An economic evaluation of occupational health

Transcription

1 Occup. Med. Vol., No., pp. 9-6, Copyright < * Lippincott Williams & Wilkins for SOM Printed in Great Britain. All rights reserved 96-7/ An economic evaluation of occupational health P. Miller*, D. Whynes* and A. Reidj The Medical School, University of Nottingham, UK; and "\The Boots Company PLC, Nottingham, UK There is an increasing need to evaluate the costs and benefits of an occupational health service (OHS). However, measuring benefits from an OHS is inherently difficult. Instead, an economic model can be constructed to present the minimum threshold benefits required for OHSs to be cost-effective, given what is known about costs. This model assumes that the benefits of an OHS are to maximize health and morale of employees; maximize performance and increase productivity; minimize medico-legal costs; enhance workplace safety; and reduce sickness absence. A certain distribution across these benefits can be assumed for each OHS. The overall required value of all benefits brought about by use of an OHS is in the range -99 per user per year. The plausibility of results can be assessed using known data and judgement. Despite many uncertainties it is likely that the minimum benefit thresholds will be achieved overall. Key words: Cost-benefit analysis; economic evaluation; modelling; occupational health service. Occup. Med. Vol., 9-6, Received July 999; accepted in final form October 999 INTRODUCTION The traditional context in which to justify the economic case for an occupational health service (OHS) has been based on broad labour force surveys reporting the total cost of sickness absenteeism to the economy. Indeed, it has been estimated that sickness absence accounted for approximately. lost working days per employee, around.7% of working time, in 996. At an average cost of per worker, the total cost to UK business could amount to billion. Whilst virtually all large companies in the UK operate an OHS, more are now requiring greater evidence of value as generally indicated in some studies in multinationals. ~ s Companies need more specific evaluative information to justify the continued provision of an in-house OHS in the face of increased pressure to control costs, combined with an awareness that the service itself can potentially induce activity and be substituted with healthcare provided (i.e. contracted out) or even funded (e.g. the UK National Health Service (NHS)) outside the company. Several studies have looked at the economic impact of an OHS with respect to single conditions such as the reduction of cardiovascular disease as a risk factor 6 and Correspondence to: Paul Miller, TIHSR, B Medical School, Queen's Medical Centre, Nottingham NG7 UH, UK. Tel: (+) () 999 (ext. 67); fax: (+) () ; paul.miller@nottingham.ac.uk This paper is based on one originally presented at the spring meeting of The Society of Occupational Medicine, London - March, 999 depression. 7 Many studies have considered the economic implications of one dimension of an OHS-health promotion. " Very few evaluations of the costs and benefits of an OHS as a whole have been undertaken in the UK. The reasons for this are not altogether clear but may be related to a previous lack of interest in the topic on the part of companies and independent researchers; the conceptual difficulty in defining and measuring the outcomes of an OHS; and the unavailability of data. This paper is the result of collaborative work between The Boots Occupational Health Service and the Health Economics Unit at Nottingham University. It is structured in three sections. The first section presents the two-stage methodology that was used to generate evaluative information. The second section presents the results of this exercise and the final section is a discussion of issues arising. METHODS A comprehensive economic evaluation requires information on the costs and benefits associated with a study intervention and ideally a comparative intervention, so incremental cost-effectiveness ratios can be presented. However, a conventional economic evaluation was not feasible for this project due to certain constraints. Good cost data were available but data on the benefits generated by an OHS were not. Indeed the specific Downloaded from on December 7

