Workforce.com

The New Era of Measurement

Measuring the health of companies’ employees is critical to evaluating the ROI of wellness programs.

August 31, 2008
The increasing cost of health care continues to challenge companies to use all means at their disposal to purchase health care in the U.S. effectively and efficiently. Now many leading-edge companies are going beyond managing health care to managing their population’s health.

    This change in perspective is ushering in a new era of measurement. The way of measuring investments in health improvement is no longer gauging whether cost has been avoided. Businesses now want to know whether their health care investments are bringing them greater organizational productivity.

    Businesses are facing global competition for talent, productivity and profitability as a result of an aging workforce and a shortage of skilled talent. To succeed in such an environment, they must have a clear line of sight to the health improvements they can make in order to create an optimally healthy workforce.

    To meet this requirement, it is essential that the measures they use are meaningful and integrated, and that they impose a radical shift in focus to the individual level—first evaluating the health of the employee and then the health of that worker’s dependents.

    Employers are primarily using financial metrics, such as changes in annual overall benefit costs, pharmacy costs, health care utilization and purchase price to drive their program assessment efforts, according to Hewitt Associates’ recent survey "The Road Ahead: Driving Productivity by Investing in Health 2008."

    Of course, focusing on costs is a necessary and appropriate part of management. However, mitigating the cost impact of health care delivery is only one element of success. Likewise, the health care system itself is only one factor that factors into the health of an employer’s population.

    Health risk is becoming a more important factor in driving health-improvement investments. A variety of factors contribute to that risk, such as genetics, current state of health and health behaviors. Health-risk influencers include demographic, behavioral, cultural, environmental and social factors. Evaluating, monitoring and addressing all modifiable health-risk factors will be critical to directing a company’s investments and evaluating the return and value of this investment.

    With the shift from a cost perspective to an investment perspective comes the requirement to modify the cost-measurement approach that employers have been successfully employing. An evaluation of program success must include measuring the health of the population and changes in that health over time, and determining the contribution that health investments make on productivity and company profitability.

    In "Two Roads Diverged: Hewitt’s Annual Health Care Survey 2008," an overwhelming majority of employers (88 percent) indicated a growing desire to focus on long-term solutions that target the health and productivity of their workforce. More than two-thirds of employers in that survey recognized the need for utilizing health care data and measurement to drive their long-term strategy.

    At the same time, though, 58 percent of employers participating in Hewitt’s "Investing in Health" survey said they do not receive the comprehensive reports and analytics necessary to support their health and productivity initiatives.

    Clear objectives are essential to an effective measurement strategy, but such objectives can be defined only with a solid understanding of the health of the population and of the areas in which an impact can be made. Collecting and aggregating a variety of data to establish a baseline and understand the characteristics of the population are important first steps to developing meaningful metrics. Evidence-based objectives support the establishment of measures that can demonstrate to leadership that health is a sound business investment.

    With a full understanding of the current state of health within your population, it is important to focus actions on the key health drivers. Establishing targeted health improvement initiatives will address the key characteristics of your population that contribute to improving health, productivity and profitability.

    A measurement strategy must allow you to answer the critical questions that determine whether the steps you have taken are making an impact and meeting your strategic objectives:

  • What are our key health risks?

  • How healthy is my population overall and how healthy are various segments of the population?

  • Is the health improving or deteriorating over time?

  • What segments of the population are vital to our business sustainability and growth?

  • What health-improvement investments offer the most potential for business return?

  • What initiatives have demonstrated change in level of risk, either as a whole or individually?

  • How are my vendor partners performing in terms of delivering integrated results?

  • Are there barriers to health improvement?

  • How have corporate productivity and profitability improved as a result of all of our actions?

    If your existing measurement approach does not allow you to answer these questions, then it is imperative to re-evaluate your strategy.

    How do you shift from evaluating costs to measuring health and productivity? The best way to do this is to start where you are today. Begin with putting the pieces together—demographics, health behaviors, health care utilization, wellness participation rates, prevention activities, workplace environment (lost time, workplace injuries/deaths) and clinical outcomes.

    Draw on a variety of data elements to paint the picture of your population’s health. Looking at these elements independently is important, but is not as effective as looking at how each independent factor contributes to the overall picture of health. It’s challenging but necessary to turn these segmented data elements into specific measures tied directly to business results.

    Here are just a few examples of the types of metrics that measure the impact of health initiatives on productivity and business profitability: level of customer satisfaction, production output, accuracy and safety goals, changes in health risk and employee costs as a percentage of payroll.

    As employers noted in the "Investing in Health" survey, obtaining the "right" data is difficult, but essential to their long-term, shifting perspectives. Employers must have access to detailed employee utilization data that is current, reliable and flexible. Use of a data warehouse is but one step toward achieving this goal, and holding vendors accountable for data coordination is a key contracting requirement.

    However, of utmost importance is a solid analytical structure that allows you to compile the pieces of data into meaningful metrics that demonstrate this critical point: Investing in health contributes to company profitability by fostering productive, at-work employees.