Lynch Presentation

8/3/2019 Lynch Presentation

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First, Make it Matter:First, Make it Matter:

Health in the Context of Personaland Business Success

Wendy D. Lynch, Ph.D.SeniorScientist,HealthasHumanCapitalFoundation

Founder,LynchConsulting,LTD.

Confidential. Not for Distribution. 2009. All Rights Reserved.

A commendable trendA commendable trend

Health improvement!

Modified actual


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Reduction in sick leave absencesReduction in sick leave absences

Average monthly absences in department


Health and business successHealth and business success

ImproveEmployee

Health

ReduceCost

SaveMoney

ImproveBusinessSuccess

Dosomething

ReduceAbsence

Improve

Productivity

The easy explanation


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Benefits CostBenefits Cost

Health improvement!

What happened?

Modified actual


What happened?



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ImproveEmployee

Health

ProduceCost

Reduction(medical,absence,

prod.)

SaveMoney


DoSomething

!

Medical &absence

costswent up!

Were

losingMoney!

Must beemployees are

sick (ormisbehaving)

Uh oh!

?What if its not

all abouthealth?


The story behind

benefits consumption

The story behind

benefits consumption

Business pressure

Slowing sales

Hiring freeze

Growth

High profits

HCMSGroup, 2009, used with permission


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Human Capital

The potential value an individual or group ofindividuals brings to an organization.

Human Capital includes three assets:

Skills education and experience Motivation attitude and incentives Health physical and mental capacity

DefinitionDefinition

skills

motivation

health


Human CapitalHuman Capital

skills

motivation

health

Human Capital

Assets

How youchoose

Work,Leisure

You Spend

Money

Recognition

Travel

To GetSomethingUseful orSatisfying

Rewards

Intrinsic,Extrinsic,

Monetary,Intangible


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Its a trade-offIts a trade-off

HCMSGroup, 2009, used with permission

SkillsMotivationAnd Health{


What interferes w ith

productivity?

What interferes w ith

productivity?

2007 Health as Human Capital Survey


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ImproveEmployee

Health

ReduceCost

SaveMoney


Dosomething

ReduceAbsence

ImproveProductivity

The easy explanation


What if weve got it

backwards?

Invest in To improve

HEALTH PERFORMANCE

Reward


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Make Human Capital MatterMake Human Capital Matter

Share Rewards: Performance improves Health matters more

Share Responsibilities: Employees become better stewards of resources Consumerism matters more

Promote Human Capital Growth: Employee protect their assets and reinvest

(health)


Shared Rewards (examples)Shared Rewards (examples)

Shared

Rewards

Eligibleforperformancebasedbonuses Yes

Ifyes,toperformancebonuses:

Employeesknowexactlyhowtheirbonusisdetermined Yes

Bonusisatleastpartiallydeterminedbyindividualperformance Yes

Totalamountemployeescanearninbonusorprofitsharingis>10%of

salary

Yes

Cancashinsomeunusedpaidtimeoffat100% Yes

OfferaHealthSavingsAccountwith$1500ormoreinemployerfunds Yes

Matcha401Kdepositat4%orhigher Yes

Coverprevention/screeningsat100%(nodeductible) Yes

Offertraining/tuitionallowanceworthatleast2%ofsalary(and>10%

useit)

Yes

Allworkershavemultipleopportunitiestoadvanceintheorganization,

andoftendo.

Yes


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ImprovePerformance


RewardProductivity

Dosomething Health

Improvement

AlignIncentives


Bonus Eligibil ityBonus Eligibil ity

Eligibility Knowledge About Bonus


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What Makes Health MoreImportant?What Makes Health MoreImportant?