2 6 Occup. Med. Vol., expected outcomes of an OHS were not routinely defined. Hence die methodology adopted was pragmatic and consisted of two stages: an analysis of costs, and the development of a framework in which to consider benefits. The first stage consisted of a functional audit of Boots OHS activities. This is a descriptive exercise to map out current patterns of service and resource use. Twelve months service use data from the OHS database were analysed for two Boots business units (X and Y). Data were first organized according to the service user's workplace, X or Y. The large portfolio of s provided by the Boots OHS was categorized into broad groupings. Data were then aggregated under these groupings. The Boots OHS database included information on the company's internal billing system for the OHS. This assigns units of resource use to activities, weighted according to time taken, type of activity and service provider (e.g. doctor, nurse). The raw data provided for this study were in the form of resource units per service user, by type of service used. From this it was possible to make a number of analyses. The second stage of this evaluation aimed to construct a model with which to translate observed resource use data into information on the minimum threshold benefits required for the Boots OHS to be cost-effective. First, a concise list of the expected benefits of an OHS was derived by 'brainstorming', which consisted of an initial meeting of OHS staff and researchers, a period of contemplation, and then a final meeting of OHS staff only. This model assumes that the expected benefits are to: maximize health and morale of employees, maximize performance and increase productivity, minimize medico-legal costs enhance workplace safety, reduce sickness absence. Secondly, an independent estimation of how each of the ten OHS s listed in Table contributes to these five benefits was made by each OHS clinician. Variations were then discussed until an agreed group estimation was arrived at. This estimated distribution, mapping the benefits of each, is also given in Table. By applying this distribution to the cost data generated in stage one, a value for each of the five types of benefit can be established for each. This value represents the impact which the OHS must have within the company in order to be economically viable, thus it is a break-even value. If the can achieve benefits equivalent or greater than this value then it will be cost-effective to continue providing it. The likelihood of achieving these threshold values can then be assessed by comparisons with other known data. In addition, since this is a simple economic model both sets of assumptions, the list of expected benefits and the distribution of those benefits, can be reviewed and adjusted and their impact on results observed. Table. Estimated contribution (%) of each to the expected benefits Pre-employment check Average... Maximize health and morale of employees.. Maximize performance and increase productivity.. Minimize medico-legal costs.. Enhance workplace safety.. Reduce sickness absence. RESULTS.. Results for the two Boots business units are presented in Tables and. Clearly, an OHS will be costeffective if the bottom-line benefits are greater than its costs, thus total benefits for X must be more than 9,6 and for Y more than, per year. Stepwise disaggregation of these global figures can begin to provide more useful information with which to begin to evaluate the service. The model provides estimates of the required absolute value of each benefit per year. Given current resource use and the assumptions of the model, business unit X needs to derive around 6, per year from the OHS, in terms of increased employee health and morale; around 6, in terms of increased performance and productivity; around, in terms of reduction or avoidance of medico-legal costs; around, in terms of enhanced workplace safety; and around 6, in terms of reduced sickness absence. Similarly, the five absolute threshold benefit values for Y are presented in Table. Since Y invests more in the OHS than does X, in absolute terms, the required level of benefits is also higher. The next step is to relate these totals to activity. Tables and present the threshold values for these benefits per OHS user and per employee, respectively. Values per user are very similar for the two business units at around per annum. This simply means that for each person attending the OHS (from X or Y) benefits of at least per year need to be generated for this to be cost-effective for the company to provide. By using the model it is possible to make estimations about how these benefits should be achieved. For example, at Y.7 per OHS user per year needs to be generated in terms of increased productivity, whilst 6. needs to be generated in terms of avoided or reduced medico-legal costs. Downloaded from on December 7

3 P. Miller et al.: Economic evaluation of an occupational health service 6 Table. Value (in ) of benefits required overall for business unit X cost Pre-employment check,,7,6,,, ,,7,96,6,,, 96 6, 7,, 6,9,6, 9 6 9,, 7, 7, 6,9,,9 6 6,,66,77,,9,6, ,79,6,6 7,,6,,6,9,,7 cost 6, 6,79 7,,9 6,6 9,666 s - are as given in the footnote to Table. Table. Value (in E) of benefits required overall for business unit Y cost 9,9,77, 7,9 7,6,76 7,6,,97 9,9,77,9,97 7,6 6,7,,,97 6 9,9,7 7,9,6,7,,7,97 9,9 9,79,7,99,6,76,,7,97 7 9,9, 6,6 7,9,9,7,6,7,97,9 9,79,76 9,9 6,6,77 76,6,67,,7 cost, 9,9,7,9,, s - are as given in the footnote to Table. Table. Value (in ) of benefits required per occupational health service user. Maximize health and morale of employees. Maximize performance and increase productivity. Minimize medico-legal costs. Enhance workplace safety. Reduce sickness absence Threshold value per user Y X X and Y refer to two separate business units within The Boots Company PLC. Table. Value (in ) of benefits required per employee Threshold value per employee. Maximize health and morale of employees. 7.. Maximize performance and increase productivity. Minimize medico-legal costs. Enhance workplace safety. Reduce sickness absence X and Y refer to two separate business units within The Boots Company PLC. The model can also make estimations about the minimum benefits required from specific services at the level of the individual. These are presented in Tables 6 and 7. For example, a at the OHS for an 'executive health screen' by a Y employee needs to generate 66 per year for the company in terms of increased health and morale but nothing in terms of saving medico-legal costs. DISCUSSION The threshold values for each of the five types of benefit have been estimated using a macro and a micro approach. It is therefore possible to comment on the possibility of achieving these values. The overall required value of an increase in the health and morale of employees brought about by the use of the Downloaded from on December 7

