Talk about “burying the lead.”
Ron Goetzel just reported on a company called Graco, where employees were subjected to a “pry-poke-prod-and-punish” wellness program. These are line employees in an “old economy” company–exactly the type of company where healthcare spending would be high. And it is high. According to the article, Graco spent $29,000,000 on healthcare for 2600 employees. That’s about $11,100 apiece, roughly what you’d expect. This estimate is with or without a wellness program, since as Ron’s recent HERO report noted, wellness programs have no positive impact on spending.
Yet later on in the article he writes:
In the immortal words of the great philosopher Rick Perry, oops.
$190 per member per month (and we assume that he meant just for employees, not members) is $2280/year/employee. Here are the possibilities:
(1) Graco has the country’s mot expensive spouses, costing about $18,000/year (to bring the average spend to $11,000 per employee contractholder per year) but hasn’t noticed
(2) Graco has some magical special sauce that kept costs way below average even before the wellness program started that Ron failed to tell us about (hence “buried the lead”)
(3) Ron Goetzel made yet another rookie mistake in his math, thus invalidating the entire study, just like most of his Koop Awards.
You can rule out that this $190 had anything to do with the wellness program. Smoking rates (the only thing that really affects spending) remained unchanged, and obesity only fell a few points. And a company can’t save money by overscreening people, paying for their drugs, and making them get unnecessary checkups. In any event, it wasn’t $190/month. It was $11,100/year.
$2280 vs. $11,100… We look forward to Mr. Goetzel’s explanation of how both these figures could be true, since it appears they are completely at odds with each other. In the immortal words of the great philosophers Dire Straits, if two men say they’re Jesus, one of them must be wrong.
And once again, the mantra of Surviving Workplace Wellness holds true: In wellness, you don’t have to challenge the data to invalidate it. You simply have to read the data. It will invalidate itself.
We will no doubt be accused of “bullying” him for invalidating this study, which he obviously spent a lot of well-compensated time on. So just to show our good intentions, we will offer him our course and certification in Critical Outcomes Report Analysis gratis. It seems he could learn a lot from it and we look forward to announcing his successful completion.
Update: Ron apparently “forgot” to include the actual data in his writeup, which showed that, um, how to put this tactfully, his entire conclusion is wrong. Looks like kids (who had no access to wellness) trended better than the adults who did have access. We added this as the second installment.
You overlooked yet another head-scratcher. How does a pry-poke-and-prod program reduce industrial errors by 37%?
Obviously the two have nothing to do with each other. However, I’m not looking to “challenge the data” (and this would be a perfect one to challenge) but rather to simply invalidate the entire study using the study’s own words. The key in wellness–as we noted with the HERO report–is to read beyond the headlines. invariably there is some massive screw-up just waiting for us. When the wellness ignorati publish, I always think of the Sherlock Holmes line: “Come, Watson, the game is afoot.”
Al, can you elaborate on this statement, as I find it confusing. How do smoking rates affect spending exactly?
“Smoking rates (the only thing that really affects spending) remained unchanged, and obesity only fell a few points.”
First, thanks as always for your comments. Second, I personally have never done the analysis, but it does appear that smokers incur considerably more healthcare costs than non-smokers. (I have seen figures as high as $5000 more per year but am inclined to believe it’s more like $1000 or so.) So if a smoking rate declines, it is reasonable to project some savings to the smoking cessation program. In this case, there was no change in the smoking rate, meaning that the savings in wellness could not be attributed to a reduction in smoking.
Hope that helps.
You should comment right on his blog about Graco. Other readers would appreciate the correction.
Haha, good one, Sam. You’ll not be shocked to learn I submitted this comment but the submission wasn’t posted.
Actually, there are many factors that could account for the two costs listed.
First, he specifically mentions $190 Per Member Per Month, a commonly reported figure in benefit analysis. Why did you disregard the Per Member, and switch to PEPM?
A PMPM cost of $190 is perfectly in line with an estimated $29 mil in annual benefit costs. For example, at the company I work at, in 2013, we had ~6500 employees with total medical and pharmacy claim costs of ~$48 million, while our PMPM costs are at ~$230.
Without knowing how many members (employees + spouses + dependents) the company has, you cannot draw conclusions dismissing these numbers.
Also, the PMPM costs are just for medical and pharmacy. The $29 mil figure includes all healthcare related costs. This includes dental, vision, wellness programs, EAP, health insurance administration fees (they are self funded) ect.
Thanks for posting. I didn’t disregard the difference between the PMPM and the PEPM. You’d expect the latter to be 2.5x or even 3x the former, just not 5 times the former. No old-economy company offering a competitive healthcare benefit could spend $2280 for these employees described as older than average, period. And unless they had a TON of dependents, as in the highest dependent ratio outside Utah, the numbers just simply don’t add up. Not to mention all the other problems that Bob Merberg found on his blog.
One other observation: if indeed the answer were as easy as you say it is, when I posted this observation on Ron’s own Graco blog and asked to reconcile those two figures, why didn’t Ron just post it (instead of ignoring it in classic ignorati style) and say what you just said, which would have clarified the whole thing. That would have had the added advantage of being the only time when our math differed and he was right.
And yet he didn’t…
Ron just graciously admitted on the NIOSH linkedin group that indeed $190 PMPM is not “perfectly in line” with the $29MM and that in fact there was a “discrepancy” that he will be fixing in his blog.