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110% 120% 130% 140% 150%

Bonus Relative to Salary

Percent Rating Health as Important to Work Success

Controlling for age, gender, company size


Relationship between

bonus and medical costs

Relationship between

bonus and medical costs

Controlling for age, gender, salary, previouslevel of illness, year one cost, company,

Health as Human Capital Research Group, 2007

Medical Cost


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Reduction in absences afterimplementing pay-for-performanceReduction in absences afterimplementing pay-for-performance

Average monthly absences in department

After bonus


Likelihood of STD by Percent of

Variable Pay For W hich Employee is Eligible

Likelihood of STD by Percent of

Variable Pay For W hich Employee is Eligible

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

0% 10% 20% 30% 40% 50% 60%

Relative Variable Pay (Variable Pay/Total Compensation)

LikelihoodofHavinga(Non-Pregnancy)STDClai

Likelihood of having a (Non-

Pregnancy) STD Claim, controlling

for age and gender.

Likelihood of STD (Non-pregnancy)Controlling for age and gender.

% Bonus Pay


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Why w e grow human capitalWhy w e grow human capital

skills

motivation

health

Assets

Spend howyouchoose

GrowHuman Capital

MoreOptions

Bigger ormore

reliable

Rewards

Intrinsic,Extrinsic,Monetary,Intangible


Effort Reward ImbalanceEffort Reward Imbalance

skills

motivation

health

Human Capital

Assets

Effort spenton work

You Spend

Opportunity

Recognition

Money

To GetSomethingUseful orSatisfying

Rewards

Whatif rewards

seem out ofbalance?


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Most frequent response: quit

When exposed for periods of time:

Decreased health status

Increased health risks

Effort Reward ImbalanceEffort Reward Imbalance


Increased likelihood of having 3 or more health risks

(inactivity, smoking, BMI , alcohol)

Increased likelihood of having 3 or more health risks

(inactivity, smoking, BMI , alcohol)

Results for men. Controlling for age, job type, marital status, SES.

Kouvonen A. et al. BMC Public Health 2006, 6:24 doi:10.1186/1471-2458-6-24


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Make Human Capital MatterMake Human Capital Matter

Share Rewards: Performance improves Health matters more

Share Responsibilities: Employees become better stewards of resources Consumerism matters more Influence over decisions

Promote Human Capital Growth: Employee protect their assets and reinvest

(health)


Shared Responsibilit iesShared Responsibilities

Shared

Responsibilities

Receiveastatementclearlyidentifyingthedollarvalueofall

investments/benefitstheorganizationmakesontheirbehalf.

Yes

APTObankoftimeoff,ratherthanseparatesickleave Yes

Lessthan100%ofpayduringShorttermdisability Yes

Asinglehighdeductiblehealthplan,withthedeductibleatleast$1500 Yes

Anoutofpocketmaximumof$3000orhigher Yes

Fewerthan31daysofpaidtimeoffperyear Yes

Strongagreementbyemployeesandmanagerstothefollowing2

questions:

Ateverylevel,employeesmakeindependentdecisionsabouttheir

work

Yes

Employeesareencouragedtogivetheirideasabouthowthecompany

candobetter

Yes

Employersponsorsfinancialdecisionmakingsupport Yes

EmployersponsorsCDHPandhealthdecisionmakingsupport Yes


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ImprovePerformance


ReduceCost

(medical,absence)

RewardProductivity

RewardProtection ofResources

Dosomething Health

Improvement

AlignIncentives

Make health matter more


skills

motivation

health

Performance

Rewards

Human Capital Business Investments

We exchangework for pay

The employment contractThe employment contract


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skills

motivation

health

Performance

Rewards

Human Capital Business Investments

When wesubstitute

benefits for

performance

rewards

RewardWhat?

benefit 1

benefit 2

benefit 3

?


skills

motivation

health

Performance

Rewards

Business Investments

When wesubstitute

benefits for

performancerewards

RewardWhat?

Unlimitedsick leave@ full pay

Extreme incentives: BelgiumExtreme incentives: Belgium

1.3% GNP

Some departments35 days/year

65% could beworking

Most labeled with

depression


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skills

motivation

health

Performance

Rewards

Business Investments

When wesubstitute

benefits for

performance

rewards

RewardWhat?

