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Measure productivity loss when tallying up health costs

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in Employee Benefits Program,FMLA Guidelines,Human Resources,Leaders & Managers,Management Training

The costliest illnesses to insure aren’t necessarily the ones that take the biggest chunk out of your bottom line. When measuring how much money your organization sinks into employee health, don’t stop once you’ve calculated your share of employees’ insurance premiums.

Instead, pull out your attendance records and a calculator to determine just how much productivity is suffering because of employee illness and poor health. Then find out what kinds of medical conditions are keeping employees from working at full capacity.

The answers may surprise you.

Most employers focus too narrowly when they try to contain health care costs—typically zeroing in on ways to reduce medical and pharmacy costs. But certain medical conditions cost organizations more in lost productivity than they spend on medical care and prescriptions.

That’s the conclusion of a study of more than 150,000 workers published in the April 2009 issue of the Journal of Occupational and Environmental Medicine. 

The study concluded that the productivity losses from four conditions exceed the cost of care and prescriptions required to treat them. The conditions are depression, anxiety, arthritis and obesity.

That study concluded that depression, insomnia and chronic fatigue—whether associated with other conditions or not—decrease employee productivity more than other medical conditions.

Here’s what these findings mean for comp and benefits professionals:

1. Measure all of the costs
of unhealthy employees.

2. Don’t depend on total medical and pharmacy spending alone to measure the impact of unhealthy employees on the bottom line.

3. Make sure your health cost-management, wellness and education programs target conditions that have the biggest impact on workplace productivity.

4. Measure the absenteeism resulting from health conditions that decrease productivity the most. 

5. Use the following resources
to help measure the full costs of unhealthy employees:

  • The American College of Occupational and Environmental Medicine (ACOEM) offers an online Health and Productivity Management Center at
  • The Integrated Benefits Institute provides health and productivity management research, case studies and tips from employers. Benchmarking, survey and measurement tools are also available at

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