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That Sinking Feeling Depression Saps Workers, Employers

January 22, 2008
Related Topics: Medical Benefits Law, Benefits, Latest News
If your bottom line has you feeling blue, don’t let that feeling get out of hand, or the bottom line could really suffer.

That’s because while workers with behavioral health problems—a phrase that encompasses substance abuse and mental health problems—are a small percentage of the overall workforce, they are responsible for a large percentage of overall health expenditures.

Studies indicate, for example, that roughly 6 percent of the U.S. workforce is depressed at any given time. But according to Sibson Consulting in Chicago, behavioral health issues cause 217 million missed workdays annually, account for 7.6 percent of total health care dollars, and are the fifth leading cause of short-term disability and, ultimately, the third leading cause of long-term disability.

Studies also show that 29 percent of health- and productivity-related expenditures are a result of employee absence and disability caused by physical health problems, while 47 percent are caused by mental health conditions, says Sibson consultant Ruth Donahue.

In 2005, JPMorgan Chase was experiencing a 6 percent year-over-year growth rate in psychiatric disability cases compared with a constant 1 percent year-over-year growth rate in medical/surgical disability cases. That growth led executives to launch a two-pronged disability management program that is now paying dividends, says Daniel Conti, a vice president and employee assistance program director for JPMorgan Chase in Chicago.

Medical expenses may be the most obvious cost of behavioral health problems, but indirect costs, including lost productivity, are the bigger financial drain. Stress, depression and substance abuse are among the leading causes of short- and long-term disability and “presenteeism” (coming to work although too sick to be productive), Donahue says. Productivity losses due to presenteeism have been estimated to be as high as 60 percent of the total cost of worker illness, she adds.

Lost productivity from behavioral health problems can be staggering. For example, a 2006 Aetna analysis of claims found that disability absences doubled in length when the cause was depression. In a study of employers—including large private employers and governmental entities—OptumHealth Behavioral Solutions found that the average annual cost of lost productivity due to depression was $5 million per company.

But companies can take steps to lessen behavioral health costs. A good first step is to understand what those costs are, Donahue says. To do so, executives need to look at available data on their plans to see where the most dollars are spent. Employers should also inventory current benefits and analyze how providers are interacting with one another, she notes.

Just letting employees know what benefits exist and encouraging them to utilize them is a good strategy, says Clare Miller, director of the Partnership for Workplace Mental Health, part of the American Psychiatric Association, in Arlington, Virginia. According to a PWMH survey, 40 percent of employees are unaware of the behavioral health benefits their employers offer.

“Employers need to be promoting what they are already paying for,” Miller says, because when employees seek and get mental health care, it pays for itself in improved productivity.

Firms should also analyze who is prescribing antidepressants and encourage employees to go to mental health professionals instead of general practitioners, Donahue says.

Antidepressants are often prescribed by general practitioners, she says, but studies show that a combination of medicine and psychiatric therapy is the most effective treatment. Going to a mental health professional and getting therapy along with medication is more likely to result in better treatment, she says.

Employees who are depressed have higher medical utilization rates, so medical plan costs are higher, explained Francisca Azocar, assistant vice president of research and evaluation, behavioral health sciences, at OptumHealth. Azocar said depression becomes the costliest behavioral health-related issue for employers because when the high prevalence of depression among employees is factored together with medical, pharmaceutical and workplace productivity costs, the total cost to the employer is huge.

Employers should have a systematic program for treating depression, Azocar recommended, including screenings and health risk appraisals. Training managers and organizational leaders to identify depression is also critical because workers may not recognize that they are depressed, she says.

There is evidence that this approach can lower overall expenditures.

A 2007 study by Harvard Medical School, Group Health Cooperative’s Center for Health Studies and OptumHealth found that a systematic approach—in which employers use a comprehensive depression screening, outreach and treatment program to identify employees who might need help—to treating depression results in higher retention, decreased sickness, lower absence rates and increased productivity.

The study noted a 2.6 hour improvement per week in overall work functioning in intervention participants, and calculated the annualized value of the higher mean hours worked at $1,800. The cost of the intervention ranged from $100 to $400 per participant.

JPMorgan’s experience is probably not uncommon, and the results from its relatively new program could offer some insights for other corporate executives.

“Behavioral health was growing faster than other forms of disability, so it was determined that if you can effect any changes, you can save,” says Daniel Conti, vice president and employee assistance program director for JPMorgan Chase in Chicago.

Behavioral health problems also involved the highest rate of recidivism—i.e., re-entering disability status within 12 months of leaving it.

JPMorgan Chase’s disability management program has a twofold approach. First, the company works to ensure that employees get the mental health care they need.

“A disability program cannot operate outside of the health care plan,” Conti says.

Often, health care plans focus on saving money being spent to provide mental health treatment, but overlook money spent elsewhere because of absentee costs.

“Health care costs are driven down in the short term, but it creates greater costs in the future,” Conti explains.

This is particularly true in behavioral health. Normally, as someone gets sicker, the intensity of treatment increases. However, there is usually no correlation between severity and intensity of treatment in behavioral health.

“If the plan provides for eight weeks of mental health counseling, you still only get eight weeks even if you are too disabled to work,” Conti says.

Second, the company worked to bring back employees from their disability leave on a part-time basis.

“Work is used therapeutically,” says Conti, adding that “just sitting home rarely makes someone better.”

Additionally, workers on psychiatric disability are required to be in active mental health treatment and are managed by a mental health clinician. JPMorgan Chase also establishes a dialogue with all treating professionals and medical plans.

Although Conti does not have any hard and fast numbers, there are signs that this approach is working. Early identification and process changes in disability management have led to people returning to work a week sooner and have reduced recidivism by about 50 percent.

“I’m convinced that behavioral health is occupational health in the 21st century,” Conti says. “In the 20th century, it [took] physical health to turn out products, but companies today have to concern themselves with behavioral health because that’s what we run on.”

Filed by Elayne Robertson Demby of Financial Week, a sister publication of Workforce Management. To comment, e-mail

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