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Health Literacy is linked to Economics – it is about both Health Management as well as Healthcare Management

Posted May 11 2010 8:08am

What are the models for the UK?

Corporate companies bear approximately 25% of the total nation’s health expenditures in the USA. With rising direct and indirect costs, up to 50% of corporate revenues are spent on managing ill health of employees.

There is no correlation between healthcare expenditure and productivity since despite this growing expenditure on employees’ healthcare, globally, the workforce pool is riddled with more health issues and problems than ever before. Additionally, productivity costs due to poor health is estimated to be double that of the direct costs. Dr Pawel Suwinski, Principal Consultant, Frost & Sullivan says that only 31% of healthcare expenditure in organizations are spent on direct medical costs, whilst 69% of medical costs are due to productivity loss.

Only a portion of total health care costs is direct: medical, pharmaceutical, worker’s compensation and salary continuation. The majority of health related costs faced by organisations are indirect, e.g. absenteeism, temporary staffing, training interim employees, administrative re-work and presenteeism – which is being at work, but not being fully functional.

Absenteeism and presenteeism and are used to measure productivity losses that are related to personal and family health problems, stress and unhappiness. In 2004, in the US, this cost employers $1,685 per employee per year, amounting to a total annual loss of $225.8 billion.

Not only does productivity shrink in tandem with increased expenditure, compounding the issue is that the pool of productive employees is shrinking as people start work at a later age, whilst the retirement age remains unchanged. Additionally, even though life expectancy has increased, the age people are afflicted with chronic and debilitating diseases is moving downwards, hence people start getting sick earlier; and claims for medical and death insurance begin at a younger age. The combination of these factors means that the draw on a country’s GDP is higher.

Suwinski says that at least 50% of medical costs are preventable by lifestyle adjustments, and 75% of all medical costs caused by chronic diseases are best prevented and treated by lifestyle adjustments. “The irony of our time is that although we live longer and have access to more technology and conveniences than previously, we are busier, more stressed and unhappier than before. This is primarily due to the changes in the environment and lifestyle, coupled with bad habits such poor diet, alcohol consumption, smoking and physical inactivity,” Suwinski states.

The top five biggest contributors of health complications are:

  • Obesity
  • high blood pressure
  • high cholesterol
  • smoking
  • poor diet.

Modern Lifestyle Demands Stress

“Causes of poor health are caused by ageing; which increases chances of chronic and age related diseases, changing disease patterns which maybe lifestyle induced and chronic in nature, and stress brought about by lifestyle demands,” Suwinski elaborates.

The fact is, poor health leads to productivity loss, and indirect costs are twice as expensive as direct medical costs, thus directly impacting corporate profitability. Suwinski says: “50% percent of all diseases can be avoided and prevented by lifestyle changes, and 50% of all medical costs can be saved with integrated and comprehensive health management. Typically, 80% of medical costs are driven by 20% of the employees.”

Suwinski elaborates and Dr Robert Lefever would agree that wellness has to be holistic and encompasses:

  • Physical
  • Spiritual
  • Social
  • Emotional
  • Intellectual
  • And environmental wellness.

For effective implementation, companies have to employ wellness programmes that are holistic, integrated, compulsory, strategic and evidence based. As healthier employees are more productive, aligning employee health management with corporate strategic plans also creates competitive advantage.

Employers in the knowledge economy who invest in health management and not healthcare management, realise employee health is a long term investment that will support corporate growth as employees’ good health is the central and essential quality that determines level of productivity.

For employers and employees alike, ‘Health Literacy’ is core to self-management and maintaining wellness. Primarily this is about prevention and early detection, and in the case of illness – knowing your treatment options via authoritative sources such as in Capital Health.


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