When O’Neal Industries launched a comprehensive wellness initiative in 2011, measuring the program’s success was a critical goal. But O’Neal executives wanted to know more than just participation rates and claims data — the most obvious markers of a successful wellness effort. They wanted to understand the link between smoking and workplace injuries, and the connection between arthritis and absenteeism, among other measures. In other words, they wanted to know exactly how health care costs were affecting their bottom line.
“You keep hearing about the data deal, everyone is talking about data, but it’s very hard to understand what companies, consultants and brokers are doing with it,” said Donna Cornwell, human resources manager at the Birmingham, Alabama-based company. With 3,700 employees at 90 locations around the globe, it is one of the world’s largest privately owned distributors of steel, aluminum and other metals.
O’Neal set its sights on measuring the value of wellness. To do that, it is looking beyond medical and pharmacy claims data and participation rates to create a broader picture of what is driving health care costs. O’Neal is also studying sick days, short-term and long-term disability claims, workers’ compensation, and lost time at work to manage both health and productivity.
Surprisingly, with the push for data-driven results, it’s still an elusive goal for most employers. While about 80 percent of companies with more than 1,000 employees offer wellness programs, more than half of these companies do not measure their return on investment, according to a 2012 survey by Automatic Data Processing Inc. Experts say that information overload — the sheer amount of data available for the picking — makes it hard to know what to measure and what it means.
“We are at the integration stage in the data continuum,” said Leah Malof, a benefits consultant with Buck Consultants. “Raw data becomes information. But how do you go from information to knowledge, to those ‘aha moments’ where the data becomes intelligence? Right now employers are struggling with the transition from information to intelligence.”
O’Neal is further along the spectrum than most employers. Cornwell said it has identified key data and contracted with Deerwalk Inc., a Lexington, Massachusetts-based data analytics firm to help O’Neal integrate the numbers, which come from a variety of programs and vendors.
Much of the data, like health, pharmacy and disability, are housed in the HR department, while the rest are collected elsewhere. Many companies use a data warehouse, which is a central repository for electronic files, to store the information. Nearly 60 percent of well-performing companies use a data warehouse, like Deerwalk’s, to collect health care metrics, according to a 2012 survey by the National Business Group on Health.
Storing the Data
Some larger employers, like American Express Co., have their own data warehouse, which is managed by a third-party vendor. And some business coalitions have developed repositories for their members. To help them interpret the findings and develop programs that address them, O’Neal is working with Rebecca Kelly, director of health promotion and wellness at the University of Alabama at Tuscaloosa.
“What are we really measuring?” she said. “In addition to health care costs, you want to look at utilization. Are we seeing ER visits and hospitalizations, but also are we seeing preventive care? Are people getting mammograms, colonoscopies?
Measuring Wellness at the University of Michigan
Since 1980, the University of Michigan Health Management Research Center has worked with nearly 1,000 employers to evaluate the effect of their wellness programs on business performance, studying indicators such as costs, health outcomes and productivity. The center, which is housed in the School of Kinesiology in Ann Arbor, manages a data warehouse that includes five major components:
• Health risk assessment
• Personnel data
• Wellness program participation
• Medical and pharmacy claims
• Productivity records
In addition to collecting and interpreting data, the center also helps employers develop their wellness programs. Companies that have partnered with the center include American Express Co., Ford Motor Co., General Motors Co. and Steelcase Inc.
At American Express, leaders receive an annual report for each of the company’s call-center locations and develop an action plan based on the findings, according to “Data Strategies for Managing Health and Productivity,” a 2013 report by the Integrated Benefits Institute.
Given its ethnically diverse workforce, one area of interest is linking ethnicity and health risks to monitor blood pressure, seat-belt use and smoking, and other conditions that need more attention. Another is linking health risk assessments to customer service scores. Not surprisingly, healthier employees receive higher customer service scores, according to the report.
“But to get a fuller picture of how health impacts business results, employers also need to look at things like absenteeism, which is a measure of lost productivity, and presenteeism — or working while sick or while dealing with a chronic condition like diabetes — which can impact workplace safety. If you improve the health of an employee, are they more productive? If someone is overweight and a tobacco user, do they have a greater chance of injury? The big data opportunity is in all of these data pieces.”
American Express is taking a similar approach. Employee metrics are “cleaned and de-identified to ensure anonymity of employees” before being sent for analysis to the University of Michigan, according to a 2013 report by the Integrated Benefits Institute, a nonprofit research organization in San Francisco. The data are divided into five categories: health-risk appraisal, personnel data, wellness program participation, medical/pharmacy claims and productivity records, according the report. University researchers then make links between health risks, costs and utilization, which allows American Express to track population health trends.
