THE UNIVERSAL LANGUAGE OF ROI: CONVERTING YOUR EAP BENEFIT INTO AN INVESTMENT

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1 THE UNIVERSAL LANGUAGE OF ROI: CONVERTING YOUR EAP BENEFIT INTO AN INVESTMENT HELLAS EAP 5 TH EAP FORUM MAY 17, 2017 ROYAL OLYMPIC HOTEL Athens, Greece LOUIS A. SERVIZIO, MA, MBA EXECUTIVE DIRECTOR, CHESTNUT GLOBAL PARTNERS DO BRASIL, LTDA. Developed with MARK ATTRIDGE, PHD, MA, ATTRIDGE CONSULTING, INC. (USA) 1

2 ABOUT THE PRESENTER Louis Anthony Servizio, MS, MBA President and Founder, Disease Management Strategy Group, Inc. WELLCAST US Executive Director and Founder, Caduceus Consultoria, Ltda. WELLCAST Brazil Founder and Global Director, Activate Corporate Health Pty Ltd. WELLCAST Australia Executive Director, Chestnut Global Partners do Brasil, Ltda. 25 years experience in the field of healthcare informatics, consulting, and financial advisory services. MS/MBA from MIT s Sloan School of Management. Certified Medical Practice Executive. Certified Financial Advisor. 2

3 OVERVIEW THE THEORY OF EAP ROI CALCULATIONS CONVERTING YOUR EAP BENEFIT INTO AN INVESTMENT WHAT IS AN EAP? WHY IS ROI ANALYSIS IMPORTANT? WHAT IS THE LOGIC FLOW OF EAP ROI CALCULATION? WHAT ARE ROI SUMMARY METRICS (Cost/Benefit Ratio, NPV & IRR?) WHAT ARE THE TYPES OF COSTS IMPACTED BY AN EAP? WHAT INPUT VARIABLES ARE CONSIDERED IN ROI SIMULATIONS? WHY IS WORK PRODUCTIVITY SO IMPORTANT? HOW DO WE MEASURE RESTORING PRODUCTIVITY AFTER EAP USE? GLOBAL RESEARCH ON EAP WORKPLACE OUTCOMES (WOS data) HOW DO YOU CALCULATE COST SAVINGS FROM AN EAP? HOW TO CALCULATE A BREAK EVEN EAP UTILIZATION RATE 3

4 THREE STUDIES from ROI CACLULATOR TOOL CASE STUDY I: EAP FOR UNITED STATES FEDERAL GOVERNMENT EMPLOYEES CASE STUDY II: INTERNATIONAL COMPARATIVE STUDY OF EAP ROI FOR SAME EMPLOYER WITH EMPLOYEES IN 3 DIFFERENT COUNTRIES CASE STUDY III: HOW TO DETERMINE A BREAK-EVEN ROI (COST/BENEFIT = 1:1) BY CHANGING THE EAP UTILIZATION RATE OR CHANGING THE LEVEL OF INVESTMENT IN EAP 4

5 WHAT IS AN EAP? Employee Assistance Programs are corporate programs provided to employees, as a benefit, to assist them in dealing with a variety of issues (family members also can use EAP). Employers pay a per employee monthly/yearly fee for coverage (PEPM/PEPY). Coverage includes a maximum number of visits per issue to EAP counselor (ex. 5 sessions) at no cost to the employee or family member. Family Relationships Emotional Mental Substance Abuse Financial & Legal Work Stress 5

6 WHAT SERVICES DIFFERNTIATE A TRUE EAP FROM A LOOKALIKE? COUNSELING Clinical cases who have individual or couple sessions with licensed EAP counselors (either in-person or telephone)* CONSULTATION Consultations for managers and supervisors with EAP counselors (i.e., work team issues, difficult employees) CRISIS Counseling after traumatic events in workplace (onsite group debriefing and for follow-up individual sessions) TRAINING Educational presentations at workplace for prevention of future problems and de-stigmatizing mental health issues to encourage future use of EAP CASE MANAGEMENT Complex case management for disability, mental health, family leave, chronic health care in benefits ORGANIZTIONAL Management consultancy services (i.e., organizational change, HR & benefits strategy, executive coaching) MEMBERSHIP AND ADHERENCE TO STANDARDS: EAPA, EAEF, EASNA. *Note only the first line type of EAP services is used in rest of this talk about EAP ROI Calculator 6

