Trends and Impact - The Basis for Investment Decisions

Strategies -- The Impact of Active Living at Work Initiatives

Trends Related to Health Spending and Prevention Strategies

National Health Expenditure Trends

On December 16, 1999, the Canadian Institute for Health Information (CIHI) reported that spending on Canada's health-care system was expected to reach $86 billion for 1999, which represented a 5.1% increase from 1998.

Projections show that sales of prescribed and non-prescribed drugs are consuming an increasingly larger share of total health expenditures, replacing spending on physician services as the second largest category. Hospital care remains the leading category of health expenditures.

Canada spent an estimated $78 billion on health care in 1997, an increase of 3.1% from 1996. These trends suggest that if rapid change does not occur, health-care costs will continue to escalate, particularly since Canada's population is aging.

Per capita spending for 1999 was estimated at $2,815.

Total health-care expenditures as a ratio of the GDP have grown from 8.9% in 1997 to 9.1% in 1998 and then to 9.2% in 1999.

Health-care spending by the private sector was an estimated $23.9 billion in 1997, representing about 31% of total health expenditures in Canada.

National Health Expenditure Trends (1975 - 1999), Canadian Institute for Health Information

National Wellness Survey Report 2000

The Second Tri-Annual Buffet Taylor National Wellness Survey shows that workplace wellness is becoming increasingly important to the Canadian Business community. Four hundred and twenty-two businesses representing 716,885 employees responded to the 1999 survey.

Results:

• 17.5% of companies are offering comprehensive worksite wellness programs
  
  
• 64% are offering some wellness initiatives
  
  
• The top four reasons why these companies offer worksite wellness programs:
  
  
  1. 27.3% consider healthy employees a valuable asset
  2. 25.6% want to promote a healthy lifestyle
  3. 14.3% want to reduce absenteeism
     
  4. 10.1% want to contain the costs of benefit programs
     
     
• The wellness initiatives being offered include:

  - Employee Assistance programs -- 49.3%
  - CPR and First Aid -- 47.6%
  - Smoking cessation -- 35.7%
  - Ergonomics --- 32.9%
  - Stress management -- 32.4%
  - Wellness posters -- 30.9%
  - Flu Shot clinic -- 30.2%
  - Fitness subsidy -- 29.0%
  - Safety -- 26.3%
  - Back care program -- 24.6%

• 35.5% feel that incentives are needed to encourage employees to participate fully in wellness programs. (Emerging data in the United States suggests that incentives are important - Chapman, 1998)
  
  
• The two most important incentives were cited as recognition programs and paid work time to attend wellness workshops.
  
  
• Only 23.9% evaluated their wellness programs, which explains why the data is so limited.
  
  
• A majority underestimate the time it takes to show reasonable improvements in employee health (e.g., Canada Life 10-year analysis provides one of the best indicators).
  
  
• The following were cited as the five most important reasons their companies do not have a comprehensive wellness program in place:
  
  
  1. Lack of resources -- 40.8%
  2. Lack of staffing -- 38.6%
  3. Concern about implementation costs -- 32.1%
  4. Lack of knowledge about employee wellness programs -- 19.6%
  5. Unconvinced of cost savings -- 17.6%
     
     
• 83.1% cited stress as the major health risk in their organizations
  
  
• The most used strategies for coping with increasing benefits costs are:
  
  
  • Disability management -- 48.8%
  • Attendance management -- 40.1%
  • Managed drug formularies -- 38.9%

1996 Study by the Conference Board of Canada

• Reported that between 1990 and 1994, employer's health spending grew by 26%

Statistics Canada 1997 Labour Force Survey

• Showed that an average 7.4 days were missed by each full-time employee in 1997. For a company of 1,000 employees, with an average salary of $190 per day, this translates into $1,400 per employee, per year for incidental absenteeism or a total cost to the company of $1.4 million per year.

Understanding Canada's Health-Care Costs

Canada's provincial and territorial Ministers of Health produced a report in August 2000 that laid out the challenges faced by Canada's health-care system.

This report spells out the pressures on the system and the costs that will be faced by all sectors of the economy to maintain it.

The Economic Burden of Illness in Canada, 1993

A 1993 report by Health Canada showed that the total cost of illness in Canada for 1993 was $156.9 billion. This is roughly equivalent to 22% of the Gross Domestic Product or $5,450 per capita.

This was broken down as follows:

• $71.7 billion in direct costs; and
• $85.1 billion in indirect costs.

All costs, except $27.6 billion in direct costs, were classifiable by diagnostic category. Those with the highest costs were:

• Cardiovascular disease -- $19.7 billion
• Musculoskeletal diseases -- $17.8 billion
• Injuries -- $14.3 billion
• Cancer -- $13.1 billion

These four categories represented 50.2% of the total cost of illness classifiable by diagnostic category.

Health Canada Economic Burden of Illness in Canada, 1993

Canada's Aging Population

People over 45 use more of the per capita share of health care resources than their younger counterparts. Canada's population is aging and health-care costs both for the country as a whole and for business in regard to benefit costs will increase with the population.

Population Tables can be obtained from Statistics Canada at www.statcan.ca or you can contact infostats@statcan.ca. You will need to marry these tables with the actual figures from your organization to project the kind of increases your organization should anticipate.

Health Care and Insurance Costs

These figures are not readily available. However, each business has these records in their Finance and Administration area. We suggest that you build your own database with the figures available in your organizations.