“The recognition by a growing number of employers that financing health care is different from managing health is a sea change in how employers think about the health of their employees,” said Tom Parry, president and CEO of the Integrated Benefits Institute. “It used to be that all they thought about is health care costs, but a growing number are also recognizing that the outcomes of better health go beyond health care cost, they go into productivity, absenteeism. It’s this great expansion of how employers think about health. This is where the world of senior leadership and benefit management comes together. It’s not an easy transition. That’s the transformation occurring now.”
The institute has developed 10 aspects of population metrics to help employers, including O’Neal and American Express, to manage population health and productivity. They include financial expenditures, biometric screenings, utilization, productivity and employee engagement, among others.
In the first year of its wellness program, O’Neal focused on engagement. In the second year, the company looked at behavior changes, like decreased smoking rates, and at clinical improvements, like reduced blood pressure for employees with hypertension. In 2013 the company examined health cost trends and changes in medical-care utilization.
Gaps and ‘Hot Spots’
This information also helps company leaders identify gaps in care and see health “hot spots” throughout the company — areas where certain diseases are more prevalent than others. And that helps them tailor their wellness program to meet those needs.
“It helps you develop and recognize the most valuable programs to offer in that particular area and where to put the emphasis,” Cornwell said. For example, O’Neal’s data show that tobacco use among employees in the Southeast is far more prevalent than among workers in the Northeast, indicating a need for tobacco-cessation programs in those areas.
10 Metrics for Managing Population Health
The lack of standardized methods to measure the financial impact of employee health and productivity is a big obstacle for employers looking to use data to link wellness and financial results. In 2012, the Integrated Benefits Institute published a list of 10 measures to help employers undertake this complex effort.
• Financial costs
• Program participation
• Biometric screenings
• Health risk factors
• Medical care utilization
• Preventive care
• Prevalence of chronic conditions
• Lost work time
• Lost productivity
• Employee engagement
Among the recommendations the institute offers to employers tackling these metrics are:
• Be clear on which metrics are most important to your company.
• Identify your data sources. Health risk assessments might reside within the HR department while short-term disability information is with the disability carrier.
• Define metrics as specific units of measurement, e.g., the health risk assessment completion rate is the number of questionnaires completed divided by the number of eligible employees.
This level of insight is helping the company make the connection between workplace wellness and better business results, something that wasn’t possible before, she said.
And that has important implications for benefit plan design, according to Dr. Bruce Sherman, consulting medical director for Wal-Mart Stores Inc. and medical director for the Ohio-based Employers Health Coalition. The coalition launched its own data warehouse for members six years ago. Currently, there are 25 Ohio-based employers that upload information here.
“One piece of data that data warehouses don’t have is what the employer’s benefit design includes, so it’s helpful for employers to interpret the data in the context of benefit design,” he said. “That provides an opportunity to make specific recommendations.”
That kind of context is invaluable, and employers would be wise to find an expert who can help them act on the findings, something that employer coalitions, like Ohio’s, can provide.
“We provide a missing layer for employers: Analysis in the context of specific employer needs,” he said. “We work with a vendor, but unfortunately, what happens with most data warehouses is that the vendors are very good at generating data and pages and pages of reports. But what employers need is a more targeted set of reports that are actionable for them and help them understand how to take the data and use it in a way that maximizes their benefits strategy.”
Employers will have to change the way they think about wellness, especially those who will be sending employees to the public health insurance exchanges established by the Affordable Care Act. While the ACA encourages workplace wellness, many of the low-cost plans offered on the exchanges do not have a wellness component, Sherman said.
Employees concerned about costs might opt for the cheapest plan, and that could have tremendous bottom-line consequences for employers, he said.
A worker “might say, ‘I don’t need all this extra stuff. I’ll just take my chances,’ ” Sherman said. “Their performance in the workplace may suffer, and the employers will pat themselves on the back and say, ‘We’ve controlled our health care costs,’ but the business end is saying, ‘We’re not being as productive as we should be.’ I think it’s important for employers to think of wellness as the business value of health rather than the cost of health benefits.”
Getting employers to embrace such thinking will take time, but Sherman predicts that change is inevitable and that HR can help lead the way.
“Benefits managers don’t think about overall business health,” he said. “We are just at the beginning of this evolution.”