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EDITORIAL
A Healthy Workforce: The Driver of Corporate Financial Performance
By Ira Smolowitz, Ph.D.
__________________________________________________________________________
I am a member of the Springfield, Massachusetts
chapter of FEI – (Financial Executives International). At the October
14, 2004 chapter meeting – the associated meeting topic was healthcare:
current status, benchmarks, trends, and viable alternatives.
The program leader was Peter J. Tavolacci, Senior Vice President,
Employee Benefits Services – Marsh and McLennan Companies.
Two of his observations have been the impetus for my own research
and this article. The two observations are: (a) Body Mass Index
(BMI) of 30 or greater is a good predictor of lost time and injury
rate and (b) employees with a BMI of 30 or greater had the highest
rate of injuries, and the longest time off.
Let’s begin by determining how BMI is determined. In a news release
issued 07/01/2003 – and authored by James J. Doyle, Chilton Memorial
Hospital President and CEO – BMI can be determined by dividing your
weight in pounds by your height in inches squared. The resulting
figure is multiplied by 703.
“Typically, a BMI of 19 is regarded as ideal. If your BMI is less
than 19, you may be underweight. A BMI of 19 – 24.9 is considered
normal. A BMI of 25 – 29.9 is overweight. Anyone with a BMI of 30
or more is considered obsese.1 “Obesity costs U.S. companies an
estimated $12.7 billion annually, reports the National Business
Group on Health (NBGH), a consortium of major employers working
to control health care costs. The higher an individual’s body mass
index, or BMI, the higher the costs.”2 …
On average, health care for obese workers costs 36
percent more than for normal weight workers, and medication costs
77 percent more, according to Roland Sturm, senior economist at
RAND in Santa Monica, Calif., where he directs the Economic and
Policy Research Program.
Direct costs of obesity include medical insurance, hospitalization,
physician visits, outpatient testing/treatment, laboratory, radiology
and pharmaceutical. Health insurance is responsible for $7.7 billion,
followed by life insurance ($1.8 billion) and disability insurance
($800 million), according to the study “Estimated Economic Costs
of Obesity to U.S. Business,” published in the American Journal
of Health Promotion in 1998.
Indirect costs include decreased productivity and increased absenteeism.
Obese employees are twice as likely to be absent 14 or more times
per year. Paid sick leave associated with obesity costs employers
an estimated $2.4 billion per year.
Even when they are on the job, a quarter of obese workers under-perform
because of infirmities related to their weight, estimates Dr.
Eve Olson, director of St. Francis Medical and Surgical Weight
Loss Center, and author of “Obesity in the Workplace: A Case for
Treatment,” (American Journal of Bariatric Medicine, 2003).
Overall, NBGH reports that obesity is associated with 39 million
lost work days, 239 million restricted-activity days, 90 million
bed days and 63 million physician visits.
More important, obesity significantly affects the health and quality
of life of employees. The condition is a risk factor for a large
number of chronic diseases, such as diabetes, heart disease, hypertension,
musculoskeletal conditions, depression, stroke, poor female reproductive
health, as well as endometrial, breast, prostate and colon cancers.
It can contribute to the onset of these disorders and worsen them.3
It seems to me, that if efficiency is defined as output/input –
then employee obesity serves to reduce organizational efficiency.
Employee obesity and its associated direct and indirect costs adversely
effect both the numerator and denominator of the above definition
of efficiency. In a subsequent article, in this publication, I will
indicate how corporations are responding to employee obesity.
References:
1 Doyle, James J. “Weight Loss At The Work Site” Chilton
Memorial Hospital News and Publications – Released: 07/10/2003
[downloaded 10/15/2004 from [http://www.chiltonmemorial.org/cgi-bin/pr.cgi?
id PressRelease =202] p.1.
2. Grossman, Robert J. “Countering A Weight Crisis”] HR Magazine
– March 2004] – Downloaded 10/15/2004 from http://www.shrm.org/hrmagazine/articles/0304/0304covstory.asp].
p.1.
3. Ibid, pp 1-2
_________________________________________________________________________________
Articles printed with the permission of Dr. Ira Smolowitz,
Professor of Finance and Dean, Bureau of Business Research and Program
Development at American International College, Springfield, MA.
_________________________________________________________________________________
Page updated: May 21, 2007 7:46 AM |