7 WHEN IS THE BEST TIME TO IMPLEMENT AN EAP? EAPs are most valuable during times of crises, as that is when the prevalence rate of issues addressed by an EAP increase. Case in point is Brazil. In 2008 Brazil was booming and the prevalence rate of EAP related issues was 30 percent. Brazil is now in an economic crisis and the prevalence rate is now 46 percent. Furthermore, employees under stress blame the employer generating a liability under Workers Compensations laws, and supervisors come under stress to deal with employee issues draining productivity. These issues drain productivity at a time when the employer can least afford it. During times of crisis, it is more effective to increase individual productivity than hire more employees to compensate for the drain. Unfortunately, from the budget point of view, most belt tightening occurs during crisis, leading to program reductions. But EAP is a tool that provides, as will be seen, significant operational cost savings, and is why EAP has to be viewed as an investment not a benefit, based on ROI, as a control on employer liability, and that allows supervisors to concentrate on work. 7

8 WHY IS ROI ANALYSIS IMPORTANT? ROI is the great equalizer. It allows decision makers to compare the investment in the EAP against: Worldwide, there has been a belttightening in corporate expenses. During good times benefits are safe but during bad times, only investments are safe. Selecting an EAP provider that provides high quality services at fair level of investment Alternative investments in healthcare programs other than EAP (e.g., exercise and smoking cessation) Alternative corporate investments (e.g., expansion of factory and investments in infrastructure and machinery) 8

9 ROI METRICS WHAT IS COST / BENEFIT RATIO? ROI = 3:1 The cost/benefit ratio is the sum of the present value (in today s dollar) of the cost savings from EAP divided by the investment in the EAP investment over the same one-year time period. Return ( total savings ) in one year Divided by Investment in EAP for same year ROI Ratio (ex. $3.00:$1.00) $3.00 benefit back to employer for every $1.00 invested in providing EAP service 9

10 ROI METRICS WHAT IS NET PRESENT VALUE? NPV = $ The net present value (NPV) is the sum of the present values (value in today s dollar) of the cost savings minus the investment cost in the EAP over a period of time. Time value of money means that time has an impact on the value of cash flows (a dollar today buys more than it will tomorrow because of inflation); The NPV is expressed in dollars; Think of this number as what the CFO can expect as an inflow to the checking account if everything goes according to plan. 10

11 ROI METRICS WHAT IS INTERNAL RATE OF RETURN? IRR = % The internal rate of return (IRR) is a rate of return used in capital budgeting to measure and compare the profitability of investments. Compares the attractiveness of various preventive care programs against each other, or preventive care programs against non health care programs (ex. expansion of a factory); The IRR is expressed as a percent. 11

12 WHAT IS THE LOGIC FLOW OF AN EAP ROI CALCULATION? Assuming only a subset of employees utilize the EAP, are the cost savings sufficient to offset the cost of the program, considering the program effectiveness in reducing costs associated with behavioral health problems? 12

13 WHAT IS THE LOGIC FLOW OF AN EAP ROI CALCULATION? 1,000 Employees If PEPM is 2.00 per month (i.e., fee rate for EAP is 2.00 per month for each employee working at company) and the company has 1,000 total employees, the investment in the EAP is 2,000 per month or 24,000 total per year. 13

14 200 Employees At-Risk for EAP WHAT IS THE LOGIC FLOW OF AN EAP ROI CALCULATION? A problem prevalence rate of 20% for EAP related issues means that 200 of the 1,000 total employees have issues that can lead to losses of work performance costs and other health burden costs for the company - if issues are ignored. 14

15 WHAT IS THE LOGIC FLOW OF AN EAP ROI CALCULATION? IF THE CLINICAL CASE RATE FOR EAP IS 5%, THEN 50 EMPLOYEES WILL UTILILIZE THE EAP (5% X 1000 EMPLOYEES POPULATION).* 50 Employees Use EAP for Clinical Issues QUESTION: CAN THE COST SAVINGS FROM THESE 50 USERS OF THE EAP COMPENSATE FOR THE 24,000 TOTAL INVESTMENT IN THE EAP? IF SO, BY HOW MUCH AND WHAT IS THE RATE OF RETURN? *The reach rate of EAP into the at-risk portion of full employee population is 25% (50 clinical users of EAP / 200 employees with issues relevant to use EAP in same year period) 15