4 6 Occup. Med. Vol., Table 6. Minimum value (in ) of the benefit required from each type of, for business unit X Numhpr of users Average cost 7 s - are as given in the footnote to Table. Table 7. Minimum value (in ) of the benefit required from each type of, for business unit Y 9 VUl ' IUSJI of users Average cost 9 9 s - are as given in the footnote to Table. Boots OHS is in the range - per user per year. For individual s provided by the OHS this range is (nurse screen) to 7 (executive health screen (EHS)). This is clearly a benefit to the employer and the employee. A 'willingness to pay' questionnaire could ascertain whether values in this range per year are in fact realistic from the employee's perspective. The employer's valuation of this benefit is unknown. The overall required value of increased performance and productivity brought about by the use of the Boots OHS is in the range -7 per user per year. For individual OHS s this range is (surveillance) to 7 (EHS). If it is assumed that an employee's wage is equivalent to output added to the company then a value of 7 for a worker with a salary of, is equivalent to.%. This means that provision of the OHS should increase each user's annual productivity by around.%, or alternatively that, had the OHS not been provided, productivity would decrease by at least.%. The level of benefit required to make an OHS costeffective across this dimension is likely to be achievable and is within an achievable range. The overall required value of an avoidance of, or reduction in, medico-legal costs brought about by the use of the Boots OHS is in the range 7- per user per year. For individual OHS s this range is (nurse screen) to 6 (ill-health retirement (IHR)). In assessing the likelihood of achieving this value it is necessary to consider both the probability of medicolegal cases arising over a year and the expected average cost of each case. Past records may reveal such information. However, given that the absolute threshold value of this benefit for Y is around,77, it seems highly likely that this would easily be achieved and that the OHS will be cost-effective across this dimension. The Trades Union Congress (TUC) estimates that in 99 it secured awards totalling million against workplace injuries and ill health for its members. One such case resulted in an award of, for a volunteer hospital worker who suffered back injuries. The overall required value of enhanced workplace safety brought about by the use of Boots OHS is in the range - per user per year. For individual OHS s this range is (treatment) to 79 (vaccination). It is difficult to assess whether these values are likely to be routinely achieved. No data are available to directly measure this benefit, but this dimension is likely to be related to the other types of benefit listed. Downloaded from on December 7

5 P. Miller el a/.: Economic evaluation of an occupational health service 6 The overall required value of reduced sickness absence brought about by use of the OHS is in the range - per user per year. For individual OHS s this range is (nurse screen) to 6 (IHR). These values may be equivalent to approximately half-a-day for an average employee. This means that the OHS needs to prevent half-a-day in sickness absence per user per year. It seems likely that the OHS is achieving much higher benefits than these threshold values, because if the OHS was not provided it is highly likely that much more than half-a-day per person would be lost through sickness absence. Thus, in all probability, the OHS will be highly cost-effective across this dimension. CONCLUSION The economic model constructed avoids the inherently difficult task of measuring the actual benefits of an OHS. Instead, minimum benefit thresholds are presented which need to be achieved in order for the service to be cost-effective. However, there is still a need to assess the likelihood of achieving these benefits. Data with which to systematically assess this likelihood are not available for all five types of benefit included in this analysis, and some subjective judgement is required. Even after allowing for the uncertainty surrounding some of these judgements it is highly likely that threshold minimum benefits will be achieved and that, overall, the Boots Occupational Health Service is cost-effective: benefits generated by the OHS are greater than its costs. Cost-effectiveness may, however, be improved by reviewing the balance of service mix within the OHS since some OHS consulations are more cost-effective than others. REFERENCES. Health Safety Executive. The Cost of Accidents. London: HSE Books, 99.. Confederation of British Industry. Managing Absence Survey. London: CBI, Fitko J, Kalina C, Fisher A, Mitchell J. A cost-effectiveness analysis of an in-house corporate occupational medical department. J Occup Med 99; 6: McGrail MP, Tsai SP. A comprehensive initiative to manage the incidence and cost of occupational injury and illness. Report of an outcomes analysis. J Occup Environ Med 99; 7: Pachman JS, Stempien DE, Milles SS, O'Neill FN. The hidden savings of an on-site corporate medical center. J Occup Environ Med 996; : Oldenburg B, Owen N, Parle M, Gomel M. An economic evaluation of four work site based cardiovascular risk factor interventions. Health Educ Quart 99; : Conti D, Burton W. The economic impact of depression in a workplace. J Occup Med 99; 6: Kingery PM, Ellsworth CG, Corbett BS, Bowden RG, Brizzolara JA. High-cost analysis: a closer look at the case for work-site health promotion. J Occup Med 99; 6: Jeffery RW, Forster JL, Dunn BV, French SA, McGovern PG, Lando HA. Effects of work-site health promotion on illness-related absenteeism? J Occup Med 99; : Warner KE, Wickizer TM, Wolfe RA, Schildroth JE, Samuelson MH. Economic implications of workplace health promotion programs: review of the literature. J Occup Med 9; : 6-. Downloaded from on December 7