Aligning action with aims: Optimising the benefits of workplace wellness Dr Michael McCoy Medibank Health Solutions Strategy & Corporate Development Health & Wellbeing September 2011
Aligning action with aims: Optimising the benefits of workplace wellness What criteria need to be met to optimise the benefits of workplace wellness programs? Who is involved in determining what those criteria are? How do you when know the program is optimised? Determining the criteria of a successful workplace wellness program involves stakeholders from employer, employee, government and service provider groups Medibank Health Solutions Telehealth Pty Ltd. Private & Confidential
Convergence of Stakeholder Needs More productive employees Employer Agenda: Company & Shareholders Greater employee retention Effective resource utilisation Lower costs Public Health Agenda: Payers - Govt. & Insurers Workplace Wellness Individual Agenda Better health Workplace engagemen t There is a convergence of the government, employer and individual health agendas at the point of workplace wellness PricewaterhouseCoopers July 2010 Wellness
Government Agenda: Key Drivers Based on the current trajectory of healthcare utilisation and costs, by 2046 health spending will exceed all revenue collected by state and local governments Demand Drivers Aging and growing population Increasing lifestyle risk factors Incidence of chronic disease Mental health / addiction incidence Inappropriate use of services Healthcare expenditure as a proportion of GDP rose from 8.5% in 2001 ($58.3b) to 9.2% in 2008 ($103.6b) 1 and is forecast to reach ~19% of GDP by 2050 2 Supply Side Factors Cost & availability of healthcare staff Cost & capacity of hospital infrastructure 1. AIHW Health Expenditure database 2. Treasury projections
Impact of Supply & Demand Drivers: Health Expenditure Demographic and demand factors will create an unsustainable cost trajectory unless prevention and management of chronic disease is addressed in the community Projected Australian Government Health Spending Source: Treasury projections. Based on current arrangements.
Demand Drivers: Demographics Australia has both a growing and ageing population; both factors increase demand for healthcare and the cost of deliver Population (millions) Life expectancy (Years) 21.2 CAGR 1.6% from FY2007 to FY2014f 21.6 21.9 22.2 22.5 22.7 23.0 23.3 78.7 79.0 79.3 79.7 80.0 80.3 80.6 80.9 2007 2008 2009 F2010 2011f 2012f 2013f 2014f Source: IMF World Economic Outlook Database 2009 1998 1999 2000 2001 2002 2003 2004 2005 Source: Australian Bureau of Statistics 2010 % of population by age bracket Commentary Year 2051 Year 2006-15% -10% -5% 0% 5% 10% 15% Source: Indicators for Chronic Disease and their Determinants, 2008 85+ 80 84 75 79 70 74 65 69 60 64 55 59 50 54 45 49 40 44 35 39 30 34 25 29 20 24 15 19 10 14 5 9 0 4 The 2010 Intergenerational Report forecasts the population aged >65 will increase from 14% in 2010 to 23% by 2050 Population is projected to grow from 22 million people in 2010 to 36 million by 2050 (source: Treasury estimates)
Demand Drivers: Chronic Disease In 2008, chronic diseases (including cancers) were responsible for more than 80% of the burden of disease and injury in Australia Estimated Australian population with one or more chronic disease by age (000 s) 1,642 2,948 2,393 DALYs by cause 2003 (%) Musculoskeletal 4% Diabetes 5% Other 14% Cancer 19% 560 597 0-14 15-24 25-44 45-64 65+ Source: Australian Bureau of Statistics and 2004-05 National Health Survey Note: 2005 chronic disease percentages applied to 2010 Australian population Injuries 7% Chronic respiratory 7% Neuro-logical 12% Source: Burden of Disease in Australia, 2003 Mental 13% Cardiovascular 18% Prevalence of selected chronic diseases in population (%) 30.0% 24.0% Increase in select diseases 2001-08 ( 000) 2,309.8 2,109.5 1,812.6 10.7% 8.3% 782.2 754.7 554.2 699.6 1,079.10 818.2 2001 2005 2008 Cardiovascular disease Psychological problem Asthma Diabetes Diabetes mellitus Heart, stroke and vascular disease Mental and behavioural problems Source: Knox et. Al 2008 Source: National Health Survey 2007-2008
26.4% 24.8% 23.3% 21.5% Demand Drivers: Mental Health Mental health and addiction conditions are a highly prevalent sub-set of wider chronic illness; rates are often under-reported due to lingering stigma issues Mental disorders prevalence (% of population) Mental disorders by age group (%) 20.0% 14.4% 13.6% 6.2% 5.1% 8.6% 5.6% Anxiety disorders Affective disorders Source: National Mental Health Survey 2007 Substance Use disorders Any 12-month mental disorder 16 24 25 34 35 44 45 54 55 64 65 74 75 85 Source: National Mental Health Survey 2007 Depression by age and sex (% of population) 10.7% 8.4% 8.5% 7.3% 6.9% 6.0% 4.9% 5.4% 2.9% 3.2% 2.4% 0.8% Substance use disorders (% of population) 3.8% 2.1% 2.2% 2.1% 0.7% 0.8% 18-24 25-34 35-44 45-54 55-64 65> Male Female Source: Indicators of Chronic Diseases and their Determinates Alcohol harmful use Alcohol dependence Drug use disorders Male Female Source: National Mental Health Survey 2007
