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New Research Shows That Prevention Is Key To Reducing Health Care Costs For All Employees, Even Those With Chronic Conditions

ST. PAUL, Minn. and NEW YORK, Nov. 19, 2012 /PRNewswire/ -- A recent study from StayWell Health Management and Towers Watson demonstrates that cost savings associated with health risk reduction begin accumulating in as little as one year, particularly for those with chronic conditions. Furthermore, the study demonstrates that, while a reduction in employee health risks leads to immediate cost savings, the accumulation of additional health risks soon leads to substantially higher medical and pharmacy costs. Such findings are critical for employers as they evaluate their strategies for engaging employees in changing unhealthy behaviors and assess their investments in workplace health management programs.

"This is one of the first multi-employer studies to explore the specific timing of changes in health care costs related to increases or decreases in health risks," said Jessica Grossmeier, Ph.D., vice president of research at StayWell Health Management and a co-author of the study. "The research supports a greater focus on prevention and wellness. It also can help employers better estimate the short-term financial impact of changes in individual and population health risks."

The study, "Association Between Changes in Health Risk Status and Changes in Future Health Care Costs: A Multi-employer Study," was published in the November 2012 issue of Journal of Occupational and Environmental Medicine (JOEM) and is available on the JOEM website.

Although health risks have been directly associated with higher health care costs, and a growing body of research shows that improving health can generate a positive long-term ROI, there has been limited research on how soon cost savings begin accruing and the relative cost impact of health risk accumulation versus health risk reduction.

"This research not only demonstrates the level of savings that can be expected, but it also begins to show how soon employers can expect to begin realizing some change in costs as a result of a change in health risk status," said Steven Nyce, senior economist at Towers Watson and lead author of the study. "This is crucial information for employers that have made a commitment to improving the health and productivity of their workforce. It also should enable employers to attract more senior management support for investing in these programs."

Specifically, the study authors suggest that employers can benefit from understanding the following key findings:
  • If you reduce health risks, lower costs begin accruing very quickly. In fact, there was a reduction in health care costs in the same year risks decreased. Coupled with prior research showing employers can "break even" on their wellness investment in year two and achieve up to a 3:1 ROI in year three, this immediate savings from risk reduction makes the financial case for prevention even stronger.
  • The financial implications for prevention may be even greater than for risk reduction. For every health risk added, costs increased by 45 percent above the cost savings that resulted from eliminating a risk. This means that if organizations prevent individuals from adding new health risks over time, their cost savings will be greater than if they focus on eliminating a health risk after it emerges.
  • A long-term solution is better than a quick fix. In this study, a greater immediate savings was realized from reducing health risks for people with chronic conditions than for the average employee. After controlling for differences in age, gender and company, those with chronic conditions who added health risks doubled the cost burden compared to those without a chronic condition. Cost savings were four times greater for those with chronic conditions compared to those without chronic conditions. The study authors stressed that although there always will be a highest-cost group, an ongoing focus on prevention can benefit the entire population by avoiding chronic disease altogether in some cases or slowing the progression and diminishing the severity of chronic disease. All of these potential outcomes from prevention will improve the company's total health care spend.

Previously published literature reviews and studies indicate wellness programs can produce even greater immediate savings in productivity-related costs, including reduced absenteeism, disability and workers' compensation costs, as well as enhanced work performance. Therefore, the combination of direct health care savings, which grow over time, coupled with these more immediate, indirect productivity savings, further supports the business case for investing in a prevention-focused, population-based health management strategy.

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