Reports

This report is based on medical evidence presented at sanctioned medical congress, from peer reviewed literature or opinion provided by a qualified healthcare practitioner. The consumption of the information contained within this report is intended for qualified Canadian healthcare practitioners only.

HEALTH RESOURCE LINE

November 2008

Absenteeism Puts Enormous Strain on ROI

Absenteeism and its less obvious counterpart, presenteeism, where an employee is at work but not fully functional because of ill health, is costly. In a test example of an organization with 4,000 full-time employees, Health Canada estimated the impact of work stress in relation to absenteeism and presenteeism to be $1,950,000 in direct and indirect costs in 2008 dollars, over 80% of which were due to absenteeism and almost 20% due to presenteeism.¹

The same assessment model found that the total direct and indirect costs of work stress amounted to 11,880 days lost based on 220 working days in a single firm alone. With such an enormous strain on businesses’ return on investment (ROI), any reasonable CEO might want to know why so many of their employees are absent from work or present in body only. Curiously, employees are not routinely questioned when they miss work or even if they have any chronic illness that could interfere with their ability to perform well—an important lack of information and one which researchers are now beginning to address. After all, if employers had a better understanding of what is keeping their employees at home, they might be better equipped to counter key reasons for absenteeism and keep their employees working.

Compounding the problem is the fact of an aging workforce. By 2011, Health Canada estimates that 41% of the workforce will be between 45 and 64 years of age compared with only 29% in 1991.² An aging population can almost be counted upon to be at greater risk for chronic and costly health complaints. Chronic illness, in turn, is likely to explain the greater rates of absenteeism among older employees compared to their younger counterparts.

According to Statistics Canada, full-time workers between the ages of 55 and 59 lost approximately 10 days due to illness or disability, while 60- to 64-year-olds lost approximately 12 days.³ These rates compared with only seven days for full-time workers between the ages of 35 and 54. An aging workforce will lead to a growing labour shortage. For example, the Conference Board of Canada estimates that the current excess in labour demand will begin to reverse itself by 2014, and that by 2025, Ontario alone could face a shortfall of 364,000 workers, with almost a million people short in the workforce across Canada by the year 2020. ⁴

Lower fertility rates in virtually every country in the Western world will only exacerbate the surge in retirement and the gaping holes it will leave in the workforce once the baby boomers retire en masse. In 2001, the Canadian Federation of Independent Business was already reporting that a quarter of a million jobs at small and medium-sized companies across Canada were vacant due to a shortage of qualified workers. With boom times now bigger than ever in almost every province except perhaps Ontario, qualified workers are at a real premium.

Clearly, keeping valued older employees healthy is in the best interests of all employers and we hope to offer some examples of how this may be done.

Getting a Handle on Illness: First Step Towards Lost Workday Prevention

Getting a handle on why employees are prone to absenteeism—and the resulting cost to business—has to be the first step towards establishing strategies to prevent lost workdays because of chronic illness.

The high cost of depression: Rationale for intervention

Depression is among the most costly of all health problems in terms of productivity losses, according to comparative cost-of-illness studies. To assess the impact of depression on its bottom line, a large information technology firm in the US recently carried out a health and productivity survey in which approximately 7,300 employees completed the World Health Organization Health and Work Performance Questionnaire, one of the few instruments to include measures of absenteeism and work performance.⁵ Nine broadly-defined classes of conditions were assessed, including indices of heart disease, diabetes, musculoskeletal, respiratory and mental disorders.

Although mental problems were not that prevalent among study participants (only 5.6% of respondents vs. 20% for cardiometabolic problems), depression had the greatest adverse effect on work performance out of all commonly occurring conditions and anxiety followed closely behind. Indeed, researchers speculated that depression, possibly in conjunction with other mental disorders, might negatively affect the impact of many physical conditions on work performance. Furthermore, within this single firm’s experience, depression occurring in conjunction with fatigue and sleep disorders as well as anxiety accounted for 40% of an estimated $8.4 million the firm lost annually due to lost productivity.

“Successful treatment of depression might uniquely be capable of ameliorating adverse workplace effects of a broad range of other conditions that often are related to depression,” the authors concluded. This could narrow down outreach and treatment efforts to a subset of depressed employees with comorbid conditions, researchers also suggested.

By targeting efforts to only a subset of workers, employers stand to appreciate especially high ROI from their workplace initiatives.

A toxic metabolic soup

People would have to have been living on the moon if they hadn’t heard about the epidemic of obesity that is threatening to shorten lifespans for the first time since significant gains in longevity have been observed. What they may not appreciate is the degree to which obesity increases their health risks, especially when concentrated in abdominal or belly fat around the waist. Men who have a waist circumference of 102 cm and greater and women who have a waist circumference of 88 cm and greater (less in those of Asian or European descent) are at high “cardiometabolic risk” to develop cardiovascular disease (CVD) or diabetes and, not uncommonly, both.

