Healthcare Reform Webinar Series Video 5: Centers of Excellence and Finding the Best Care

In the fifth webinar in our healthcare reform series, Dr. Hank Gardner, Dr. Tim Ryan, Rene Sims, MSN, RN, and Justin Schaneman, MS discussed centers of excellence and how clinical prevention plays a role. Watch the video recording to hear how centers of excellence are commonly evaluated and learn a new way of evaluation that measures how efficiently healthcare networks/providers manage patient risk.

For HD viewing, please click on the video and then click on “HD” in the bottom right of the pop-up window. The HD button will be blue when it is turned on.

Have any questions or comments? Leave a comment and we’ll be sure to get back to you.

To see the other videos in this series, please click here.

Which Comes First — Better Health or Better Job Performance?

Better Health or Better Job PerformanceThere’s a strong link between better health and better job performance, according to a study by HCMS Group.

People who rated in the top 20% on year-end performance reviews also had the lowest medical costs and the lowest health risk scores, HCMS researchers found. The analysis covered several thousand professional workers in the HCMS database over 12 months. The performance evaluation system classified the group in three performance bands—the lower 20%, middle 60%, and upper 20%.

There are two ways of looking at the findings. One is that high job performance correlates with a high sense of responsibility, so the better workers try harder to maintain good health. The other is that healthier people are simply better able to perform at a high level in the workplace, while for others illness may cause productivity to suffer.

There’s been relatively little research on the connection between work performance and health. One study by Brigham Young University’s department of health science found that employee engagement, health behavior, and physical health were significantly associated with job performance and absenteeism. The research was based on 20,000 employees of three U.S. companies who completed surveys between 2008 and 2010.

For each of the three performance groups in the HCMS study, researchers calculated the average annual medical costs and the average risk score, using the Human Capital Risk Index® (HUI, patent pending). The HUI score takes into account about 300 variables for each individual, including medical diagnoses, health plan costs, compensation policies, and use of disability and workers’ compensation benefits. The average risk is 1.0.

Risk Score Health Plan Cost by Performance Group

Medical costs for the entire group averaged $5,455 for the year. Those in the top-performing 20% had average health expenses of $4,100, more than a third lower than the middle group’s $5,600. People in the lowest performance band had healthcare costs 41% higher than those in the middle band.

Similarly, the HUI risk scores average 1.0 for the top-performing group, or 17% lower than for those in the middle group. The lower-rated band had average risk scores 17% higher than those in the middle. The research also found that those in the middle and lower performance groups were two to three times as likely to have a disability claim. Workers’ compensation filings were twice as high for the bottom group as for the upper two categories.


– Robert L. Simison, HCMS Communications

On behalf of HCMS Data Analytics


Higher Education, Lower Risk to Health

Human Capital Risk Index EducationA college education doesn’t just raise your earnings potential. It may also lower your risk of poor health.

Health risks for people with a bachelor’s degree are 20% lower than for those with a high school education, and more than 27% lower than for people who didn’t finish high school, according to research by HCMS Group LLC. Holders of doctorates have risk scores 10% lower than for people with a bachelor’s degree.

The findings are based on the HCMS Group research reference database. Health risk reflects the company’s Human Capital Risk Index® (HUI, patent pending). The index weights more than 300 characteristics on each individual, including clinical diagnostics, medical and pharmacy benefit use, workers’ compensation claims, and disability time used. A score of 1.0 represents average risk across the entire database of 3.7 million people. The analysis of education level was based on a database subset for which the average risk score was higher than 1.0.


HUI Risk Scores by Education Level

For people who didn’t complete high school, HUI risk scores were 1.82, almost double the overall mean. The lowest score for any group was 1.19, for those with Ph.D.’s.

Other researchers have documented the link between higher education and better health. This month, the National Bureau of Economic Research published a working paper, “Education and Health: Evaluating Theories and Evidence.” The authors calculated that the health returns on education increase education’s total value by 15% to 55%. Earlier research sponsored by the Robert Wood Johnson Foundation examined the role in this phenomenon of health knowledge and behaviors, employment and income, and social and psychological factors.

The conventional wisdom is that a higher degree of formal education correlates with a higher degree of health knowledge. Our research also suggests a significant compensation impact. Employees with a higher level of education are more likely to have higher-paying jobs with more compensation at risk through incentive compensation structures. These workers have a stronger incentive to protect their health to ensure continuing success.

