American Institute for Preventive Medicine

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Control Health Care Costs by Controlling Demand
Educating employees on how to help themselves in many cases can save a company money in health care costs. Such training can cost very little, but result in significant savings.

Don R. Powell, Ph.D.

The cost of health care in the United States has continued to spiral out of control. In 1993, health care costs totaled more than $942 billion. This came out to $3,781 per employee and amounted to 13 percent of the gross national product. It is expected that by the year 2000, employers will pay over $13,000 per employee for health care costs.

Over the past decade, human resource departments have attempted to reduce health care costs by managing the supply of health care. Generally, this involves a gatekeeper who determines what type of health care an employee can receive and when they can receive it. There are a number of ways that the supply of health care can be restricted.

The first involves network management which consists of a restricted supplier network, negotiated fees and financial incentives for good performance by health care providers. The second is medical management which analyzes the medical necessity and appropriate criteria for medical procedures. Admission, pre-certification, hospital concurrent review, discharge planning and retrospective audits all fall under this category.

Thirdly, supply management will contain costs by steering employees to lower-cost health care services such as those provided by an ambulatory surgery center, non-physician health care providers and a reduction in the number of days allowed for a hospital stay.

Demand management, on the other hand, helps employees manage their actual and perceived need for health care services. This is accomplished by teaching employees to make more informed decisions about whether and when to seek medical assistance. The potential benefits of demand management are numerous.

First, they can reduce unnecessary trips to the doctor and emergency room thereby significantly reducing health care costs and saving time. Secondly, employees who get more involved in medical decision making will feel a greater sense of control over their lives.

Thirdly, demand management encourages employees to make wiser health care decisions, thereby using financial resources more efficiently. Finally, it can increase employee satisfaction while improving the overall quality of care.

Program Components
A demand management program should include some or all of the following items:

  • Self-care publication. This is either a booklet or book that presents a variety of symptoms and helps the employee determine what level of care should be taken to treat these symptoms. Several of the more popular ones use a flow chart format. By answering "yes" or "no" to various questions, employees can determine whether their symptoms require emergency treatment, a physician visit, a call to their doctor or simply at-home measures.
  • Self-care workshop. Self-care materials will be utilized more frequently if they are presented to employees during a workshop. The workshop would address the benefits of self-care, how to use the self-care publication, how to be a wise health care consumer and how to communicate effectively with your doctor.

  • Demand management sounds great in theory, and there is now research that supports the advantages.

    This workshop can either be led by a health professional from outside the company or an employee could be trained to put on the workshop.
  • Self-care videos. A video can either be used in place of an instructor-led workshop or as an adjunct to it. It would present similar information to that presented in a workshop.
  • Self-care audiotapes. When it is not practical to have employees watch a video, an audiotape can be distributed. It would present how to use the self-care materials and get maximum value from them. It is an ideal way to reach employees at remote sites or those who work at home.
  • Self-care promotional materials. Posters, flyers, paycheck inserts, table tents, etc. can be distributed to remind employees to use their self-care guides when they are not feeling well.
  • Health advice lines. Companies that want a very comprehensive demand management program may provide employees with a toll-free health counseling hotline. Employees can speak to a health professional about their specific symptoms or can ask general questions about diseases, wellness, exams and tests, medical procedures, surgery, medications, etc.
Case Studies
Demand management sounds great in theory, and there is now research that supports the advantages of such programs. MEMC Electronic Materials Inc., an electronics company in St. Peters, MO., distributed the HealthyLife Self-Care Guide published by the American Institute for Preventive Medicine to 1,000 employees at its corporate headquarters as part of its demand management program.

The Guide addresses 25 of the top health problem (see sidebar on opposite page for examples). These 25 medical conditions account for about 90 percent of acute care physician office visits according to National Center for Health Statistics data.

In order to receive the Guide, employees were required to attend a HealthyLife Self-Care Workshop. The original workshop was conducted by Lois Jackson, the company's health and wellness coordinator. This workshop was videotaped and shown to employees who attended subsequent workshops.

To evaluate the effectiveness of the demand management program, Jackson tracked the number of limited duty assignments taken by employees for medical reasons. She found that the number of such assignments decreased significantly saving the company $331,878 in 1994 alone.

