How health promotion outweighed STD costs

June 1, 2001

A program that gives employees incentives to take better care of their health demonstrated cost savings in fewer days claimed for short-term disability.

 

How health promotion outweighed STD costs

A program that gives employees incentives to take better care of their health demonstrated cost savings in fewer days claimed for short-term disability.

By Seth Serxner, PhD, MPH, and Daniel Gold, PhD

Jump to:Choose article section... Seeking new evidence Fact finding and analysis STD categoriesSTD cases per employee and days per caseThe bottom line

Worksite health promotion programs have historically been under intense pressure from corporate management to prove a return on investment. Some senior managers are "believers" who will support continued funding based on process measures such as participation rates and subjective outcomes such as improved employee morale and satisfaction. Most, however, want to see hard data on outcomes such as medical cost reductions and lower absenteeism before they are willing to commit significant resources over extended periods.

Their demands reflect an increasing interest in quantifying program impact. What's known as the "health and productivity management movement" takes a broad perspective on worksite health promotion, recognizing its potential impact not only on absenteeism, disability rates and worker output but also on recruitment and retention. For example, one comprehensive health and productivity benchmarking study gathered benefits information and productivity data from 43 large public and private employers. This study documented median annual health and productivity costs per employee of $9,992, of which 47 percent were group health costs and 3 percent workers' compensation. The remainder consisted of productivity-related costs such as turnover (37 percent), absenteeism (8 percent), and nonoccupational disability (5 percent). The study noted that employers' median opportunity was approximately $2,600 per employee for direct health and productivity cost savings in five categories—group health, turnover, unscheduled absences, non-occupational absences, nonoccupational disability and workers' compensation.

Most productivity-related research has been done in the area of absenteeism. For example, one study that examined a health promotion program's impact over a four-year period found that employees who participated in the program experienced 4.6 fewer absentee hours annually than nonparticipants. Another study in which employees who participated frequently in a fitness program reduced their number of sick days by 4.8 days, compared to no changes in those who participated less often.

A comprehensive study of 46,000 workers on behavioral risks at DuPont Co. found that absenteeism was 10 to 32 percent higher among high-risk employees than among those without risks. The high-risk employees also generated significantly higher illness costs (i.e., compensation, health care and other benefit costs). The total cost of health risks to the company was estimated at $70.8 million annually.

Only a few workplace health promotion studies have examined the impact on disability, and most of those have examined interventions related to ergonomics, exercise and mental health. A study on workplace depression found that depressed workers had between 1.5 and 3.2 more short-term work-disability days a month than other workers, with a salary-equivalent loss averaging between $182 and $395 per employee per month.

Seeking new evidence

Our own study looked at the impact of a worksite health promotion program in a global telecommunications company with a large employee presence in Raleigh, N.C. It was part of a comprehensive evaluation addressing a range of outcomes, from employee satisfaction to impact on medical costs. We compared workdays lost from short-term disability (STD) by voluntary program participants vs. nonparticipants at three different points: the year before the program was launched and during each of its first two years in operation.

The company wanted to reduce health care costs, improve employee satisfaction and enhance the employer's image as an employer of choice, but its program had to serve 8,500 employees at 20 facilities spread over three counties. Rather than expand its fitness center resources to reach all of these dispersed workers, the company listened to employee feedback and decided to implement a flexible wellness program that included family members as well.

A primary goal was to integrate all health and wellness services in a seamless continuum of care. A local third-party vendor provides the on-site components, which include occupational health services, physical therapy, a fitness center, special programs addressing the top five risk areas, biofeedback, ergonomics, nutrition counseling, massage therapy, weight management and smoking cessation. Off-site components include a health risk assessment (HRA), risk-reduction intervention and counseling support by telephone and a self-care book with access to a nurse advice line.

One very important feature: Since 1997, the program has reimbursed the cost of participating in community-based fitness and wellness activities. Employees and eligible dependents must first complete an HRA. They can then receive reimbursement of up to $450 per year for health club memberships, summer leagues, lessons, licenses and educational programs.

The sample for this evaluation consisted of all the company's employees in the Raleigh area who had at least one STD episode, excluding maternity, between January 1, 1996 and December 31, 1998, a total of 1,628. Participants included two groups of employees: those who completed only an HRA and those who completed an HRA and received reimbursement. A baseline comparison between participants and nonparticipants was conducted in 1996 by comparing those employees who eventually participated in either 1997 or 1998 against those who did not. A total of 450 employees (28 percent of STD claimants) were classified as participants for this study, and 1,178 (72 percent) were classified as nonparticipants—those who did not complete an HRA during the study period.