Impact of Supply & Demand Drivers: Health Expenditure The healthcare cost alone from smoking, alcohol and obesity alone was estimated at nearly $6 billion in 2004 05 (Collins and Lapsley) Healthcare expenditure (historic) Healthcare spend per capita % % % % % 8.8% 8.7% 8.5% 8.6% 73.5 68.8 63.1 58.3 9.0% 9.0% 9.1% 9.2% 103.6 94.9 81.1 86.7 3,022 3,230 CAGR 7.1% from FY2001 to FY2008 3,479 3,672 4,001 4,218 4,546 4,874 % 2001 2002 2003 2004 2005 2006 2007 2008 Expenditure Expenditure % of GDP Source: AIHW Health Expenditure database Health prevention expenditure as % total health expenditure 4.9% 3.3% 2.4% 1.9% 1.7% 0.6% NZ US Japan Portugal Australia Italy Source: OECD Health Data 2009 2001 2002 2003 2004 2005 2006 2007 2008 Source: AIHW Health Expenditure database Commentary At current growth rates, annual healthcare costs for type 2 diabetes will increase from $1.3 billion to $8 billion by 2032 (Goss) Total economic costs of smoking were estimated at >$31 billion in 2004 05 (Collins and Lapsley)
Workplace Health & Wellbeing Programs What Employers Want What s the employer s agenda? Why should employers care? Why do employers care now? How do they see their role in the future?... We thought we d ask
Economic and Business Cost Implications Though rarely recognised at an individual business level workplace health issues are a significant burden to the economy In 2005 2006, the cost of presenteeism to the Australian Economy was estimated to be $25.7 billion (1) The Impact of lifestyle related risks on the productivity of the Australian workforce is estimated to be between 2.5 and 3% of the Australian GDP (2) Mental health symptoms in Australia result in a loss of $2.7 billion in employer productivity (3) Source: (1) Medibank Private, Sick at Work. (2) Lang, J. Workshop Paper: Prevention & Wellness. (3) Hilton et al. 2010. 11
Workplace Health & Wellbeing Programs What Employers Want A Survey of 20 Australian employers Conducted by leading international consulting company Sponsored by Medibank Health Solutions & Fitness2live Diverse organisations: from ASX top 10 to organisations of a few 100 employees Diverse industry groups Diverse employee demographics May July 2010
Workplace Health & Wellbeing Programs What Employers Want Current wellness programs What employers do Why they do it How they measure it / Whether it works Future wellness programs What employers would like to do Why they d like to do it Whether they can do it / Barriers to doing it
Workplace Health & Wellbeing Programs What Employers Do Now Decreasing participation in: Seminars EAP Gym use Increasing participation in: Mental health services BCPs Online services Strong participation in: Health checks Onsite group activities
Workplace Health & Wellbeing Programs What Employers Do Now Drivers influenced by either: OH&S approach hard metrics i.e. absenteeism, compensation claims, OR; HR approach soft metrics i.e. Engagement, participation Growing influence of: Ageing workforce Chronic illness on compensation claims
Workplace Health & Wellbeing Programs What Employers Do Now What is measured is influenced by either: OH&S approach vs. HR approach Capacity of internal systems and service providers to measure High incidence of no / ineffective measurement is driven by inability to measure rather than a lack of need
Workplace Health & Wellbeing Programs What Employers Do Now Two main barriers: Poor participation / employee engagement Insufficient / poor evaluation Success with either or both of these are prerequisites of securing executive support Conversely, budget is not a significant issue if the business case can be demonstrated
Workplace Health & Wellbeing Programs Summary of Current Practice The content of programs is shaped by: The types of services employers want, that being driven by practical considerations - measured or perceived need amongst employees - rather than an overarching, forwardlooking strategy; and The types of services providers can and, perhaps more importantly, can t deliver, the most significant failure of capacity involving the collection of data relating to program efficacy (changes in employee health) and the correlation of that data with productivity measures (absenteeism, presenteeism) The success of programs is shaped by: Employee engagement effectively promoting services that employees want to participate in; and The ability to measure hard (health outcomes, linked to productivity measures) and soft (engagement, participation) success metrics If success can be demonstrated, executive commitment will at least sustain current practice
