Poor health costs companies money — in direct medical costs, loss of work through absenteeism, and loss of productivity through presenteeism (where employees are present at work but too unhealthy to be productive). No matter what sector you operate in, and whether you run a large corporation or an SME, employee health represents a significant area of business risk and one that companies ignore at their own peril.
Alain Peddle, head of research and development at Discovery Health, points out that apart from the expenditure directly related to the illness or injury, the are a number of other costs that both the employee and the SME can incur. Consider the costs if one of your employees is constantly ill and does not have access to high quality medical care or suffers from a severe illness or disability, for instance.
They would carry the cost of loss of income or reduced working hours, modifications to living areas, modifications to transport and assistance with family responsibilities. Your business costs might include the salary of the ill employee, the cost of recruiting replacement staff, loss of productivity and the risk to key customer accounts.
The medical aid debate
There is currently much debate about whether companies should make some sort of medical cover mandatory for employees. As more companies adopted the cost-to-company salary package model, they left it up to employees to decide whether they wanted to spend money on medical insurance — and many employees elected not to, preferring to spend their money elsewhere. Doing so leaves both them and their companies exposed.
Employees who are not covered by medical aid are less likely to seek early medical intervention when they fall ill, risking severe illness that leads to more time off work and a decrease in productivity. In medical emergencies, their company is often the first place they turn to for a loan to cover unforeseen medical expenses which can run into hundreds of thousands of rands.
Such risks can be mitigated with the right kind of medical insurance. Blanket comprehensive cover is not necessarily required — medical aids offer a range of options suited to different risk profiles and companies can leave it up to employees to decide on the most suitable cover. At the very least, however, it’s probably a good idea for all employees to be on a hospital plan as this covers them for emergencies and those things that can incur the greatest costs.
Understanding employee health risk factors
Peddle comments that there is a large body of evidence to show that many health risks are modifiable. Many of the diseases that cost companies the most money are therefore preventable, provided companies can identify which employees are at risk for which diseases and implement programmes that actively lower this risk.
Working with world expert in corporate wellness, Ron Goetzel, from Emory University in the United States, Discovery Health published the first Healthy Company Index in South Africa. Top health risk factors in the South African population include high blood pressure, high cholesterol, excess body weight, low fruit and vegetable intake, diabetes, physical inactivity, and smoking tobacco. These are lifestyle factors that can, with the programme, be changed.
In a White Paper on Corporate Wellness, Discovery points out, “There is increasing evidence to suggest that nearly a quarter of all health care costs can be attributed to conditions directly resulting from easily modifiable lifestyle factors. In fact, the higher the health risk of individuals based on their lifestyle factors, the higher the health care costs.”
The benefit of workplace health programmes
A study by Ron Goetzel et al, published in the Journal of Occupational and Environmental Medicine, points out that although a good deal of emphasis has been placed on the management of acute and chronic disease as a way to contain employer health costs and limit employee absenteeism, there is growing recognition that promoting employee health may be a more efficient way to achieve cost savings.
This entails understanding the risk profile of employees and finding ways to actively reduce these. This is supported by additional research published in the same journal by Henke et al. The authors state: “Employers seeking to contain health and productivity costs are turning to workplace health promotion programmes to reduce the prevalence of risk factors among their workers.
Knowledge of the association between health risks and costs can help employers determine where to target workplace programmes and estimate cost savings resulting from interventions.” Such information can, the authors point out, help employees to calculate a potential return on investment before investing in any programmes.
Discovery’s White Paper provides evidence of the kind of return on investment employers can expect from such programmes. “A recent World Health Organisation Report cites research into the economic benefits of workplace health programmes observed over an average of 3,6 years. The research showed an average 27% reduction in sick leave absenteeism, 26% reduction in sick leave costs, and a 32% reduction in workers compensation and disability claims,” reports the paper.
Components of a successful workplace wellness programme
Discovery’s White Paper outlines the hallmarks of a successful employee workplace wellness programme. It should:
- Integrate health and productivity management programmes into the organisation’s operations
- Simultaneously address individual, environmental, policy and cultural factors affecting health and productivity
- Target several health issues
- Be tailored to address specific needs
- Attain high employee participation
- Include rigorous evaluation
- Communicate successful outcomes to key stakeholders.
The problem with presenteeism
You might look favourably on those employee ‘martyrs’ who come to work no matter how ill they are, but research shows that such presenteeism is a significant contributor to decreased productivity. The Institute of Risk Management in South Africa (IRMSA) reports that presenteeism is just one of several challenges facing South African companies under the increasing pressure of global competition.
“For workers, that pressure means they can feel they need to be present at work even if it’s unhealthy. In the US the cost of presenteeism is believed to equal the sum of absenteeism, injuries and health care costs. There is no reason to believe that South Africa is any better off,” reports IRMSA.