Return on Investment

Evidence in Canada

• Canada Life in Toronto showed a return on investment of $3.40 on each corporate dollar invested on reduced turnover, productivity gains and decreased medical claims.
• Dr. Roy Shephard found corporate wellness programs returned a cumulative economic benefit of $500 - $700 per worker per year.
• Municipal employees in Toronto missed 3.35 fewer days in the first six months of their "Metro Fit" fitness programs than employees not enrolled in the program.
• BC Hydro employees enrolled in a work-sponsored fitness program had a turnover rate of 3.5% compared with the company average of 10.3%.
• The Canadian Life Assurance Company found that the turnover rate for fitness program participants was 32.4% lower than the average over a seven-year period.
• Toronto Life Assurance found that employee turnover for those enrolled in the company's fitness program was 1.5% versus 15% for non-participants.

Evidence in the U.S.

• Bank of America - $5.96/$1
• PacBell - $3.10/$1
• Wisconsin School District - $4.47/$1
• Prudential Insurance - $2.90/$1
• General Mills - $3.50/$1

Here are some examples in the U.S.

• For $30 per person, the Bank of America conducted a health promotion program for retirees. Insurance claims were reduced by an average of $164 per year while costs for the control group increased by $15.
• Coca Cola reported a reduction in health-care claims with an exercise program alone saving $500 per employee per year for the employees who joined their HealthWorks fitness program.
• Prudential Insurance reports that the company's major medical costs dropped from $574 to $312 for each participant in their wellness program.

Data from the Worksite Health Promotion Directory

Disease Patterns and Organizational Costs

70% of an organization's benefit costs are incurred in six disease categories.

Detailed below, these categories represent the most prevalent types of illness and injury experienced in the North American workplace. They are also preventable or at least modifiable through physical activity and other lifestyle/behaviour changes.

1. Cardiovascular (CV): (includes such things as hypertensive heart disease, myocardial infarction, angina, arteriosclerosis, cardiac arrest, and other heart-related disorders)
2. Muskuloskeletal (MSK): This category is organized into three sub-categories of MSK injuries:
   • Back (this sub-category includes such things as: all forms of intervertebral disc disorders, psychogenic backache, plus sprains and strains of the sacroiliac region, etc.)
   • Repetitive Strain Injury (RSI) (this sub-category usually includes: carpal tunnel syndrome, fibromyalgia, as well asRSI of wrist, elbow and/or shoulder, etc.)
   • Other (includes all other forms of MSK injury and usually includes all forms of sprains, strains, and dislocations, etc.
3. Respiratory: (includes all forms of acute sinusitis, laryngitis, and bronchitis, as well as acute upper respiratory infections, viral infections, viral pneumonia, and influenza, etc).
4. Digestive: (includes all forms of functional digestive disorders, ulcers and esophagitis. Some digestive cases may be hard to distinguish from stress.
5. Cancer: (includes all sites and forms of neoplasms)
6. Stress: (besides some forms of gastric disorders and gastroenteritis, the stress category includes many forms of headache, anxiety reactions, and miscellaneous conditions such as insomnia, etc.)

Total deaths and age-standardized death rates by selected causes 1981 and 1992.

	Women				Men
	1981		1992		1981		1992
	Total Deaths	Rate*	Total Deaths	Rate*	Total Deaths	Rate*	Total Deaths	Rate*
All Cancers	17,974	148.8	24,785	152.8	22,440	238.9	30,053	244.0
Lung Cancer	2,170	17.9	4,829	29.6	7,147	73.1	9,747	77.4
Breast Cancer	3,604	30.1	4,677	30.4	--	--	--	--
Colorectal Cancer	2,616	21.5	2,779	16.6	2,670	29.2	3,147	25.9
Heart Disease	24,754	202.7	25,419	141.4	33,633	379.2	30,051	255.8
Cerebrovascular Disease	8,244	67.4	8,419	46.3	6,601	80.8	6,052	54.0
Respiratory Disease	3,980	32.5	7,252	40.3	6,999	84.3	9,410	84.9

*Rates per 100,000 population

Statistics Canada: Catalogue 84-209, 1991 Canadian population

Similar Statistics are available by gender and age in Statistics Canada Catalogue 11-612E, No 8.

Health-care costs related to major disease groups

Benefit streams data -- National norms

• Incidental Absenteeism: 16.39% of benefit costs -- 1.5% of payroll
• Worker's Compensation: 20.77% of benefit costs -- 1.9% of payroll
• Weekly Indemnity: 19.13% of benefit costs -- 1.75% of payroll
• Short-Term Disability: 18.03% of benefit costs -- 1.65% of payroll
• Long-Term Disability: 9.29% of benefit costs -- 0.85% of payroll
• Drug Plans: 6.56% of benefit costs -- 0.6% of payroll
• Extended Health Care: 8.2% of benefit costs -- 0.75% of payroll
• Employee Assistance Program: 1.64% of benefit costs -- 0.15% of payroll

Supporting research

Click here to access the supporting research for this section.

Strategies -- The Impact of Active Living at Work Initiatives

top

[Introduction] [Physical Activity in Canada] [The Role of Health Canada] [Trends & Impact - The Basis for Investment Decisions] [Getting Started & Managing Initiatives] [Business Case Studies & Template] [Case Study] [Press Release] [Site Map]
Date Modified: 2004-01-08	Important Notices