Demographically, participants and nonparticipants were quite similar except that nonparticipants were substantially more likely than participants to have manufacturing jobs, be slightly older and have been with the company slightly longer.

Fact finding and analysis

The employer provided STD data and employee demographic information while the StayWell Company provided HRA and reimbursement program participation data. To ensure confidentiality, a third party replaced personal identifiers.

Net days lost from STD were used to measure program impact. STD benefits begin on an employee's sixth consecutive day of absence due to a nonoccupational illness or injury and may last as long as six months. Net days lost are calculated by taking an employee's gross days lost and subtracting the days saved from a part-time return to work. STD episodes were classified in 17 diagnostic groups. We examined the top seven and combined the remaining 10 into a category labeled "other." (See the table below.)

 

STD categories

 ParticipantsNonparticipants
Cardiovascular5%4%
ENT/mouth5%6%
Gastrointestinal12%9%
Gynecologic12%7%
Musculoskeletal37%35%
Psychiatric8%13%
Respiratory6%10%
Other*15%16%

 

The 1996 baseline analysis indicated no significant differences between future participants, who used about 29 net STD days a year, and future nonparticipants, who used 33 days.

Post-launch analyses showed a significantly different picture. While the nonparticipants' average rose to nearly 37 days lost in 1997, the participants' average dropped below 25 days. This difference continued in 1998, with nonparticipants averaging 38 days lost while participants averaged less than 28. Overall, nonparticipants increased their days lost from baseline by 15 percent while program participants decreased their days lost by 5 percent. This total 20 percent difference was statistically significant after controlling in the analyses for age, gender, job type, tenure and STD category. (See the chart below.)

 

 

To examine the factors driving the differences in days lost, we then looked at differences in both the number of STD cases per employee and the average days lost per STD case. In both 1997 and 1998, participants had significantly fewer STD cases per employee than their nonparticipant counterparts, a difference that did not exist at baseline. Over this same period, non-participants showed a 23 percent increase in days per case while participants experienced only a 6 percent increase. (See the table below.)

 

STD cases per employee and days per case

 19961997*1998*
Nonparticipants1.301.241.20
Participants1.191.111.09
Nonparticipants26.227.832.1
Participants23.922.825.3

 

The bottom line

This study found that participation in a reimbursement-based health promotion program had significant impact on workdays lost due to STD. Employees on STD who were participants in the health promotion program used an average of six fewer disability days than similar employees on STD who were not participants. The average net STD days for nonparticipants significantly increased during the study period. That is consistent with other research that found low-risk populations left unattended will become high-cost ones, and that doing nothing to support high-risk populations will result in a risk increase.

Given the tremendous interest in the return on investment for health promotion programs, it is reasonable to attempt to quantify the fiscal impact of the observed reduction in STD usage among participants.

This employer estimated that the average absenteeism cost per day for employees on STD is $225. In this study, the 294 employees on STD who participated in the program used an average of six fewer days than nonparticipants. The number of employees, multiplied by the days saved, then multiplied by the cost per day equals $396,900 saved in STD costs in the two program years. This may be a conservative estimate, because it does not include direct medical expenses, replacement workers and project delays. If we were to further extrapolate the findings to 722 nonparticipants, the result would be an additional $974,700 in potential savings. The actual and potential savings for two years would total $1,371,600.

Our study is not definitive. Self-selecting to participate in the HRA and reimbursement program introduces a bias, but that is the reality of health promotion programs. On the other hand, the inability to track health promotion activities may make the results a conservative estimate of the impact of participation on STD usage, because some nonparticipants may actually have been doing some form of activity that reduced their disability, which the study was unable to measure. That would produce a conservative estimate of impact.

There is no doubt, however, that our findings support the notion that health promotion programs contribute to the health and productivity of employees. They further suggest that employers would do well to target employees on STD for health promotion programs. Likewise, it may be useful to target frequently occurring causes of STD usage that are known to generate significant medical costs, such as stress, mental health and tobacco use.

Seth Serxner is vice president, research, and Daniel Gold is senior research manager, at StayWell/Krames. David Anderson, PhD, executive consultant, StayWell/Krames, and David Williams, EdD, senior manager, Nortel Networks, both contributed to the article. This article is based on research that was originally published by the Journal of Occupational and Environmental Medicine in January 2001. That special issue was organized by the Health Enhancement Research Organization (www.the-hero.org).

 

Seth Serxner. How health promotion outweighed STD costs. Business and Health 2001;6:25.