Workplace Health & Wellbeing Programs What Employers Want Types of services: Mental health services Behaviour change programs Delivery of services: Onsite / face-to-face; and Online, podcast, telephone Measure the effectiveness of intervention programs & link them to productivity data
Workplace Health & Wellbeing Programs What Employers Want Want: Funding, grants, tax breaks Don t want: Mandated provision of services Employers will continue to provide wellness programs without government intervention
Workplace Health & Wellbeing Programs Barriers to Funding Program Growth Lack of sufficient data to convince Executive team of value Ongoing, resource-intensive innovation & promotion required to keep employees engaged Having sufficient internal resources to support day-to-day implementation and promote participation Lack of central repository of what works Small medium enterprises (SMEs) face particular challenges (e.g. resources and capacity to deliver) so government was seen to have a key role to support SMEs
Workplace Health & Wellbeing Programs Future Needs Services Expanded provision of mental health services in the workplace Provision by multiple media: onsite & via technology Government assistance Funding &/or tax breaks Standardisation of assessment criteria & creation of objective, evidence-based repository of effective services Measurement Improved capacity to report on changes in employee health Improved capacity to link health changes to workplace productivity
Commercial Drivers What do organisations value? Business purpose = Creation of Wealth Organisational health importance: Businesses generally don t know how to manage the health of people, occupational health professionals do Corporate social responsibility/ proactive approach to minimising regulation Return on Investment; data & reporting Risk Reduction Reduce undesirable human factors Injury Absenteeism Presenteeism Primarily OH&S dept Employer of Choice Increase desirable human factors Health & happy workforce Talent attraction/ retention Productivity Primarily HR dept 23
Commercial Drivers Industry and Risk profile: High Risk organisations have more workplace injuries and a greater focus on OH&S (risk reduction) to minimise insurance premiums, claims costs and other indirect costs associated with injury and regulation Low Risk organisations have a greater focus on employee benefits, reducing absenteeism & being an employer of choice Direct and indirect costs: Employer as funder pays $7bn into Workcover schemes premiums Self insurers cost high Other costs: Self insurers direct via employer Direct costs paid for via employer (non compensable) Government initiatives have commenced through State Workcover authorities DSP pension costs $13bn per year Opportunity costs of lost productivity through absenteeism and presenteeism $35bn 24
Key Industry Challenges Due to a lack of adequate data, workplace health services are regularly purchased (whether discretionary or statutory spend) without a good understanding by the payer of the of the root causes of health risks, or the impact of solutions provided Industry Focus Root Causes Manifeste d Issues Health Intervention s Provided Outcome Evaluation Rarely understood, especially the broader organisational causes Few tools to identify issues at an early stage Purchased, often based on statutory requirements, from a multitude of largely undifferentiated providers Rarely understood with no standardised metrics available Greater insight here would mitigate downstream issues and the need for service provision Greater insight here is critical to better solution design and delivery 25
Workplace Health & Wellbeing Programs Roadmap to Sustainable Success Program breadth & effectiveness Program promotion & delivery More employees exposed to programs that improve health and engage them in their workplace Demonstrate ROI Link outcomes to productivity Measure outcomes Achieve executive support Consolidate workplace wellness programs as an integral component of Business As Usual
Dr Michael McCoy Medibank Health Solutions Strategy & Corporate Development Health & Wellbeing Mike.McCoy@medibankhealth.com.au July 2010 PricewaterhouseCoopers Wellness Slide 27
Facilitator welcome Natasha Mitchell