Let's Do the Math

Categories: Executive Health

Why Your Company Needs a Health Risk and Management Model
Health care is big business. The total new tax revenue from The Patient Protection and Affordable Care Act (PPACA) is expected to amount to $409.2 billion over the next 10 years1. Meanwhile companies and consumers alike face the enormous challenge of burgeoning health care costs due to changes brought on by the health care reform, inflated medical claim costs, and an aging population.

Considering unhealthy employees are estimated to cost companies $153 billion in lost productivity annually, health care management presents the number one fiscal strain on corporations2. CEOs cite rising health care costs as the greatest cost pressure on U.S. businesses.

The PricewaterhouseCoopers LLC (PwC) medical cost trend analysis for 2012 suggests that health care costs are expected to increase by 8.5 percent this year. Key accelerators include continuation of provider consolidation and post-recession stress building up on the workforce3. Although the health care cost increase has slowed nationally in 2011, Los Angeles and Orange County are two of a few U.S. markets with anticipated rate increases above 10 percent. To mitigate these rising expenses, companies have increased the share of premiums and co-payments to employees.

This year, anticipate higher costs for dependants, more spousal surcharges, and more employees opting for consumer-directed health plans (CDHP). With huge out-of-pocket costs arising in the event of a medical crisis or elective health care, consumers are using fewer medical services. This in turn directly affects the number of sick days a company faces annually, resulting in productivity loss. The latter is felt by direct absence due to illness as well as by what is described as “presenteeism,” limited productivity measured in staff that goes to work in poor health. Look for us to further explore this topic in a future blog.

The good news is, corporations are starting to identify the profound value of proactive, preventative health care. Wellness programs and comprehensive physical exams have become high demand products as part of a cost-effective health management model.

To date, over 50 percent of companies have a disease management/health improvement strategy in place. Of those that don’t, 75 percent plan to implement one over the next three to five years4. The Wellness Council of America (Welcoa) released a cost benefit analysis that focused on the success of risk management programs in corporate and public entities. Examples include The Travelers Corporation, which claims a $3.40 return for every dollar invested in health promotion, yielding total corporate savings of $146 million in benefits costs. The four-year study suggested that sick leave was reduced by 19 percent.

Another study cited found that of the 72,000 people insured through 285 Wisconsin school districts, those with access to disease prevention and self-care programs had a lower demand for medical services5. According to the Watson Wyatt Staying at Work report 2007-2008, companies with highly effective health and productivity programs have 20 percent more revenue per employee.

Hoag Executive Health (HEH) presents the gateway to the transformation of the health care delivery system in corporate Orange County. HEH offers a comprehensive physical examination, including laboratory testing, in a single session that lasts less than a day. Benefits of this program are efficient use of time, personalized attention, and a wellness report that serves as a catalyst and roadmap for obtaining or maintaining health.

Please contact us at 855/209-3610 to learn more about the long-term quality outcome of executive health.

Written by Leeann Garms


[1] http://www.huffingtonpost.com/2011/10/17/unhealthy-employees-cost-153-billion_n_1016568.html

[2] IBID

[3] http://www.pwc.com/us/en/health-industries/publications/behind-the-numbers-medical-cost-trends-2012.jhtml

[4] http://www.businesswire.com/news/home/20100927005437/en/U.S.-Health-Care-Cost-Rate-Increases-Reach

[5] http://welcoa.org/worksite_cost_benefit.html