A hidden dimension to healthcare costs lies in a workplace perk that most people take for granted: Paid time off to recover from an illness or injury. And most employers can improve their approach and improve health while reducing lost time by focusing on the right people, based on research by HCMS Group.
Work time lost because of illness or disability represents a major indirect cost in addition to the direct expenses of healthcare and other employee benefits. Sick days, disability, and workers’ compensation time off run into the millions of dollars every year for large employers and into the hundreds of billions for the U.S. economy, studies have shown.
The average worker with a disability claim uses about 11 days of recovery time a year, costing employers $5,577 annually (see figure 1 below). That is based on 10 million lost-time episodes from HCMS Group’s Research Reference Database of almost 4 million people covered by more than 300 employers.
But those averages mask the true nature of the issue. People in the 5% of the population that accounts for more than 50% of healthcare costs consume much more recovery time. For them, disability and sick time adds up to almost 92 days a year and costs almost $42,000. By comparison, members of the lowest-cost 50% use fewer than 2 sick days a year at a cost of less than $1,300. Clearly, the high-cost 5% group offers a great opportunity for helping people return more quickly to health and work, saving money on recovery time.
This is where most employers could improve their management approach. Almost every disability-management program in use today focuses on a patient’s primary medical problem. There’s a whole industry built around “disease management.” Do a Google search on that term, and you get more than 41 million entries.
What’s wrong with that? Well, a person’s primary disease is often only a relatively small part of the picture, based on more than a decade of research on the high-cost 5% group by HCMS. These are people with complex health needs who typically have 11 medical diagnoses and 10 healthcare providers, and are taking 10 prescription medications, HCMS researchers have found.
The additional conditions, known as comorbidities, account for anywhere from 50% to more than 90% of total healthcare costs for people in the 5% group, according to HCMS data (see figure 2 below). For example, among people with cardio-metabolic syndrome–one of the highest-cost diseases–the primary heart condition amounts to just 9% of total medical costs. For those with a musculoskeletal condition, the cost of treating the basic injury to the body’s structure of bones, joints and muscles comes to just 24% of the total.
Consequently, disease management that focuses on a single dimension of a person’s set of conditions will fail to address most of what else is keeping that employee away from work. The main takeaway from these research findings is the need for a whole person-centered approach to helping people return to health and to work.
— Bob Simison, HCMS communications, on behalf of HCMS Data Analytics
Figure 1: Average disability cost by population group, from the lowest-cost 50% to the highest-cost 5%.
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Figure 2: Cost of primary condition and comorbidities, by category of primary disease.
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