RichMedicalBenefits

Misaligned incentives: healthcareMisaligned incentives: healthcare

Cover BariatricSurgery

New employees

getting surgery

Full coverage and

STD

Most quit in 18months


Incentive Alignment MatrixIncentive Alignment Matrix

0

1

2

3

4

5

6

7

8

9

10

0 1 2 3 4 5 6 7 8 9 10

SharedRewards

SharedResponsibilities

Aligned

Pampered Partners

Entitled Disengaged

AlignedMisaligned

Misa

ligned


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Cost DriversCost Drivers

Non-M

odifiable

Modifiable

(11%)

(28%)

www.hhcf.blogspot.com 2009

Medical and Absence Costs

Workforcedemographics

(28%)

(11%)


Shared Responsibilit iesShared Responsibilities

Shared

Responsibilities

Receiveastatementclearlyidentifyingthedollarvalueofall

investments/benefitstheorganizationmakesontheirbehalf.

Yes

APTObankoftimeoff,ratherthanseparatesickleave Yes

Lessthan100%ofpayduringShorttermdisability Yes

Asinglehighdeductiblehealthplan,withthedeductibleatleast$1500 Yes

Anoutofpocketmaximumof$3000orhigher Yes

Fewerthan31daysofpaidtimeoffperyear Yes

Strongagreementbyemployeesandmanagerstothefollowing2

questions:

Ateverylevel,employeesmakeindependentdecisionsabouttheir

work

Yes

Employeesareencouragedtogivetheirideasabouthowthecompany

candobetter

Yes

Employersponsorsfinancialdecisionmakingsupport Yes

EmployersponsorsCDHPandhealthdecisionmakingsupport Yes


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What happened?



Job ControlJob ControlAssociated with

perceived and reportedhealth outcomes

4-year change in jobcontrol Risks increase

Self-reported healthworsened

Smith P. et al. Psychosomatic Medicine 70:8591 (2008)

Controlling for age, gender, chronic illnesses, previous control, household income, previous health risks and other factors.


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ImprovePerformance


ReduceCost

(medical,absence)

RewardProductivity


Dosomething Health

Improvement

AlignIncentives

Make health matter more

Discretion&

Control


A straight line meansA straight line means

Who consumes = who pays Who delivers = who gets paid

What we want = what gets paid for

Buyer Seller

Direct consequences


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DIRECT EXCHANGE

Boss Worker

Business performance Improving performance

Business..Business..

Pays Gets paid

On e

Transact ion

Direct exchanges promote accessible information


DefinitionDefinition

Consumer:

Everyday purchaser of a good orservice for his own use.


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DIRECT EXCHANGE

Patient Provider

Improve wellbeing Improving wellbeing

Healthcare..Healthcare..

Pays Gets paid

On e

Transact ion


ChoosePBM

Setformulary

RebatesFrom Ph

PickRx

HP setsfees by

complexity

Ptschedule

s appt

Ptselects a

docIn HP

Groupagrees to

fees

Doclearns

payments

HP findsMD

groups

Employernegotiates

HPcoverage

Pt selectsHealth

plan fromwork

PatientHas

Benefits

MD Grouphas billing

office

Doc has35 pts/

day

Patientand

doctormeet

Practice

Learnsfees

Maximize

feesMaximize

benefits

Assign

DXGoal

Who

wantsservice

Whodelivers

service

Who

pays

Who

gets

paid

Whatis

wanted

Whatis paid

for

Vendor 1

Notrequested

Paid by

Instead of

Vendor 2

Vendor 3


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DIRECT EXCHANGE

Patient Provider

Improve wellbeing Improving wellbeing

Healthcare..Healthcare..

Pays Gets paid

On e

Transact ion

Direct exchanges promote accessible information



ImprovePerformance


ReduceCost

(medical,absence)

RewardProductivity


Dosomething

HealthImprovement

AlignIncentives

ActiveConsumersDiscretion

&Control


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What if weve got it backwards?

Invest in To improveHEALTH PERFORMANCE

Reward

Variable payProfit sharingTraining/Tuition

PTO cash backHealth savings accounts

Health protectionConsumerismDecision support

Engagement


Book at:www.hhcfoundation.org

Blog at:www.hhcf.blogspot.com

Alignment:www.hcmsgroup.com

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