When your employees are at work but not at their best, the entire company’s productivity suffers. However, many employers don’t realize that the cost of lost productivity can easily outweigh what they spend on direct medical costs.
“Employers should look at health care not as an expense but as an investment,” says T.C. Williams, the manager of channel strategy for Kaiser Permanente. “As such, they should invest in their most important asset: their work force.”
Williams advises companies to partner with a health plan that will help keep the work force at work and, more importantly, actually being productive.
Smart Business spoke with Williams about how your health plan can help you improve the total health and productivity of your work force.
What is presenteeism and why should employers be concerned about it?
Presenteeism is when workers are physically on the job, but because of illness or other medical conditions, are not fully functioning. At this time in the health care arena, employers and consultants are familiar with presenteeism. It is not a revolutionary term. Health plans have brought the topic up to their clients and said, ‘This is something you have to take a look at.’ Studies show that productivity losses cost employers $2 to $3 for every $1 of direct medical costs. In fact, direct medical costs, which include group premiums and pharmacy costs, account for only 24 percent of total medical costs.
Indirect costs, such as long-term disability, short-term disability, absenteeism, worker’s compensation and presenteeism, make up the remaining 76 percent of total medical costs. Presenteeism accounts for a stunning 63 percent, making it the largest contributor to total health care expenditures, much larger than absenteeism or short-term disability (6 percent each) or long-term disability (1 percent).
So, many employers know about presenteeism, but don’t know what to do about it. They may have strategies targeting absenteeism and disability, but with the national average of direct medical costs hovering around $7,000 a year per employee, presenteeism-driven productivity losses could be costing employers as much as $21,000 a year per worker.
What factors contribute to presenteeism?
Although workers often report to work with minor illnesses like colds, researchers have found that chronic conditions are the most likely to be associated with presenteeism. Allergies, depression, asthma, lower back pain, cardiovascular disease, cancer and even overweight/obesity are chronic conditions that prevent employees from being as productive as they could be. For example, the average annual cost of medical expenses and absenteeism related to obesity can range from $460 to $2,500 per employee.