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According to research recently completed by D.W. Edington, Director of the University of Michigan’s Health Management Research Center (UM-HMRC), direct medical and pharmacy costs account for only 25% of the total cost of healthcare that a company pays.
Indirect costs such as Absenteeism, Long Term Disability (LTD), Short Term Disability (STD), and Presenteeism account for 75% of the total cost of healthcare. Presenteeism refers to the problem of workers being on the job but, because of medical conditions, not fully functioning. Furthermore, there is a direct linear relationship between an employee’s increase or decrease in health risk and their increase or decrease in direct and indirect healthcare costs. The bottom line is that a healthy and fit workforce has lower medical, pharmacy, LTD, STD and workers comp costs and less absenteeism and presenteeism.
A healthy & fit workforce is a productive and profitable workforce.
The above graph is from an analysis that the University of Michigan completed for one of the ACBG Member contractors. The graph is a 4-year cost projection of the contractor’s expected medical and pharmacy spend per employee per year, assuming that the contractor does nothing to manage their risk as compared to them implementing one of the three levels of wellness program interventions recommended by UM-HMRC. The goal of each ACBG Member is to become a “Champion Company” and ACBG provides each Member with a custom-designed track to accomplish this goal.
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