In a back-and-forth conversation, Harvard Medical School's Ron Kessler and Carol Harnett discuss some healthcare-plan design and ROI strategies for HR leaders, including the impact of recurring or chronic health conditions on accident and injury prevention.
That's why David Brooks' and Gail Collins' biweekly exchange in the New York Times is a must-read for me.
I persuaded a mentor and friend -- Ron Kessler, a professor of health care policy at Harvard Medic al School -- to create a Brooks/Collins-like discussion with me on ways employers can optimize employee performance through their benefits framework.
CH: One of the topics I frequently consider is how employers can minimize employee-benefits costs while maximizing worker performance and corporate profitability.
RK: Return on investment is extraordinarily local. What makes sense for one company doesn't make sense for another.
For example, some businesses may largely hire hourly employees. These workers do a good job while they're at work and then leave the workplace behind. Salaried employees, on the other hand, may be thinking about work projects all the time.
CH: So, corporations often structure benefits differently for hourly employees than for salaried workers. Companies may also have different employee demographics and job types.
RK: Call centers have large female populations doing sedentary work who -- from a health perspective -- are more susceptible to depression. On the other hand, manufacturing plants are managing male workers and focusing on accident prevention.
One of the other things companies need to take into account is their overall corporate risk profile. The cost of one accident -- like the BP oil spill in the Gulf -- overshadows the ROI of all its employee-benefits programs.
CH: Absolutely. I worked with a major airline's HR leader who said the company was still dealing with litigation costs associated with a crash 15 years after the accident.
RK: Legal costs can swamp healthcare and disability costs. While safety goes well beyond employee benefits, HR executives can contribute to operational effectiveness by understanding benefits costs, investment opportunities and the nuances of their particular workplaces.
CH: It is amazing how little we know about the unique characteristics of our overall workplaces.
RK: That's because we understand the things we can measure.
It's relatively easy to understand healthcare utilization. Healthcare costs are vivid. Employers know how much money they're spending on premiums, emergency-room visits and prescriptions.
What none of us know is what conditions are not being treated. We know the implied costs of depression on the workplace and how to treat depression, but we don't know how many employees go undiagnosed and, therefore, untreated.
CH: I remember you referencing Robert Rosenheck's research in one of your presentations. Rosenheck demonstrated the surge in non-mental healthcare utilization after a company restricted mental-health coverage.
RK: Reducing demand by restricting benefits may not be a good business move. The money saved can result in unintended expenses elsewhere.
CH: Is there any low-hanging fruit left where HR executives can find ROI?
RK: Profit centers can be found around acute prevention; in other words, an intervention, which produces an almost-immediate savings.
CH: According to the Tufts-New England Medical Center's comparative effectiveness database, less than 20 percent of prevention strategies produce cost savings. Most of these strategies are related to acute prevention.
RK: If your workforce turns over every three years, you can't focus on chronic prevention initiatives that may reduce risk 20 years from now. HR leaders need to focus on the time window of effectiveness.
Acute prevention yields the best ROI when it's focused on challenges like seasonal allergy management, and accident and injury prevention. In fact, there's a connection between seasonal allergies and the rate of accidents.
CH: I remember when Claritin was reclassified as an over-the-counter drug. You began doing research on the impact of seasonal allergies on the workplace after that.
RK: Accidents go up during the allergy season. Employees may take a sedating OTC medication like Benadryl, which can be the equivalent of having three alcoholic beverages. Making certain that workers use non-sedating medications is a direct method to cut down on the accident rate.
CH: HR executives can influence their employees' accident and injury rate -- both on and off the worksite -- by making certain the pharmacy-benefit formulary is comprised of non-sedating allergy medications.
What about the impact of other acute prevention programs like flu shots?
RK: There is good data available about flu shots. HR executives can make a clean decision about whether to offer a worksite-based program and pretty quickly determine whether the initiative had an impact afterward by following the accident and sickness rates during the flu season.
The challenge with flu-shot initiatives is you have to make an educated guess -- using information from the CDC and others -- about whether it will be a bad flu season. If there's a high flu rate, the employer will easily make back the costs. But, if it's not a bad flu season, the program won't pay for itself that year.
Employers should also factor in how easily their staff is replaced and the impact increased worker absence has on the business. In the high-tech industry, it makes sense to have an annual flu-shot program. But it may or may not show an ROI in companies that rely heavily on hourly workers.
CH: There are many little decisions that HR leaders have to make regarding employee benefits. What's the best way for them to sort through the information?
RK: I think HR executives can use one or several approaches to making decision about employee benefits.
First, they can play it by ear and follow their gut instincts. Some companies may want to offer bare-bones benefits and others may want a rich benefits package.
Second, benefits leaders can hire a management consultant who can share the experience of other employers in similar industries.
Third, HR leaders can systemize their decision-making beyond a consultant's experience by joining an employer-based membership organization like the National Business Group on Health or the Integrated Benefits Institute.
Employers gain access to benchmark information based upon different cuts of the data, including industry, benefit-plan design and outcomes that are important to them, such as healthcare costs and absence rates.
Finally, the highest level of what's available now is to work with a company that provides services that directly focus on individual corporations and their distinct challenges. The service provider uses outcome measurements that are important to the employer.
This last approach is only useful if the company is large and has a generous benefits package. We don't know if this approach is cost-effective yet, but it's promising.
CH: What about small employers? Is there anything they can do to get access to benchmark data?
RK: What I'd like to see is for small employers to work together on a regional basis to pool their data and do things that make sense in that specific area of the country.
CH: I know of a small town in Iowa where the local citizens rotate among three employers -- workers cycle through the three companies about once every 10 years. The companies made a decision to put the same acute and chronic prevention programs in place since -- at one point or another -- they would each benefit.
There seems to be a lot of interest lately in the impact of an employee's global well-being on employee performance and loyalty.
RK: There is a relationship among keeping employees engaged, dispositional optimism and employee effectiveness.
There's a likelihood that focusing on employee well-being at companies like the SAS Institute and Google will work, but it will probably fail at other companies.
We're simply not good yet at understanding how to foster positive well-being.
CH: So, is there anything HR executives should put on their radar that may produce a positive return?
RK: One place where everything comes together -- acute prevention, chronic-condition management, safety and legal costs -- are accidents and injuries.
About one in five accidents is caused by a chronic condition. For example, musculoskeletal conditions can lead to falls, and untreated ADHD can lead to four times as many car accidents.
Employers should consider investing in treatment for certain types of conditions that are particular to a large number of their employees and can result in increased risk for accidents and injuries. Using an experimental prevention study design, employers can follow whether treatment brings down the injury and accident rate almost immediately.
This type of approach is much more likely to yield a positive ROI than trying to help employees lose weight.
Carol Harnett is a widely respected consultant, speaker, writer and trendspotter in the fields of employee benefits, health and productivity management, health and performance innovation, and value-based health. Follow her on Twitter via @carolharnett and on her video blog, The Work.Love.Play.Daily.