Measuring
the Effectiveness of Health and Wellness Programs using Cost Effectiveness
Analysis
William L. Matzner, MD, PhD,
MBA FACHE, FACP
Overview
Health and Wellness programs that appeared in the corporate
world two tot three decades ago were considered more an employee perk than a
focused effort to change behaviors and influence health and performance
factors. However, various emerging trends and solid research data have r led
corporations over the last several years to look at employee health and
wellness an investment in worker productivity, staff retention and an
opportunity to directly impact utilization and cost of a growing healthcare
cost liability. It seems intuitive that a workforce which does not smoke, is
not overweight, participates in exercise programs, and eats healthy will perform more
efficiently and cost the corporation less in term of fewer sick days and lower
healthcare costs . But how does a corporation go from a generally good idea to
implementing a program which has real costs, but conversely has the potential
to foster even more significantly real cost benefits.
Current Situation
Measuring real cost and value has presented considerable
challenges to health and wellness professionals and consultants in the
industry. Some programs have attempted to use Return on Investment calculations
(ROI) to help in decision making. ROI by definition is Net Profit/Investment
(gain from investment-cost of investment)/cost of investment. While at first
this calculation seems simple and straight-forward, there are many pitfalls in
using this calculation, which was really designed for investment in property,
manufacturing equipment, and other capital acquisitions or expenditures.
Opportunity
The use of Cost Effectiveness analysis, a branch of decision
analysis, can likely be used to produce more useful and actionable data and
information. In this analysis, one sets up a decision tree model to determine a
treatment choice, or in this case a wellness program choice, and directly chart
how its costs and benefits affect the decision. In this technique, we
investigate and quantify the costs of certain interventions and their outcomes.
One can also include opportunity costs (the cost of not doing something) in the
model. The benefit is typically measured in terms of Quality Adjusted Life
Years which is not only the benefit of living one year longer, but living it in
a quality and enjoyable manner. Techniques have been developed to quantify
this, and from a corporate perspective, it may be correlated directly to cost
associated with various employee outcomes or actions, such as productivity,
absenteeism, turnover, or other such factors as the organization may measure or
choose to measure in the future
In this example, one can evaluate the effectiveness of a
standard treatment for a tumor versus a new treatment. The costs are in the
numerator (dollars), and the effectiveness in the denominator (usually
representing quality adjusted life years).
The best choice is the branch with the lowest ratio
(cost/effectiveness)—here the Standard Treatment arm that Eradicates the
Tumor. Likewise, we could use the cost
of a particular Health and Wellness Program and model how changes in health
will affect the costs and benefits to the workforce at the organization. The
model can be as simple or as complex as one wishes to model it. It can directly
visualize how much an organization may wish to invest in a wellness program in
order to get desired benefits. Although my example is a model of different
treatments for diseases, the analogy is that a particular intervention in a
corporate health and wellness program is a type of treatment that can actually
impact health for the employees.
The benefit of this type of analysis lies in its
flexibility. Although general programs
for corporate health and wellness exist in many organizations, the specific
programs are dictated by a combination of the desire of the employee population
and the desires and needs of the corporation. Benefits can include healthier
employees who can work more efficiently and effectively while at work, and have
less time off for illness. It can also give the employee a sense of belonging
to the organization, which can have secondary beneficial effects for the
organization. Such benefits can be
incorporated into the model in the denominator as a form of quality in the
Quality Adjusted Life Year (QALY) measurement.
A survey could be conducted of the employees in a specific organization
to determine what is most important to them and even quantify just how
important each benefit could be.
From the perspective of the organization itself, there are
numerous potential benefits to the corporation.
Healthier employee populations can work for longer periods of time and
more efficiently. Furthermore, they would have less sick days off which are in
effect an opportunity cost (cost of not having someone at work). This can
further correlate to lower health insurance premiums if statistically fewer employees
are making claims. This is a definite direct cost savings for corporations
participating in health and wellness programs. A model could be constructed to
incorporate the premium costs to the organizations in two scenarios: one with a
particular wellness program and one without.
The difference in cost savings can guide the organization in how much
they could spend on a program and still be ahead from a cost/benefit
perspective.
Another issue arises as to the time horizon for both
investment and at what point the organization can see beneficial effects from
their investment in a particular wellness program. One problem that employers
have a difficult time visualizing when considering a wellness program is the
length of time it will take to see a difference. In general, most corporate wellness programs
will say that it will take 2-3 years to see a difference. Using CE analysis, one can actually track the
benefits over specific time periods. Furthermore, there are advanced modeling
techniques that can simulate the course of chronic debilitating diseases over
time. These models will incorporate the probability that something will happen
as a percentage of certainty per year, and then it iterates the probability
over X number of years to give one an accurate idea of the cumulative effect of
a disease outcome over time. This capability is not at all possible using ROI
or VOI calculations. Since many common
health problems that can affect the corporation fall into this category (heart
disease, lung disease such as COPD, smoking, obesity), cost effectiveness
analysis is the only accurate way to model the outcome of such diseases and the
benefits of intervening through corporate health and wellness programs.
Conclusion
In assessing
the costs and benefits of corporate health and wellness programming and
strategies, an organization may begin with a record review of healthcare
expenditures to gather a picture of current healthcare utilization and the
determination of interventional points of opportunity. A second step would be
to survey the work force based both on demographics and behaviors, as
determined important by the corporate health and wellness director. This
process will develop data points that may be used to then create the type of
analysis presented here.
As a result, this type of analysis can guide the corporate
health and wellness director in deciding which of the many programs that are
presented would be worth implementing. And it provides the executive team with
highly quantifiable data from which to make effective economically sound
employee benefit decisions.
About William L.
Matzner, M.D., PhD, FACP
Dr.
William Matzner works in the area of healthcare economics consulting at
Healthcare Analytics, LLC, in California. He graduated Phi Beta Kappa from
Stanford University. He received his M.D. with Honors from Baylor College of
Medicine. In 1988, he was the Solomon Scholar for Resident Research at Cedar
Sinai Medical Center. Dr. Matzner subsequently was awarded a PhD in Neuro
Economics from Claremont Graduate University. He is board certified in Internal
Medicine and Palliative Medicine. He has researched and published extensively
on the issue of reproduction and immunology in medical literature. He has been
in private practice since 1989, specializing in Reproductive Immunology and
Internal medicine.
Website: https://drwilliammatzner.com
Consulting Website: http://healthcareanalytics.biz
William Matzner, MD (Simi Valley, California), has been practicing medicine since 1989, Internal Medicine and Reproductive Immunology. M.D. with Honors from Baylor College of Medicine.
