Hidden health costs that get ya every time
October 15, 2008 by Bill MeltzerPosted in: Healthcare costs, Special Report
When most companies measure their health costs, they tend to calculate them by categories, such as medical visits, medication, and disability claims.
A recent study found this method is strong on catching direct costs, but misses a huge chunk of overall cost – lost productivity.
Companies surveyed lost four times more money on productivity than was spent on medical and pharmacy claims. In actual dollars, annual medical and drug costs for back and neck pain came to about $170K per 1,000 employees. When productivity was measured too, the total bill came to over $500K!
Cancer, back and neck pain, and coronary heart disease are the costliest employee health conditions for employers. But that’s only the case when the traditional method is used to measure cost.
When researchers took production costs into account, the list was very different. The costliest problems are:
- musculoskeletal conditions,
- depression, and
- fatigue.
In general, only one firm in five has seen stabilization in its overall health costs over the last five years. Much of the reason is due to failure to track indirect costs.
Know the impact
Experts are worried that American companies are falling behind in the global market by not taking into account the full impact employees’ health costs have on their bottom line.
The American College of Occupational and Environmental Medicine and the Integrated Benefits Institute have both launched initiatives encouraging employers to consider the full-cost of employee health. They’re assisting employers in weighing the cost of employee health problems against things like wellness programs.
Both organizations are offering free online tools. ACOEM’s program is “Blueprint for Health.” Visit its Web site for more information. IBI’s program can be found here.
What has worked best for your firm in controlling costs?
Tags: health costs
October 16th, 2008 at 4:32 pm
Anyone who has diligently run a business in the past 15 years is WELL aware of this. Somehow the culture has given much leeway from solid production if one cries “medical issue.”
Also MANY doctors prescribe and prescribe and prescribe until employees are debilitated by the effects of medication!
And, the body fails – we are mortal – yet laws greatly impact the employers ability to consider age in hiring and lay-off decisions, leaving a business vulnerable to huge costs and loss of work when injury occurs at work or from the ailments that come with age.
It’s awfully nice to be so fair but not a boon to productivity.
October 20th, 2008 at 12:46 pm
I have a hard time believing the right thing to do to ensure profitability is to start discriminating against people based on age…or for any other reason, for that matter.
There are a lot of factors that play into productivity and to focus on one aspect while disregarding all others seems a little short-sighted to me. In a healthy work culture, people are more engaged in their work and feel more loyalty and ownership. These people are often more productive because they feel they are important, they are part of what is going on in the company and they know their contribution (or lack thereof) matters.
If I happen to get sick…whether I’m older or not…and have to take some time off work, I would be doing everything I could to minimize my absence and the impact if I felt valued and appreciated. If, on the other hand, I felt like people held it against me, like the time was given grudgingly and I was even less valued because “the body fails,” I would be tempted to start a mental ledger of all the ways my company was not doing me right and would be much less inclined to give any extra when required. I think anything that promotes this kind of thinking should be avoided as it typically comes back to bite us (financially) in the long run.
There are costs to employing people. There are benefits to employing people. If people are taking advantage of a company, that’s a problem. If a company is taking advantage of people, that’s a problem too. I believe in finding solid win-win solutions and I don’t think valuing people (all different kinds, ages, races, etc.) will ever take us down the wrong road. I also think it pays off, overall, on the bottom line. It’s good to understand our overhead and to do business with this clearly in the forefront of our planning. But it’s not smart to stop having compassion and to view our workforce only as an expense when they can’t perform at the highest level. Not everything is ONLY about money. There always needs to be a balance.