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 (i.e., presenteeism) can be 2 to 3 times the direct medical costs.^1,2
Chronic health conditions (e.g., 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 (e.g., presenteeism).
- Higher rates of disability.
- Higher sick days and absenteeism.
- Higher workers' compensation claims.
- Higher injury rates.

The Toll of Chronic Disease

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

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.³

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 to 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
Employees with irritable bowel syndrome (IBS) miss nearly 3 times as many workdays (i.e., 13.4 days vs. 4.9 days) as employees without IBS symptoms.⁸
In a retrospective study of General Motors workers, ischemic heart disease accounted for the highest rate of disability-adjusted life-years (DALYs)–an aggregate index of years of life lost and years lived with disability.⁹
When migraine symptoms were present, sufferers reported 3.2 workdays lost to absenteeism and 4.9 workday equivalents lost to reduced effectiveness annually.¹⁰

References:

Edington DW, Burton WN. Health and productivity. In: McCurneu RJ: A Practical Approach to Occupational and Environmental Medicine. Philadelphia: Lippincott Williams & Wilkins. 3rd ed. 2003:140-152.
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.
American Heart Association. Healthy people are the foundation for a productive America. TrendWatch Report. Washington, DC: AHA, 2007. Available at http://www.hospitalconnect.com/ahapolicyforum/trendwatch/content/TW706SinglesFINALTOWEB.pdf. Accessed November 14, 2007.
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.
Kessler RC, Barber C, Birnbaum HG, et al. Depression in the workplace: effects on
short-term disability. Health Affairs. 1999;18:163-171.
American Diabetes Association. Economic costs of diabetes in the U.S. in 2002. Diabetes Care. 2003;26(3):917-932.
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.
Smith DG, Barghout V, Kahler KH. Tegaserod treatment for IBS: a model of indirect costs. Am J Manag Care. 2005;11(1):S43-S50.
Friedman C, Mckenna MT, Almed F, et al. Assessing the burden of disease among an employed population: implications for employer-sponsored prevention programs. J Occup Environ Med. 2004;46(1):3-9.
Burton WN, Conti DJ, Chen CY, et al. The economic burden of lost productivity due to migraine headache: a specific worksite analysis. J Occup Environ Med. 2002; 44(6):523-529.