workplace productivity loss

Deeper Dive: Productivity, Medical Costs Associated with Chronic Disease

We have been reporting on the request from the Research Center of the Nashville Area Chamber of Commerce to FTI Consulting Inc.’s Center for Healthcare Economics and Policy (“Center”) to collaborate with the Chamber on the development of data and analyses for the Nashville Region Health Competitiveness Initiative (see Part I and Part II).

The study addresses the role workplace wellness can play in addressing chronic disease among employees and helping manage health concerns and costs.

Today we take a deeper look at the report’s conclusions on medical and productivity costs, or what the authors call the “Implications of Employee Health for Costs, Competitiveness, and Wellbeing.” These conclusions help address the business case for workplace wellness and are areas — particularly in the range of chronic disease — on which a well-run program may focus.

The report notes that “indirect costs associated with productivity are more difficult to measure, but are profound at the national level.” Among the findings:

  • “Presenteeism among individuals with diabetes ranges from an excess or increased incremental cost (as compared to individuals without diabetes) of 1.8% to 38% of annual productivity.”
  • “Obesity may account for an additional one day of work missed per year.”
  • “Individuals with uncontrolled hypertension lose between two to three days’ worth of productivity during the year due to absenteeism and presenteeism associated with the condition.”
  • “Recent research exploring several risk factors (obesity, physical inactivity, and smoking) and chronic diseases (hypertension and diabetes) finds that absenteeism increases with the number of conditions reported.”
  • “As many of these risk factors are correlated, these further compound the productivity implications related to poor health. This productivity loss implicates significant financial costs. In 2015 dollars, absenteeism associated with diabetes was estimated to cost in excess of $2 billion, hypertension over $10 billion, and obesity over $11 billion.”
  • “These costs are even more significant when considering the relationship between poor health and turnover. Replacing workers is costly in that it requires firm resources to hire and train new employees. New employees also may face a period of lower productivity when starting a new job. Together, estimated cost of turnover is about 15 to 20 percent of an employee’s wage.”
  • “A report released by the National Institute of Aging using data collected by the HRS found that employees in poor health are more likely to retire early than their healthy counterparts. Among retirees in the 55-59 age group, poor health was cited as an important factor in their retirement decision.”
  • “Chronic conditions and health conditions can have other employment costs. Otherwise, healthy employees may leave the workforce to care for family members with chronic conditions. The cost to replace employees who leave the workplace as a result of caregiving is estimated to cost U.S. businesses in excess of $2.8 billion annually.”

Finally, businesses questioning whether taking action around employee well-being can make a difference, may want to consider this finding from the report:

“Tobacco use, obesity, and physical inactivity are three risk factors that influence incidence of chronic conditions, such as hypertension and type-2 diabetes. While these factors have a profound impact on individual health, the CDC designated them as “winnable battles” – public health challenges for which strategies to address them exist.”