As explained by Dr. Salim Yusuf, Director of cardiology at McMaster University to Canadian Press writer Sheryl Ubelacker,⁶ abdominal fat is linked to CVD and diabetes for several reasons. Firstly, fat in the abdomen—reflected in a larger waist—is metabolically active, producing various hormones that can promote the development of diabetes, high blood pressure and abnormal blood fats—the latter major contributors to CVD. The same abdominal fat can adversely affect the liver.

The best way of assessing heart attack risk is not by the traditional body mass index (BMI)—a simple ratio of weight and height—but the waist-to-hip ratio, now found to be three times more powerful than BMI in predicting the risk of a heart attack, according to a recent study.⁷

Nevertheless, even if the BMI does not predict heart attacks as well as the waist-to-hip ratio, obese patients, as defined by a BMI of 30 kg/m² or more, cost business staggering amounts of money. In Canada, for example, obesity costs us between $4.3 to $5.3 billion in indirect and direct costs in 2001 dollars.⁸ Employees with a high BMI have average medical costs that are 50% more than normal-weight employees, according to Mary Kaye Sawyer-Morse, clinical manager at Avidyn Health in Addison, Texas.

Furthermore, obese employees are more likely to be absent from work than their normal-weight counterparts. One US study, where researchers examined data from the 2000 to 2004 Medical Expenditure Panel Survey,⁹ showed that for both men and women, the obese were substantially more likely than healthy-weight subjects to miss work, and absenteeism was especially high among men and women who were also diabetic. As researchers pointed out, quantifying obesity-related costs is important because this type of information is needed to help employers assess their ROI for any intervention they may offer to reduce obesity among their employees.

Even after only 12 weeks of intervention, more effective treatment in a group of workers with type 2 diabetes resulted in not just an improvement in symptoms and quality of life but favourable health economic outcomes as well, with more workers with improved glycemic control remaining employed, having a greater productive capacity and less absenteeism than those with suboptimal glycemic control.¹⁰ And we should never forget that high blood pressure, coronary artery disease and diabetes are the three largest contributors to all healthcare expenditures in Canada.¹¹

Based on an extensive literature search, the list of illnesses that have a substantial impact on productivity runs long and includes conditions such as severe migraine, manic-depressive illness, chronic obstructive pulmonary disease, asthma and other types of allergic diseases.

Employers thus have a vested interest in offering workplace programs and improved access to innovative therapies that either prevent these conditions from occurring or at least ameliorate symptoms more effectively so as to enhance productivity among their employees.

Snapshot: Disease-related productivity loss in the workplace

• Employees with severe allergy symptoms incurred 1.67 times more absenteeism and nearly three times as many injuries than healthy employees in a manufacturing environment.¹²

• Employees with irritable bowel syndrome (IBS) missed nearly three times as many workdays (i.e. 13.4 days) as employees without IBS (4.9 days).¹³

• Ischemic heart disease accounted for the highest rate of disability-adjusted life-years—an aggregate index of years of life lost and years lived with disability—in a retrospective study of General Motors workers.¹⁴

• Migraine sufferers reported an annual rate of 3.2 workdays lost to absenteeism and 4.9 workday equivalents lost to reduced effectiveness because of migraine.¹⁵

• Nearly half a million Canadians between the ages of 50 and 69 were unable to work for health-related reasons in 2003. Those not working for health-related reasons were much more likely to smoke or have a BMI in the high to extreme health-risk range.¹⁶

Wellness Programs Healthy for the Bottom Line

The advantages of keeping employees healthy have been well documented over the past several decades and there is no shortage of examples of successful worksite health promotion programs. At the same time, worksite interventions have to be cost-effective or there is no incentive for employers to go to the trouble and expense of designing and implementing a plan for employees. By many accounts, wellness programs appear to be as healthy for the bottom line as they are for their participants.

Some of the best examples of cost-effective workplace programs come from the US, where major companies are leading by example and encouraging employees to follow them into better health. “Leading by Example” was the title of one such initiative put into action by key business leaders to improve employee health by showing them how. Their many endeavours all support the value of various worksite health promotion programs,¹⁷ some specific examples of which included:

• A blood pressure program offered by General Motors resulted in an average $3.50 to $1 savings-to-cost ratio in reduced absenteeism costs in the second year and $3.90 to $1 in the third year.

• An HMO-based depression management program by Maine employers led to a reduction in depression scores in two-thirds of depressed participants with average productivity savings of $2,599 per treated patient.

• The American Society of Safety Engineers calculated that for every $1 an employer invests in an effective workplace safety program, $4 to $6 may be saved in reduced illnesses, injuries, fatalities, medical costs, worker’s compensation claims and increased productivity.