16 WHAT TYPES OF COSTS/EXPENSE S ARE IMPACTED BY AN EAP? Productivity losses from absenteeism and presenteeism Vary by country, region, industry, and occupation Need productivity loss data base by country Turnover costs Relocation of replacement employees Training of replacement employees Accidents Medical costs, insurance premiums and/or disability claims (importance depends on the country) Employee out of pocket expenses paid to providers 16

17 WHAT VARIABLES ARE CONSIDERED IN ROI SIMULATIONS? Number of employees covered and PEPM rate for EAP (cost of the investment) Expected prevalence rate of employees with EAP related issues in the full employee population for this company Utilization rate (clinical cases only excluding other EAP services) Pre EAP cost burden rates and the effectiveness rates for EAP counseling in reducing these same costs: Productivity losses from absenteeism and presenteeism Employee turnover Accidents Medical treatment costs or insurance premiums Out of pocket provider costs for employees EAP Program user dropout rate Opportunity cost of money for investing in alternative investments (discount rate) 17

18 MEASURING THE MEDICAL COSTS OF EMPLOYEE DISTRESS & POOR HEALTH Why traditional emphasis in some countries on calculating the medical costs of disease? Health care treatment costs are easier to identify, calculate and measure. Calculations are often performed by payors and benefits consulting firms who are focused on reducing medical, not economic costs of disease. Some employers do not pay for the medical costs of disease because their employees are treated in the public health care system (this is more likely in countries with good national health care systems). So these employers are just left with the economic costs of disease. 18

19 MEASURING THE ECONOMIC COSTS OF EMPLOYEE DISTRESS & POOR HEALTH Economic costs are not easy to quantify: Productivity losses the illness cost burden - vary by each job function, industry, and geographic region. But may not have access to sophisticated economic indicator data on productivity. In some cases, a crude estimate can be made to estimate a productivity multiplier to better measure the full value of an hour of work to their business. Example of a multiplier of 1.3 X employee full compensation hourly rate $ (wage + benefits) = productivity value per hour. However, full country specific productivity loss data bases do exist, by occupation, industry and state (discussed later) 19

20 SHOULD YOU INCLUDE OR NOT INCLUDE MEDICAL COSTS OR INSURANCE PREMIUMS IN THE ROI CALCULATION?? 20

21 Employers in countries with good national healthcare system where employees are treated in public health system: NO Employers that are self insured: YES Employers with health care plan: just consider effect on insurance premiums Public Health System: YES 21

22 PRESENTEEISM DRIVES ROI Based on the results of hundreds of ROI simulations, reductions in productivity losses (due to absenteeism and presenteeism) are the largest contributors to ROI for EAP (and other health care services). However, small amounts of lost productivity while at work over long period of time (presenteeism) add up to far more total cost impact in ROI than lost productivity from missing work altogether. Why? Because absenteeism is simply much less commonly experienced. 22

23 EAP RESEARCH What are Typical Levels of Work Absenteeism & Presenteeism When Employees Start Use of EAP? How Much is this Problem of Lost Productive Time (combined absenteeism and presenteeism) Reduced After Use of EAP Counseling? 23

24 WORKPLACE OUTCOMES SUITE (WOS) A VALIDATED MEASUREMENT SURVEY FOR EAPS The WOS was developed by Dr. David Sharar and Dr. Richard Lennox of Chestnut Global Partners in 2010 (published peer-reviewed research). Utilized now globally by over 400 EAP vendors and internal EAP programs to measure changes from before to after use of EAP counseling Work Absenteeism hours Work Presenteeism ratings Work Distress ratings Work Engagement ratings These two scales used in ROI for hours of lost productive time at work Life Satisfaction ratings 24

25 EXAMPLE WOS 5 ITEM BRIEF VERSION Three Versions of WOS: Full 25-item original Brief 5-item revised (1 per scale) Absenteeism focused 9-item scale (with all 5 items for absence and single items for other four scales) 25

