Global perspective

The global business risk of employee health.
By Susan DeGregorio, Consultant, Global Health Management, Hewitt Associates, Pittsburgh.

Developing a global health strategy
The recent debates on health care reform in the United States and Europe highlight that no country or system can adequately meet the challenges of adequate, efficient, and cost-effective health care provision.

As governments around the world warn their citizens that in a few years they may not be able to provide the level of heath care that is expected or demanded, more and more individuals are turning to their employers as an alternate source of coverage. However, employers are struggling to define their role in safeguarding employees’ health. Human resource and finance leaders report that their ability to control their health care strategy and costs around the globe is rapidly slipping away.
To counter this trend, organisations have been moving toward more corporate oversight and consistency in the design and delivery of global health care programs.

They also are reconceiving their role with regard to employee health, realizing that it does not end with the effective management of health care benefits. Employee health is a critical business risk that must be managed comprehensively—the health care benefits that an organisation offers through its insurance program are simply one of many initiatives used in an effort to manage the broader business risk.

The World Health Organisation’s (WHO) definition of health is “a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity.” In other words, the health of individuals—an organisation’s employees—is defined by their general well-being in terms of body and mind. The role of an organisation in manageing the business risk of employee health is extensive—requiring a sustained commitment to the recognition of the risk and the development of a strategy and resulting initiatives to mitigate it.

In a global health care survey conducted by Hewitt Associates, almost all employers (92%) believe that employees are responsible for their health, but this responsibility is not theirs alone. As shown in Table 1, 72% of employers indicate that they should share in this responsibility (49% of respondents state that the responsibility should be shared equally between the employee and the employer and 23% believe that the government—in addition to the employee and employer—should bear a portion of the responsibility).

To understand why organisations invest in the development of global health strategies, the survey asked employers to identify their expectations of their global health strategy and the resulting initiatives relative to benefits to the business. As shown in Table 2, employers report that they expect their efforts to reduce employee absence, increase productivity, and enhance employee morale in addition to controlling their health care costs. If an organisation is able to improve the overall health of its workforce, broad benefits for the organisation should be realized.

Developing global health initiatives
Many organisations have global benefit philosophies or strategies. A global health strategy is a set of company principles and guidelines specific to health and health improvement. An effective strategy, however, goes beyond this—it focuses on employee health and health improvement that will enable the organisation to compete effectively in attracting, retaining, and motivating the best talent, as well as decrease health risk and improve productivity over time.

Organisations may have both global initiatives that are implemented in multiple countries (such as a global Employee Assistance Program), and local initiatives designed to meet specific country needs. When developing an implementation plan for global and local initiatives, it is essential that organisations focus on more than employee headcount. Other factors such as the overall heath status of the population, accessibility of the public health system, as well as the quality and availability of health insurance products should all be considered. The following examples illustrate how existing health care infrastructure and initiatives can vary by country.

United Kingdom
Currently, stress is the headline issue affecting health care in the United Kingdom. Outside of seasonal illnesses (such as colds and flu), stress, anxiety, and depression are the primary causes of workplace absences. The causes of stress are not always workplace-related—health care industry analysts estimate that only 18% of cases involve issues arising from work. For the rest, stress emanates from the pressures of modern living—debt, relationships, family care, and the fear of unemployment. According to the UK’s Health and Safety Executive (HSE), four out of every ten days’ absence in 2007/2008 were linked to stress or were workplace-related. The National Institute for Health and Clinical Excellence estimates that mental health conditions are costing UK employers over £28.3 billion (US$ 43.9 billion) per year. This figure includes the costs of pay, lost productivity, and replacement of employees.

To respond to stress-related issues, typically an Occupational Health or Employee Assistance Program (EAP) has been used. However, according to recent UK case law, the provision of an EAP may not be sufficient—employers may have to take action to deal with stress if a problem is known to exist. The use of stress vocational rehabilitation services, which are psychologist-led, is proving to be effective, producing a 40% reduction in stress-related absences during the first year of implementation.

India
Employee health risks in India are converging with those in the advanced industrial economies. The rates of death and disability from chronic disease due to lifestyle issues are rising, overtaking the rates from communicable diseases. As the public health system was established to address infectious diseases, it is ill-prepared to handle the increase in these new challenges and is relying on the private sector to provide solutions.
In 2005, India’s estimated loss of national income from heart disease, stroke, and diabetes was equivalent to US$ 8.7 billion. In 2015, the estimated loss of national income is forecast to exceed US$ 54 billion, or around 1.3% of GDP.

Employers experience these losses first—through elevated health care costs and lost productivity. Progressive employers have initiated wellness programs which have gone beyond providing a gym or doctor on-site. They include providing fresh fruits along workplace corridors and arranging face-to-face consultations with fitness experts and dietitians. Other employers have started to work with independent wellness solution providers to help employees quit smoking, manage alcohol consumption, and cope with stress.

Brazil
Brazil has a national health care program, with all clinical, surgical, maternity, and dental services provided for all citizens from government-approved centers; however, government medical services are severely oversubscribed, understaffed, underequipped, and underfunded.
In response, a private health care system, similar to that in the United States grew in the country; the system is largely company-sponsored. With rising health care costs and rates of chronic disease spiraling, cost-containment approaches similar to those used in the United States are being tried in Brazil, including Health Management-like Organisations and managed care. The leading causes of death are chronic disease, notably heart disease and diabetes, and violence.

Company-provided medical, dental, and hospital services are not taxable to the employee. Company-paid premiums can be deducted from taxable income. Aside from the provision of health insurance, employers in Brazil are investing in wellness and prevention programs, health education, and improved communication with employees on health care.

The most common wellness programs include regular wellness handouts on nutrition, heart disease, diabetes, chronic disease control, stress, and fitness. To encourage employees to see a doctor, many employers make their on-site occupational health and safety physician available for routine visits and second opinions and provide gym memberships. Given the importance of cash benefits in Brazil’s compensation culture, employers find that financial incentives to take annual physical exams are popular among employees.

Measuring success
Organisations that have implemented strategies to manage the health of their employees are measuring the impact of these strategies. According to Hewitt’s Global Viewpoint Survey, 57% of companies measured the success of their health improvement programs. Methods include measuring production volumes; evaluating employee absence statistics; reviewing employee satisfaction survey data; tracking employee participation in programs; collecting employee feedback; and charting changes in health risk measurements.

Often when an organisation reports measuring success by evaluating changes in health risk measurements, it has adopted a Global Health Risk Assessment (or Personal Health Assessment) tool to collect data from employees on their general health and well-being. One of the primary benefits of operating this type of tool globally is the collection of consistent data on the health of an organisation’s population that can be used to establish a baseline metric and can be conducted regularly in order to track progress.

Summary
Employee health represents a significant business risk, and many employers have heightened their oversight of, and involvement in, the management of health care benefits. They are starting to recognise the limitation of a global strategy that focuses too much on the level of health insurance benefits offered to their employees at each location and the hard costs associated with these benefits.

Often the needs of health care programs will be determined by specific health factors at the country level, and require initiatives tailored to suit. Having an effective global health strategy helps bring consistency to this decentralized approach, and ensures that the benefits put in place align to the organisations wider business needs. Beyond this, a well thought-out global health strategy affirms the corporation’s commitment to the health of its global workforce, and sends the message that governments, individuals, and businesses all have a role to play in the health care challenges that the world faces.