Lower out-of-pocket costs for employees reduce healthcare costs for employer

Perhaps one of the most striking examples of innovative workplace programs that improved employee health and saved the company money is the Pitney Bowes example. As reported by Dr. John Mahoney,¹⁸ Pitney Bowes was concerned about the rising prevalence and costs of diabetes among its employees. Having already identified that poor adherence to required medications was associated with increased healthcare costs in diabetic patients, the company shifted all diabetes drugs and devices from tier 2 or 3 formulary status to tier 1.

This strategy effectively reduced out-of-pocket costs for employees for recommended medications and, as the company reasoned, both eliminated financial barriers to preventive care and increased adherence. In other words, with one simple tactic, Pitney Bowes employees and their covered dependents only had to pay 10% in co-insurance payments—the same levels as they would have to pay for generic drugs—compared to between 25% and 50% that they had to pay over in previous co-insurance payments.

After two to three years, the company documented increased rates of medication use, especially the use of fixed-combination drugs, while average total pharmacy costs dropped by 7%. As importantly, overall direct healthcare costs per plan participant again decreased by approximately the same amount and the rate of increase in overall per-plan-participant health costs at the company slowed markedly.

As Mahoney concluded, “Investing in aggressive diabetes control not only improves blood glucose levels but reduces medical complications and costs and may also boost productivity and lower absenteeism.” As indicated in this preliminary project, health managers may be able to improve care and limit overall costs for diabetes by selectively lowering barriers to appropriate pharmaceutical access.”

Just as significantly, an integration of education plus pharmacy benefits targeted to asthma medications at the same company also proved to be highly cost-effective. As with diabetes, the problem with asthma is not being compliant with appropriate therapy. Realizing this, Pitney Bowes placed all asthma medications on the first tier of its formulary as well, giving employees and their co-dependents

Annual costs for the care of employees with asthma decreased by 15% after the introduction of the co-payment strategy, according to Dr. Brent Pawlecki, associate medical director of Pitney Bowes.¹⁹ “We thought our costs for pharmacy would go through the roof, but our annual pharmacy bill also decreased by 19% for asthma,” Dr. Pawlecki is quoted as saying. “Getting people on the proper therapies helped keep them from having to use expensive rescue medications.”

These findings would not be surprising to value-of-medicine guru Prof. Frank Lichtenberg of Columbia Business School in New York. “I have done many studies that indicate new drugs reduce inability to work, reduce absenteeism and having to retire early for health reasons,” he said in an interview. “So providing newer, better drugs could improve employee productivity and from that point of view, they are worth it.”

Summary

Absenteeism and presenteeism cost business substantial sums of money every year and put an enormous strain on their ROI. An aging workforce is also more likely to be absent because of chronic conditions including CVD and diabetes, while looming labour shortages dictate that organizations keep older workers as healthy and productive as possible. Identifying key contributors to absenteeism and presenteeism is elemental to help redress conditions that make workers unproductive. Once identified, organizations can then implement innovative programs to reduce lost work days by introducing measures such as making required medication more affordable and improving access to health care. Only then will business be in a position to maximize worker productivity and capitalize on their ROI, all the while making for healthier—and happier—employees.

REFERENCES

1. http://www.hc-sc.gc.ca/ewh-semt/pubs/occup-travail/costs_stress-couts/draft-ebauche-eng.php.

2. http://www.hrsdc.gc.ca/en/lp/spila/wlb/aw/01aging_workforce.shtml

3. http://www.hrsdc.gc.ca/en/lp/spila/wlb/aw/09overview_analysis.shtml#2

4. Report—Ontario’s Looming Labour Shortage Challenges. The Conference Board of Canada. 2007.

5. Kessler et al. J Occup Environ Med 2008;50:809-16.

6. Sheryl Ubelacker. Canadian Press Nov 3, 2005.

7. Lancet 2005;366:1640-9.

8. Katzmarzyk PT, Jenssen I. Can J Appl Physiol 2004;29:90-115.

9. Cawley et al. J Occup Environ Med 2008;50:527-34.

10. Testa et al. JAMA 1998;280:1490-6.

11. Birmingham et al. CMAJ 1999;160:483-8.

12. Bunn et al. J Occup Environ Med 2003;45:941-55.

13. Smith et al. Am J Manag Care 2005;11:S43-S50.

14. Friedman et al. J Occup Environ Med 2004;46:3-9.

15. Burton et al. J Occup Environ Med 2002; 44:523-9.

16. Perspectives. Statistics Canada. Feb 2006–Catalogue no. 75-001-XIE.

17. http://prevent.org/images/stories/Files/docs/LBE_Book.pdf.

18. Mahoney J. Am J Manag Care 2005;11:S170-S176.

19. Asthma in the workplace. Fall 2006. http://www.managedcaremag.com/supplements/0609_asthma_workplace/Asthma_Workplace.pdf