Cost-Benefit Analysis

Chronic disease, illness, and physical inactivity can be very costly for your organization. A 25 year old male non-smoker has a 24 percent chance of having a critical illness (cancer, heart attack, or stroke) prior to turning 65 according to the first National Critical Illness Risk Assessment Study published by the American Association for Critical Illness Insurance. The study also reveals that 17 percent of non-smoking men and 36 percent of male smokers who reach the age of 55 without having a critical illness will be diagnosed with one prior to turning age 65. For women who reach age 55, some 12 percent of non-smokers and 23 percent of smokers will face a critical illness before reaching age 65.

Assuming your company reflects the average U.S. population, almost half of your employees and executives could have at least one chronic condition or disease and often have multiple.ⁱ Their ability to receive the quality care that they deserve and that your company is dependent on is rapidly deteriorating. The following example utilizes public data to provide an estimate of what disease, illness and inactivity could be costing your company. Applying this research, we can then demonstrate a tangible cost benefit by investing in Personalcare Physicians’ industry leading services. The medical system is in distress and we have a solution to help you protect your most valuable asset — your people!

If your organization is like most, your health care costs have been steadily rising and are expected to double in just eight more years.ⁱⁱ Additionally, as set forth in the Patient Protection and Affordable Care Act, 30 million people will be added to the already overtaxed medical system. As a result, an over-extended primary care physician will have to see even more patients than the typical 35-40 that they see today, and the ability to receive quality care and proactive medical support are going to become increasingly hard to find.

EXAMPLE 1: How much can disease and illness cost your organization?
Number of executives	10
U.S. average rate of chronic condition/disease (DETAILED BELOW)	x 1.407 per adult
Estimated number of potential disease cases in your organization	14
Weighted average cost per caseiii	x $10,220
Total medical costs associated with disease in your organization	$143,080

Average rate of chronic condition/disease across all U.S. adults = 1,407 cases per 1,000 employees
Cancer (colon, breast): 11^iv • Heart Disease: 77^v • Stroke: 26^v • Diabetes: 63^vi • Hypertension: 260^vi • Hyperlipidemia: 358^vii • Weight: 612^viii

In addition to the direct expense of disease, significant costs can be incurred even before the chronic disease becomes apparent. Inactivity and poor nutrition can be linked to back and joint injury, weight gain, muscle weakness, depression, anxiety and osteoporosis.

Conservatively, it is estimated that approximately 190 hours of productivity can be lost per inactive employee per year.^ix According to the CDC, just 13% of men and 10% of women engage in 10 minutes or more of vigorous activity 5 or more times per week. Based on this, we assume the average rate for inactivity is 70% and can estimate total productivity costs for your organization.

EXAMPLE 2: Productivity costs associated with inactivity for your organization
Number of executives	10
U.S. adult estimated inactivity rate CDC	x 70%
Estimated number of inactive executives in your organization	7
Average compensation per executive per hour (INCLUDING PAYROLL, TAX & BENEFITS)	x $150
Number of hours lost per inactive executive per year	x 190 hours
Productivity costs associated with executive inactivity for your organization	$199,500

 

Total costs of disease and inactivity to your organization
Medical cost (FROM EXAMPLE 1)	$143,080
Productivity loss cost (FROM EXAMPLE 2)	$199,500
Total estimated costs	$342,580

As you can see, the potential direct cost and loss of productivity due to illness can be very substantial. As your medical and wellness partner, our goal is to provide your company with immediate medical services and wellness programs that will help to reduce this expense. Once we understand your company health program objectives, we can create a customized program that is tailored to your specific goals.

Whether you choose to implement our flagship Healthfit 4 Life program, yearly comprehensive physical program, or a customized, proactive medical offering, our industry-leading medical and wellness programs will help you to reduce your risk and expense. As demonstrated below, a 25 to 35% reduction achieved by utilizing our services can be a considerable cost benefit in the first year.

Personalcare Physicians ROI Example Estimate	Example Cost of Disease (MEDICAL & PRODUCTIVITY) 20 EMPLOYEES	Expense Reduction	Program Fee*	Cost-Benefit Ratio
25% reduction in potential costs associated with disease and inactivity after 1 year	$342,580	$85,645	$30,000	2.8 : 1
35% reduction in potential costs associated with disease and inactivity after 1 year	$342,580	$119,903	$30,000	4 : 1

*PERSONALCARE PHYSICIANS HEALTHFIT 4 LIFE PROGRAM, 1 YEAR MEMBERSHIP, ENTERPRISE RATE $3,000

Please feel free to contact us today at (949) 706-3300 so that we can create a customized cost-benefit model and services proposal to get your business started in reducing risk and expense today.

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ⁱ The Surgeon General’s Report on Physical Activity and Health. U.S. Department of Health and Human Services, Washington, D.C.
ⁱⁱ Healthy People 2010: Understanding and Improving Health. 2nd Edition. Oce of Disease Prevention and Health Promotion, November.
ⁱⁱⁱ Centers for Disease Control and Prevention (CDC). Behavior Risk Factor Surveillance System Survey Data 2007 and 2008, Atlanta, GA: U.S. Department of Health and Human Services, Washington, D.C.
^iv Centers for Disease Control and Prevention (CDC). The National Program of Cancer Registries. Atlanta, GA: U.S. Department of Health and Human Services.
^v Circulation: Heart Disease and Stroke Statistics 2010 Update: A Report from the American Heart Association.
^vi Milken Institute: An Unhealthy America: The economic burden of chronic disease, 2007 (hypertension); American Diabetes Association. (proportion and incidence of type 2 diabetes).
^vii MEDSTAT database. Medical costs (including pharmacy, clinic visits, hospital stays, and medical procedures.)
^viii Dr. David Chenoweth study, Chronic Disease and Associated Health Risk Factors Among Adults, 2009.
^ix Centers for Disease Control and Prevention (CDC). National Center for Health Statistics. National Health an Nutrition Examination Survey (NHANES) 2003-2006.