The HUI score, based on more than a decade of research by HCMS Group, is the most accurate person-centered risk score available. It is central to the company’s 5|50 Solution™ which is designed to address the 5% of any population that accounts for 50% of employer’s benefit costs.

– Robert L. Simison, HCMS Group Communications

On behalf of HCMS Group Data Analytics.


Can a Backache Be Contagious?

Contagious BackacheIf you have a backache, a knee sprain, or some other injury to the body’s structure of bones, joints, and muscles, the risk that someone else in your family has such an injury rises by more than a third.

That’s what researchers at HCMS Group LLC discovered in analyzing healthcare data on more than 3.7 million people whose medical benefits were provided by more than 200 employers. They found that when a covered employee has medical costs for treating a musculoskeletal condition, there’s a 27% likelihood that a dependent will, too. That compares with a 20% risk for dependents when the employed family member doesn’t have such an injury.

Among dependents, the risk is higher for adults than for children, but the findings are consistent across all groups. (See figure 1 below.)

Likelihood of Dependent Musculoskeletal Cost

For more than a century, economists and psychologists have observed a contagion effect in social networks and workplaces. One 1996 study found that health symptoms often spread through groups of workers without any physical cause. In 2000, researchers, led by Dr. Hank Gardner,  the CEO and principal owner of HCMS Group, analyzed data on claims for workers’ compensation and family leave. They found evidence that workers learning from each other about the benefits fueled a contagion effect in filing of claims.

With respect to musculoskeletal conditions, multiple cases within a family can have significant cost ramifications. Average annual expenses for treatment of these conditions range from $500 to $55,087, according to HCMS Group research. The low end of the scale is for the healthiest 50% of the population. At the high end are those in the 5% of the population who account for 50% of healthcare costs. People in this group have an average of 10 other conditions, with several medications and specialists involved in their treatment. (See previous blog post. For information on HCMS Group’s 5|50 Solution™ designed to address this problem, click here.)


– Robert L. Simison, HCMS Group Communications

On behalf of HCMS Group Data Analytics


This is the final installment in the series on musculoskeletal discoveries. Please visit the links below to read the other posts in this series:

1. Musculoskeletal: Top Contributor to Total Claim Costs

2. Musculoskeletal Costs Nearly Twice that of Condition-Specific Costs

3. The $55, 087 Backache


Healthcare Reform Webinar Series Video 4: The Importance of Primary Care

The fourth video in our healthcare reform webinar series focuses on the importance of primary care. Watch this live webinar recording of Dr. Hank Gardner, Dr. Nim Patel, Shawn Petrini, MSN, RN, and Justin Schaneman, MS as they discuss a market solution for healthcare reform, primary care and clinical prevention analyses, key issues with primary care usage, and clinical prevention’s synergy with primary care.

For HD viewing, please click on the video and then click on “HD” in the bottom right of the pop-up window. The HD button will be blue when it is turned on.

Have any questions or comments? Leave a comment and we’ll be sure to get back to you.

To see the other videos in this series, please click here.

The $55,087 Backache

It costs an average of $55,087 a year to care for the sickest Americans who have a backache or some other injury affecting the body’s structure of muscles, joints, and bones. That is according to data compiled by HCMS Group on 3.5 million people, and the total is more than 100 times the cost for treating similar conditions among the healthiest Americans.

Why? It’s because people in that part of the population typically struggle with multiple conditions that complicate treatment, HCMS research shows. (See earlier blog post). This group amounts to about 5 percent of Americans, and yet they account for half the medical spending. By contrast, the healthiest group includes 50 percent of the population and spends relatively little on health care. (See overview of population risk analysis).

Figure 3 contrasts the expense of treating musculoskeletal situations with spending on all other conditions. The population is broken into groups based on where they rank in total costs of all medical treatment.

Figure 3: Average Annual Cost for Musculoskeletal and other Conditions, by Spending Group

Further analysis of the data shows that the risk of back or other muscular and skeletal problems is also much higher among the 5 percent who are the least healthy. HCMS Group’s proprietary Human Capital Risk Index®, or HUI, takes into account more than 100 characteristics for each person, including diagnoses, use of medical care, drug prescriptions, and claims for disability and worker’s compensation. A score of 1.0 represents the average risk of the population as a whole.

In Figure 4, the risk of musculoskeletal problems among the sickest group is four times as high as among the healthiest. Across all four groups, the risk of having this kind of condition exceeds that of all other illnesses combined.

