APA Center for Organizational Excellence: Good Company

Resources for Employers

Good Company Blog

Dr. Matt Grawitch: November 2008 Archives

In this era of increased healthcare costs, many organizations are beginning to shift to so-called high-deductible plans or consumer-driven healthcare plans. Various constituents banter about the advantages and disadvantages of such plans, some driven by a particular agenda. I am by no means a healthcare expert, however, one thing is for certain when it comes to these high-deductible plans. Employees are required to be knowledgeable about health and healthcare.

Unfortunately, employees may not have sufficient knowledge to be able to make truly informed choices about how they spend their healthcare dollars. A recent issue of Psychological Science in the Public Interest highlights the problem: the vast majority of people are not qualified to interpret statistical results regarding different drugs, testing procedures, and other key health decisions. What’s worse is that doctors tend not to be much better. For example, the article reports on a study of gynecologists. Only 21% of them could accurately explain the probability that a positive mammogram result actually indicated that a woman had breast cancer. I don’t know about others, but that certainly does not give me much confidence.

Of course, a lot of the problems surface because everything gets reported in relative percentages. This drug cuts your risk of stroke by 50%...lose 25% more weight with this diet drug…cut the length of a cold by 10%. What do these percentages mean? Absolutely nothing, because these percentages are all relative! If the odds of suffering a stroke go from 2% to 1%, you have cut your risk of a stroke by 50%. But, is it really worth taking an expensive drug with 15 possible side effects so that your odds of suffering a stroke can go down by 1%? Most people would at least think twice before taking such a drug. Yet, because the benefits are inflated with relative percentages, most people have no idea. If doctors themselves have trouble sorting through all the spin, what are the odds that the average person with no medical training will be able to accurately interpret the results? I wouldn’t want to bet on those odds! Until people become more educated consumers (and that includes an ability to see through the spin and understand the statistics), then healthcare costs will continue to rise, resulting at least in part from people’s dependence on costly and yet unnecessary drugs and medical procedures. Call me cynical, but that is not a consumer-directed healthcare plan!

So many websites, organizations, foundations, and consulting firms have been devoted to the issue of wellness in the workplace. The key assumption is that wellness drives so many costs for an organization that the employer needs to make workers healthier.

Yet, a report that will soon be published by Mercer indicates that healthcare costs are not the primary issue that employers are facing. Instead, planned and unplanned absences may cost as much as 36% of total payroll, according to a briefing published by the Society for Human Resource Management. That means absenteeism would be costing an organization about twice as much as healthcare, with the bulk of those costs coming from planned absences, such as vacation and other scheduled time off.

So, what does this mean? Healthcare costs organizations millions of dollars and these organizations respond by relying on plans that cost employees more, incentives to encourage healthier behaviors, and penalties for unhealthy behaviors. If absenteeism is costing them twice as much, what will the response be, especially given that millions of Americans do not even use the full amount of their time off? Will we see penalties for taking time off, incentives to avoid taking vacations, and recognition for perfect attendance? If so, what will that do to employee stress and consequently to employee health?

Perhaps the answer lies with workplace flexibility. Offering more flexible options for when, where, and how employees interact with their work responsibilities can allow employees the flexibility to have some time off without negatively impacting organizational performance. Although I am not advocating a complete trading of the physical office for the virtual office, which was recently recommended in Wired Magazine, there should be a greater emphasis on workplace flexibility within an organization’s culture. This would permit employees to take time out from work, without an all-or-nothing approach. Given that most Americans don’t use their entire vacation time and tend to “dig themselves out” afterward anyway, such an approach would seem to represent a win-win for the organization and its employees.

However, this approach does not come without accountability and responsibility. An organization has to be willing to allow employees the real flexibility they need to get away from work, manage non-work demands, and yet maintain productivity. This means providing managerial support for flexibility, as well as working out arrangements that will be genuinely beneficial for both the organization and the employee. Employees, on the other hand, would have to learn to manage themselves outside of the workplace in a way that allowed them to maintain their productivity in the face of other distractions. So, both the organization and employees would need to learn a new style of the work-employee interface. The question is: Will that happen?