Costs of Healthcare
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Understanding the Total Cost of Healthcare

The direct medical costs associated with poor health practices and chronic health conditions are well-documented. But the impact of indirect health-related costs on organizational performance has come into greater focus this past decade.

The discipline of health and productivity management has shown the following associations:

  • Indirect factors such as absenteeism, disability, and job impairment (eg, presenteeism) can be 2 to 3 times the direct medical costs.1,2
  • Chronic health conditions (eg, heart disease, diabetes) and/or associated risks such as obesity, tobacco use, and low physical activity are linked with1:
    • Higher direct medical costs.
    • Greater job impairment (eg, presenteeism).
    • Higher rates of disability.
    • More sick days and absenteeism.
    • Higher workers' compensation claims.
    • Higher injury rate.

Healthcare costs can have a direct and indirect impact on your company.

The Toll of Chronic Disease

Chronic disease is overwhelming healthcare. In 2000, Bank One spent3:

  • Nearly half a trillion dollars in total health-related costs.
    • 76% on presenteeism, short- and long-term disability, and absenteeism.
    • Only 24% on direct medical costs.

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Disease-Related Productivity Loss

Bank One is not the only organization experiencing the toll of chronic diseases. Here are more examples of disease-related productivity loss in the workplace:

  • Compared with healthy employees in a manufacturing environment, employees with severe allergy symptoms incurred 1.67 times more absenteeism and nearly 3 times as many injuries.4
  • Workers with depression experience between 1.5 and 3.2 more short-term disability days per month.5
  • In 2002, men with diabetes lost 3.1 more workdays per year than men without diabetes. Women with diabetes lost 0.6 more workdays than women without diabetes.6
  • Estimated costs of presenteeism due to asthma symptoms are estimated to be 72% of total health-related expenses.7
  • Estimated presenteeism costs are 25% of total health-related expenses for respiratory infections.7

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References:

  1. Edington DW, Burton WN. Health and productivity. In: McCurneu RJ. A Practical Approach to Occupational and Environmental Medicine. 3rd ed. Philadelphia, PA: Lippincott Williams & Wilkins;2003:140-152.
  2. Loeppke R, Hymel PA, Lofland JH, et al. Health-related workplace productivity measurement: general and migraine-specific recommendations from the ACOEM expert panel. J Occup Environ Med. 2003;45(4):349-359.
  3. American Heart Association. Healthy people are the foundation for a productive America. TrendWatch Report. Washington, DC: AHA; 2007. http://www.hospitalconnect.com/ahapolicyforum/trendwatch/content/
    TW706SinglesFINALTOWEB.pdf. Accessed November 14, 2007.
  4. Bunn WB, Pikelny DB, Paralkar S, et al. The burden of allergies—and the capacity of medications to reduce this burden—in a heavy manufacturing environment. J Occup Environ Med. 2003;45(9):941-955.
  5. Kessler RC, Barber C, Birnbaum HG, et al. Depression in the workplace: effects on
    short-term disability. Health Affairs. 1999;18:163-171.
  6. American Diabetes Association. Economic costs of diabetes in the U.S. in 2002. Diabetes Care. 2003;26(3):917-932.
  7. Goetzel RZ, Long SR, Ozminkowski RJ, et al. Health, absence, disability, and presenteeism cost estimates of certain physical and mental health conditions affecting U.S. Employers. J Occup Environ Med. 2004;46(4):1-15.