Bottom-line takeaway: The difference between a $500 and a $55,087 backache lies in who has it and what other conditions affect that person. The research findings show that healthcare programs need to be designed around holistic primary and preventive care centered on individuals. The programs should also incorporate a tool for identifying those most at risk—the comprehensive HUI score—and a system for helping these individuals to prevent, manage, and recover from their conditions.

Figure 4: Human Capital Risk Index® (HUI) Score for Musculoskeletal and Other Conditions, by Spending Group


– Robert L. Simison, HCMS Communications

On behalf of HCMS Data Analytics


Healthcare Reform Webinar Series: Video 3

The third video in our healthcare reform webinar series, The Pathway to Implementing a Single “Aligned Incentives” Health Plan, reviews why having this single health plan delivers the best results.

Watch this live webinar recording as Dr. Hank Gardner, Justin Schaneman, and Neil Sullivan discuss, analyze, and evaluate population risk, actuarial versus econometric modeling, the health insurance exchanges, and health risk assessments.

For HD viewing, please click on the video and then click on “HD” in the bottom right of the pop-up window. The HD button will be blue when it is turned on.

Have any questions or comments? Leave a comment and we’ll be sure to get back to you.

To see the other videos in this series, please click here.

Musculoskeletal Costs Nearly Twice that of Condition-Specific Costs

The figure below shows total musculoskeletal costs in comparison to other major chronic conditions for a collection of large employers in the HCMS Group Research Reference Database (RRDb). Musculoskeletal costs rank among the highest with respect to co-morbidities and disability costs, with co-morbidity costs nearly twice that of condition-specific costs.

Figure 2: Top Condition Co-Morbidity Analysis

The co-morbidity analysis emphasizes the need to treat the individual, not a specific condition. In the case of musculoskeletal conditions, common co-morbidities include obesity, diabetes, and hypertension. Treating theses diseases individually is therefore inefficient; an effective treatment plan needs to address the individual.

Musculoskeletal: Top Contributor to Total Claim Costs

Our next Health as Human Capital research blog entries will focus on people with musculoskeletal conditions. Using Major Diagnostic Category (MDC) disease classification, figure 1 illustrates the aggregate cost of musculoskeletal diseases compared to other common disease conditions. Musculoskeletal claim costs consistently contribute to over 20% of all medical spending, costing nearly twice as much as the next leading category. Musculoskeletal conditions are comprised of several conditions ranging from medically well-defined arthritis to medically poor-defined repetitive-motion injuries. Each circumstance represents a different treatment challenge.


Figure 1: Percent of Total Medical Spending by Major Diagnostic Category

Percent of Total Medical Spending by Major Diagnostic Category


Optimal Number of Primary Care Visits?

Optimal Number of Primary Care VisitsIntroduction

With the increasing interest in learning how to improve the use of primary care, we have modeled the optimal number of annual primary care visits related to Health Plan Costs as shown in the graph below. Increasing primary care is a key element in the HCMS Aligned Incentives Health Plan as described in our webinar series (please click on these links to view the first and second webinar recordings in our healthcare reform series).

Healthcare Reform Webinar Series: Video 2

In the second webinar in our healthcare reform series, HCMS Group CEO Dr. Hank Gardner and VP of Data Analytics Justin Schaneman discuss the Data Analytics used in the successful implementation of effective healthcare reform.

Watch this live webinar recording and listen to a detailed analytic discussion on health plan selection bias, primary care, econometric modeling, population risk analysis, and more.

For HD viewing, click on the video and then click on “HD” in the bottom right of the video. The HD button will be blue when it is turned on.

To see the other videos in this series, please click here.

Advantages of a Bundled Paid-Time-Off (PTO) Plan

Advantages of a Bundled PTO PlanBackground

High instances of sick leave and vacation leave are significant contributing factors to high employer benefit costs and low employee productivity. Various HCMS Group studies have shown that bundled paid-time-off (PTO) plans, as opposed to plans with separate banks for sick and vacation time, are associated with reduced absences, lower health plan costs, and increased employee productivity.

Isn’t It Time You Knew… How Employee Tenure Status Drives the Use of Health Benefits?


The Analysis

When an employee is about to be terminated, their consumption of health benefits increases by over 50%. Previous HCMS Group research indicates that the difference in cost for terminating employees is largely due to the incentives generated by their pending change in benefits coverage (55%). The rest of the cost disparity is explained by differences in health status (roughly 30%) and demographics (roughly 15%). Figure 1 below illustrates the annual cost of employees in each population cohort: new hires, steady population, and terminated. The employee costs for terminated employees are calculated in the year prior to termination.

