Source Newsroom: Journal of Occupational and Environmental Medicine
Countertrend Success Story Has Implications for Health Care Reform
Newswise — PHILADELPHIA, PA — At U.S. manufacturing company Navistar, a strategy focusing on "total health burden" has achieved breakthrough reductions in direct health care costs, with even greater savings in indirect costs, reports the August issue of Journal of Occupational and Environmental Medicine, the official publication of the American College of Occupational and Environmental Medicine (ACOEM).
"Attention to the drivers of direct and indirect costs—which capture what is being purchased and why it is being purchased, and together comprise total health burden—has helped put this employer's healthcare investment on a markedly more sustainable path compared to national cost trends," comments lead author Harris Allen, PhD.
Allen and a team of health and productivity experts examined the change in total health burden for Navistar and its active workforce from 2001 to 2009. The program included a wide range of initiatives focused on maintaining and improving individual health, managing and reducing organizational health burden, and maximizing the value of health benefits.
Using 42 measures developed from surveys and claims, the researchers found that total direct costs—driven by transactions that employees have with the health care system—decreased by 16 percent. After adjustment for other factors, the drop remained significant at 8.5 percent, or $426 per employee. By contrast, comparable U.S. per capita expenditures during the same period started from an equivalent baseline but increased by 22 percent.
The study showed even larger savings in indirect costs, such as absenteeism, short- and long-term disability, workers' compensation, and "presenteeism"—reduced productivity while at work due to health conditions. For hourly workers, the total adjusted reduction in annualized indirect costs was $3,280 per employee. The reductions for salaried workers were smaller but still significant.
These aggregate-level savings were achieved with minimal "cost shifting" to employees. Two papers coming up in the September issue of JOEM will focus on recent steps by Navistar to extend this strategy to diseases that have posed unique challenges to its implementation: chronic obstructive pulmonary disease and autoimmune disorders.
Dr. William Bunn, Vice-President for Health, Safety, Security and Productivity at Navistar, was one of the study’s authors. He comments, “In this era of unrelenting increases in health care costs, what has enabled our company to achieve a more sustainable health care future has been not only the careful attention we have devoted to measures of both direct and indirect costs, but also the steps informed by these measures that we have taken to promote primary, secondary and tertiary prevention to manage these costs."
The authors hope their study will help more employers to better understand how indirect costs affect their organizational capacity to survive and thrive in the marketplace. They maintain that indirect cost measures should be considered when assessing the true value of health and wellness approaches included under health care reform.
They also believe their findings make the case for including indirect cost measures in the “Final Rule” framework for performance assessment and payment developed for accountable care organizations by the Centers for Medicare and Medicaid Services—particularly as ACOs for the commercially insured are gaining momentum. Adds Dr. Allen, "While indirect cost measures would pose logistical challenges, their upside potential for promoting the long-term prospects for acceptance of change in health care merits their consideration as measures of ACO performance."
About the Authors
Dr. Allen may be contacted for interviews at email@example.com. Interviews are also available with co-authors William B. Bunn III, MD, JD, MPH, and Dan B. Pikelny, MA, MBA, CEBS from Navistar; William H. Rogers, PhD, from Tufts Medical Center; and Ahmad Naim, MD from Jannsen Scientific Affairs, LLC.
ACOEM (www.acoem.org), an international society of 5,000 occupational physicians and other health care professionals, provides leadership to promote optimal health and safety of workers, workplaces, and environments.
About Journal of Occupational and Environmental Medicine
The Journal of Occupational and Environmental Medicine (www.joem.org) is the official journal of the American College of Occupational and Environmental Medicine. Edited to serve as a guide for physicians, nurses, and researchers, the clinically oriented research articles are an excellent source for new ideas, concepts, techniques, and procedures that can be readily applied in the industrial or commercial employment setting.