At-Home Remedies
The following are some ailments that are covered in self-care publications:
  • Acne
  • Asthma
  • Backaches
  • Bronchitis
  • Common Cold
  • Coughs
  • Cuts, Scrapes and Punctures
  • Diarrhea
  • Earache
  • Eczema
  • Fever
  • Flu
  • Hay fever
  • Headaches
  • Heartburn
  • Ingrown Toenails
  • Laryngitis
  • Sinus Problems
  • Sore Throat
  • Sprains and Strains
  • Urinary Tract Infections
  • Vomiting and Nausea
Source: HealthyLife Self-Care Guide, American Institute for Preventive Medicine.

In addition, 607 employees returned a questionnaire that was given at the end of the self-care workshop. The results were as follows:
  • 99 percent of the employees who received the HealthyLife Self-Care Guide booklet found it to be informative.
  • 98 percent of participants in the HealthyLife Self-Care Workshop found it to be useful.
  • 92 percent of the participants in the workshop found it to be enjoyable.
  • 91 percent of the participants in the workshop felt that they had a better understanding of when to see a doctor.
  • 93 percent of the participants in the workshop now think that they are wiser health care consumers.
  • 70 percent of employees felt that using HealthyLife Self-Care Guide will enable them to visit the doctor less frequently.
  • 56 percent of employees felt that using the guide will enable them to be absent from work less often.
Like many hospitals and corporations, Florida Hospital in Orlando, an institution with 7,500 employees, has been adversely affected by rising health care costs.

In 1987, the cost for health insurance came out to $805 for each full-time employee. In 1991, insurance cost $2,360 per employee and although it is less than the national average, the hospital still experienced a 293 percent increase in only 5 years. Based upon this, the hospital implemented a number of cost containment strategies including an employee self-care program.

The hospital distributed copies of the HealthyLife Self-Care Guide to employees who participated in a health screening. Five months after the Guide was distributed, evaluation questionnaires were sent to 1,236 employees and were returned by 365 of them (a 30 percent response rate).

It was determined that these employees had reduced their number of physician office visits by 126 and emergency room visits by 52.

Using the hospital's insurance records, it was calculated that the average cost for a physician office visit is $55 and the average cost for an emergency room visit is $462. This amounted to a savings of $30,954 or $84.81 per employee in only 5 months.

Extrapolating the results over a year's time would produce a savings of $203.54 per employee.

Since the booklets cost $1.77 per copy, the hospital's return on investment in only 5 months was 48:1. The hospital also reported that 15% of the employees were absent less often, producing 95 fewer absences or 1.3 days per employee.

Florida Hospital conducted a second study 6 months later on an additional 436 employees. These results virtually replicated those of the first study as it demonstrated a total savings of $29,359 in 5 months or $67.34 per employee.

In addition, the study found that:

  • 35 percent of the employees used the HealthyLife Self-Care Guide before contacting a physician.
  • 73 percent felt the Guide better prepared them for physician visits.
  • 67 percent felt the Guide positively affected their family.
Selecting a Publication

Human resource professionals should know what criteria to consider when they evaluate self-care publications. The following items should be taken into consideration when designing a self-care program:

  1. Readability. Is the guide written at a sixth to eighth grade reading level? Is medical jargon kept to a minimum?
  2. User-friendly. Is the material presented in a way that makes it easy and appealing for employees to use the publication?
  3. Clinical review team. Has the booklet been reviewed by a team of physicians and other health professionals?

  4. Human resource professionals should know what criteria to consider when they evaluate self-care publications.

  5. Date of last printing. Is the last edition of the book current?
  6. Proven cost-effectiveness. Have one or more studies been conducted on the material to show that health care costs were reduced?
  7. Number of pages. Is the material an appropriate length so that your employees will read it and not be overwhelmed by the text7
  8. Addresses particular target areas. Does the self-care guide(s) address the unique needs of specific employee population groups such as women, retirees, families, or minorities?
  9. Customization options. Can your company imprint its logo on the front and/or add additional information to the publication?
  10. Self-care training. Can a workshop accompany the distribution of the self-care publication?
  11. Cost. Is the price for the publication reasonable?
By managing their employees' demand for health services by providing comprehensive self-care materials, employers can begin to make a significant impact on health care utilization and potentially, health care costs.

This represents a strategy that should go hand in hand with the traditional supply management strategies.

Only then will human resource professionals begin to make a significant impact on the extremely high medical expenses their companies have been experiencing over the past decade.

Human Resource Professional
Vol. 8, No. 2
Mar/Apr 1995


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