begin accruing very quickly. In fact, there was a reduction in health care costs in the same year risks decreased. Coupled with prior research showing employers can "break even" on their wellness investment in year two and achieve up to a 3:1 ROI in year three, this immediate savings from risk reduction makes the financial case for prevention even stronger.
- The financial implications for prevention may be even greater than for risk reduction. For every health risk added, costs increased by 45 percent above the cost savings that resulted from eliminating a risk. This means that if organizations prevent individuals from adding new health risks over time, their cost savings will be greater than if they focus on eliminating a health risk after it emerges.
- A long-term solution is better than a quick fix. In this study, a greater immediate savings was realized from reducing health risks for people with chronic conditions than for the average employee. After controlling for differences in age, gender and company, those with chronic conditions who added health risks doubled the cost burden compared to those without a chronic condition. Cost savings were four times greater for those with chronic conditions compared to those without chronic conditions. The study authors stressed that although there always will be a highest-cost group, an ongoing focus on prevention can benefit the entire population by avoiding chronic disease altogether in some cases or slowing the progression and diminishing the severity of chronic disease. All of these potential outcomes from prevention will improve the company's total health care spend.
Previously published literature reviews and studies indicate wellness programs can produce even greater immediate savings in productivity-related costs, including reduced absenteeism, disability and workers' compensation costs, as well as enhanced work performance. Therefore, the combination of direct health care savings, which grow over time, coupled with these more immediate, indirect productivity savings, further supports the business case for investing in a prevention-focused, population-based health management strategy.
"The bottom line for employers is that if you start to change employee behaviors, you will start seeing health care cost savings very quickly. In fact, an employer can save an average of $100 in health care costs per employee per health risk eliminated in the year of the change, and $105 per risk reduced in the year following the reduction," said Nyce. "But if you don't keep healthy people healthy and employees start accumulating new health risks, you not only negate this savings but stand to add health care costs of $145 per employee per health risk added within just one year."
Nyce added that while the study findings provide employers with specific short-term dollar amounts associated with risk change, the total value of behavior change programs is not fully captured in these study findings.
"More research is needed with a longer follow-up period to measure the full cost impact of risk change," said Grossmeier. "We know from extensive published research that program impact does not fully emerge for at least three years, which means this study did not have a long enough follow-up period to quantify the full cost savings employers ultimately will realize from a given level of risk reduction or prevention."
About the Study
This study integrated data from six large and diverse employers representing the finance, manufacturing, health care, energy and education industries, making this study the first multi-employer study to demonstrate the cost impact of risk change. Nearly 23,000 individuals were included in the analysis, which combined standardized health assessment data from a single provider of health management services with health care (i.e., medical and pharmacy) claim data from a single data warehouse provider.
StayWell Health Management, LLC, is a recognized leader in delivering comprehensive population health management programs and services that help organizations maximize business results by improving employee health and productivity. Founded in 1978, StayWell Health Management is a MediMedia USA Company headquartered in St. Paul. StayWell's programs help improve the lives of millions each year. StayWell customers have received the C. Everett Koop National Health Award and more than 40 WELCOA Gold Awards for health management programs StayWell has developed. To learn more about the company, visit www.staywell.com.
About Towers Watson
Towers Watson (NYSE, NASDAQ: TW) is a leading global professional services company that helps organizations improve performance through effective people, risk and financial management. The company offers solutions in the areas of benefits, talent management, rewards, and risk and capital management. Towers Watson has 14,000 associates around the world and is located on the web at www.towerswatson.com.
Barbara Tabor, APR
For StayWell Health Management
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SOURCE StayWell Health Management