26 WOS RESULTS NORMATIVE DATA Lower score is better outcome Item: For the period of the past 30 days, please total the number of hours your personal concern caused you to miss work. Include complete eight-hour days and partial days when you came in late or left early WOS Full ABSENTEEISM Scale (5 items) Hours of Work Absence in Past Month for Average User of EAP Counseling 10,41 5,35 5,06 Before EAP After EAP Change Reduction In Absenteeism After Use of EAP 49%* * Significant at p <.001. N = 1,948 from many different vendors global dataset. Analysis by Attridge (2016 EAPA Conference). Note: Excluded 34 cases with 160+ absence hours (< 1% all cases in aggregated sample). 26

27 WOS RESULTS NORMATIVE DATA Lower score is better outcome NOTE: Conversion formula needed to estimate hours of lost productivity from WOS presenteeism 1-5 agreement ratings Strongly Agree Agee Neutral Disagree Strongly Disagree WOS Full PRESENTEEISM Scale (5 items) Average Ratings on 1-5 Scale in Past Month for Average User of EAP Counseling 5,00 4,00 3,00 2,00 1,00 2,86 Before EAP 2,22 After EAP Reduction in Presenteeism While at Work After Use of EAP 22%* * Significant at p <.001. N = 1,948 from many different vendors global dataset. Analysis by Attridge (2016 EAPA Conference). Note: Excluded 34 cases with 160+ absence hours (< 1% all cases in aggregated sample). 27

28 WHAT IS THE DOLLAR VALUE OF PRODUCTIVITY LOSSES ASSOCIATED WITH BEHAVIORAL HEALTH DISORDERS? Most employers users do not have sufficient information available to directly calculate productivity losses for a given occupation, industry or region. Although various methodologies exist, DMSG utilizes a validated methodology that generates productivity losses by inputting a company-specific number that is readily available, such as salary. Once salary is inputted, the methodology applies a highly-advanced economic model and detailed economic data to translate salary into productivity losses. 28

29 THE APPROACH: THE CONCEPT OF DOLLAR CONTRIBUTION TO OUTPUT Or DCO In order to calculate DCO, assume that the distribution of average productivity is the same as the distribution of average payroll (i.e., an individual s wage represents relative contribution to output). The process involves calculating payroll, and distributing productivity according to payroll for all industries in a country. This methodology allows the model to determine productivity losses for a given occupation, industry and region, by using salary as the basic driver. 29

30 SALARY IS NOT THE SAME AS PRODUCTIVITY LOSS! NEED TWO COMPONENTS: LABOR/SALARY CAPITAL EQUIPMENT TECHNOLOGY WORK TEAMS WORK CULTURE EFFICIENCIES OUTPUT 30

31 WHAT DOES A PRODUCTIVITY LOSS DATA BASE LOOK LIKE? UNITED STATES United States: Productivity Contribution Output per Employee per: Wage Rates per: Region Occupation Industry Hour Day Year Hour Day Year New England General and operations managers Agriculture, Foresty, & Fishing $ $1,376 $357,760 $60.07 $481 $124,946 New England General and operations managers Construction and Mining $ $976 $253,739 $70.62 $565 $146,890 New England General and operations managers Manufacturing $ $1,231 $320,112 $72.40 $579 $150,592 New England General and operations managers Wholesale Trade $ $1,039 $270,046 $59.96 $480 $124,717 New England General and operations managers Retail Trade $ $807 $209,830 $50.39 $403 $104,811 New England General and operations managers Transportation, Warehousing, & Utilities $ $1,222 $317,803 $53.26 $426 $110,781 New England General and operations managers Information $ $1,470 $382,242 $57.67 $461 $119,954 New England General and operations managers Financial Activities $ $2,665 $692,848 $72.62 $581 $151,050 New England General and operations managers Professional & Business Services $ $1,016 $264,098 $72.17 $577 $150,114 New England General and operations managers Educational & Health Services $65.69 $526 $136,635 $43.60 $349 $90,688 New England General and operations managers Leisure & Hospitality $77.78 $622 $161,782 $43.63 $349 $90,750 New England General and operations managers Other Services $95.15 $761 $197,912 $54.59 $437 $113,547 New England General and operations managers Government $73.61 $589 $153,109 $43.64 $349 $90,771 SALARY IS NOT A GOOD INDICATOR OF PRODUCTIVITY LOSS! NOTICE THE DIFFERENCE BETWEEN INDUSTRIES cgpbrasil.com 31