Isn’t it Time You Knew… How Employee Compensation Impacts Human Capital Risk?


The Analysis

Figure 1 illustrates the relationship between the HCMS Human Capital Risk Index® (HUI) and employee compensation. The HUI uses a broad set of person-centric integrated medical, pharmacy, and lost time metrics (including disability data) to produce the HUI risk score. The HUI score adjusts for most demographic variables such as age and gender.

Isn’t it Time You Knew… How Health Plan Design Impacts Employee Work Performance?



Health plan design not only impacts employee engagement and lost time, but also how well year-end productivity goals are met (or not met). When it comes to the three health plan types featured below, high-deductible health plans produce the most engaged and highest-performing employees.

Most Likely to Exceed Year-End Goals

Employees that choose a high-deductible health plan (HDHP) show increased engagement at work, are on the job the most and, as shown in Figure 1 below, also exceed year-end work goals more than employees who choose an Health Maintenance Organization (HMO) or Preferred Provider Organization (PPO) health plan. More than twice as many HDHP employees exceed year-end goals than HMO employees.

Isn’t it Time You Knew… How Health Plan Type Affects Employee Engagement?


In our previous research post, we described the relationship between health plan type and worker lost time (disability and workers’ compensation benefits). Similar to lost time, health plan design is also significantly associated with employee engagement.

Healthcare Reform Webinar Series: Video 1

HCMS Group CEO Dr. Hank Gardner and CCO Shawn Petrini, MSN discuss “big data,” current trends in healthcare reform, the 5% of a population that is driving over 50% of health benefit costs, and an effective healthcare reform model in HCMS Group’s first webinar in the Healthcare Reform Series.

Discover how multiple health plans drive employee decisions, why specialty care utilization and employee lost time costs remain incredibly high, and what can be done to curb these negative trends.

For HD viewing, click on the video and then click on “HD” in the bottom right of the video. The HD button will be blue when it is turned on.

To see the other videos in this series, please click here.

Isn’t it Time You Knew… How Health Plan Type Affects Worker Lost Time?


As part of HCMS Group Healthcare Reform research, HCMS has explored the relationship between health plan type and worker lost time from disability and workers’ compensation benefits.

Key Finding
Employees enrolled in a PPO (Preferred Provider Organization) health plan had 41% more lost time when compared to employees enrolled in an HDHP (high-deductible health plan). Employees enrolled in an HMO (Health Maintenance Organization) health plan had 21% more lost time than those enrolled in an HDHP.

Important Components of Health Care Cost Variation

There have been several articles published recently about the wide variation in pricing from one hospital to another. Having this information open and available will help providers begin to think about competing on price and quality and will help control the runaway health care costs in the US.

As we examine the variation in costs from one provider to another, it is good to keep in mind that there are at least three important components of cost variation:

  1. Price per service
  2. Number of services per person or per episode
  3. Actual types of services performed

For example, let’s say identical twins with the exact same health problem enter two different hospitals (Hospitals A and B). These two people could face vastly different health care charges after leaving the hospital, but the difference could be due to any (or all) of the three components mentioned above:

Video 5 of Hank Gardner’s Series: Human Capital Risk Index — Population Risk Stratification

In order to manage risk, you need to be able to predict it. Health benefit costs continue to rise at an unsustainable rate. Thirty to forty percent of costs are driven by over-utilization and waste. This waste cannot be analyzed with reactive cost reports and analytics; you need a comprehensive, predictive risk assessment.

HCMS Group’s Human Capital Risk Index® (HUI) is the only leading risk score that predicts and measures human capital health and job performance risk (not just disease).

Built from our diverse research reference database of over 3.2 million individuals from over 100 distinct populations, the HUI takes various data types into account; it utilizes lost-time, medical, pharmacy, and compensation data in order to provide the best assessment of risk and predict high-risk/cost cases.

Our HUI is unique in the fact that it incorporates lost time data and enables our evaluation of a full spectrum of risk. Using lost time data allows us to predict progressive HUI scores before claims cost even come in. This foretelling risk index allows us to provide the right service at the right time without delaying cost-saving and risk-prevention opportunities due to a lag in claims data.

Learn more about HUI by watching the video below.