Quizzify’s unified theory of healthcare: smarter employees use less

One of Albert Einstein’s great regrets was never having developed a “unified theory,” a consistent set of calculations that could explain the universe. That’s the bad news. The good news is that he did give us the word “Einstein” as in: “Ron Goetzel’s Koop Committee members are the biggest bunch of Einsteins in all of wellness, no easy feat considering the competition from WELCOA, HERO and others.”

Past postings have easily invalidated all the Koop awards since 2010.  This did not require breaking a sweat.  Rather, as Surviving Workplace Wellness observes: “In wellness, you don’t have to challenge the data to invalidate it. You merely have to read the data.  It will invalidate itself.”

Previously, we’ve had to content ourselves with pointing out the plethora of individual rookie mistakes in each award. Now, however, we have a Unified Theory of Koop Award Ludicrous Impossibility. It reveals a remarkably consistent set of ludicrously mathematically impossible outcomes across all this decade’s award-winners.  Not just any old ludicrously mathematically impossible outcomes but — and this is what excites my Inner Nerd — the same ludicrous mathematical impossibility pervades every award-winning outcome.  

In each case the award winner has documented a small risk reduction among active participants.  (They have also shown that willingness to participate, rather than the actual program, is what generates the savings, of course, but choose to ignore their own findings.)  And in each case that small risk reduction generates what we thought were fairly random claims of savings.  But it turns out that in 5 of the last 6 awards, the claims savings weren’t random at all but rather were essentially the same, using the same simple formula comparing risk reduction to claims savings.  (The missing year is 2013. We can’t do Dell because we don’t want to embarrass them due to our relationships.)

The Unified Theory of Koop Award Ludicrous Impossibility Revealed

In the real world, trivial reductions in risk among participants — excluding non-participants because they increase in risk — have no impact on spending discernible in the white noise of random claims variation. And if we could discern an impact, it would be even more trivial than the risk reduction, because risk-sensitive medical events are a small percentage of total events.  For instance, if risk-sensitive medical events comprise the typical 5% of total spending, and risk declines by 1%, the reduction in total spending would be 1% of 5%, or 0.05%.  And that’s before subtracting fees.

However, on Ron Goetzel’s planet — also inhabited by fellow Einsteins like Optum’s Seth Serxner, Wellsteps’ Steve Aldana, and Staywell’s David Anderson, and obviously Mercer and Milliman — the opposite is true: a trivial reduction in risk generates massive cost savings. For example, McKesson saved $13 million via a 1% overall risk reduction. At that rate of savings and their rate of spending, their entire health spend could be wiped out if risk factors fell 14%.   Not just their spending on wellness(risk)-sensitive medical events, but their total spending spending on healthcare.  Wiped out. Gone. Obliterated.

A simple example can demonstrate how the Unified Theory works.  Suppose the Koop Award goes to an outfit that claims to have achieved a 10% cost savings by reducing risks 2%.  Then it follows that a 100% cost savings (10 times the claimed amount) could be achieved if risks fell 10 times the claimed 2%, or 20% in total.

To give credit where credit is due, we shall call this resulting figure — 20% in this hypothetical — the Goetzel Factor. The Goetzel Factor is specifically defined as: “The percentage decline in risk factors projected to wipe out spending according to the Koop Award Committee validations of risk and cost savings.”

The Evidence

Let’s review the last five awards (leaving out 2013) using this formula to estimate a Goetzel Factor. Note that the risk reduction is cross-sectional, meaning it is averaged across the entire population, not just participants.  So if the stated or calculated risk reduction is 2%, as with McKesson, and half the employees participate (ditto), the figure in the table below for McKesson would be 1% (half of 2%).

Conclusion: the range of Goetzel Factors is remarkably tight–13% to 16%.  Given the ludicrous impossibility of wiping out spending by reducing a small minority of risk factors, the consistency of the result is amazing:  the Goetzel Factor reveals almost exactly the same ludicrous impossibility every time!

There are a few asterisks in this Unified Theory. In some cases, the award application itself wasn’t specific on some things, like total spending.  So we made assumptions and “showed our work” as they say in fifth-grade math. Or, in the case of British Petroleum, we defaulted to their article in JOEM, which had much more detail.  In any case, the spreadsheet calculations and sources are available to all legitimately qualified researchers, meaning those excluded from the Koop Award Committee because they aren’t Einsteins.

Koop Award Shmoop Award!