32 WHAT DOES A PRODUCTIVITY LOSS DATA BASE LOOK LIKE? India: Productivity Losses (Rupees ) INDIA Output per employee per Wage rate per Hour Day Year Hour Day Year Agriculture , ,978 Manufacturing 208 1, , ,996 Mining & Quarrying 392 3, , , ,000 Electricity, gas & Water Supply 666 5,328 1,342, , ,720 Construction 154 1, , , ,112 Trade, Hotels and Restaurants 199 1, , , ,660 Transport, storage & communication 203 1, , , ,052 Financial, Real Estate and Professional Services 907 7,260 1,829, , ,731 Public Admin & Defense, Health, Education, Social Services, and Other 265 2, , , ,440 SALARY IS NOT A GOOD INDICATOR OF PRODUCTIVITY LOSS! NOTICE THE DIFFERENCE BETWEEN INDUSTRIES cgpbrasil.com 32

33 WHAT DOES A PRODUCTIVITY LOSS DATA BASE LOOK (AUS$ ) LIKE? AUSTRALIA Manufacturing Services Manufacturing Services Output per employee per Output per employee per Wage Rate Per Wage Rate Per Hour Day Year Hour Day Year Hour Day Year Hour Day Year New South Wales , , , ,266 Victoria , , , ,728 Queensland , , , ,808 South Australia , , , ,544 Western Australia , , , ,025 Northern Territory , , , ,402 Capital Territory , , , ,250 Tasmania , , , ,967 Assumes Number of Work Days Australia 260 Number of Hours in Day 8 SALARY IS NOT A GOOD INDICATOR OF PRODUCTIVITY LOSS! NOTICE THE DIFFERENCE BETWEEN STATES cgpbrasil.com 33

34 HOW ARE PRODUCTIVITY LOSSES UTILIZED TO CALCULATE COSTS? EXAMPLE 1 Absenteeism Assume that an employee who has depression or stressed about a work or personal issue and does not get any health treatment and then misses 1 day from work each month over the course of three months. Assume daily productivity value is 200: Cost of lost work productivity due to this absenteeism = 200 per day X 3 days = 600 total loss per employee 34

35 HOW ARE PRODUCTIVITY LOSSES UTILIZED TO CALCULATE COSTS? Note: Presenteeism loss is 80% of total for combined Absenteeism and Presenteeism per employee per issue episode EXAMPLE 2 Presenteeism Assume a person with depression or stressed about a work or personal issue is distracted 20% of the work day for three months (60 working days). Assume the daily productivity value is 200: Cost of lost work productivity due to presenteeism = 200 per day X 20% = 40 productivity loss x 60 work days = 2,400 total loss per employee 35

36 HOW ARE PRODUCTIVITY LOSSES UTILIZED TO CALCULATE COSTS? NOTE: This excludes the 4X greater losses from work presenteeism NOTE: Greece has about 4.8 million employees in workforce (if at same per day = 5.8 B total loss EXAMPLE 3 Absenteeism for Public Health Care Systems Take the average daily productivity loss across all the industries in the country and multiply times the average number of days employees are absent from work each year across the country (or state). Research in US shows health related absence from work is 6 days total per year for typical employee. Cost of health absence to entire country = 200 X 6 days per year = 1,200 X 1,000,000 (number of employees using health care system) = 1.2 B 36

37 SO HOW DO WE CONVERT EFFECTIVENESS RATES INTO FINANCIAL RESULTS? 37

38 HOW TO CALCULATE ROI OVERVIEW OF THE STEPS 1. Decide on which costs are impacted by an EAP; 2. Decide on how each cost is measured; 3. Costs should be calculated pre and post implementation of the EAP in order to calculate the savings; 4. Once the return (cost savings) and investment amounts are determined, apply ROI Metrics simple Cost/Benefit ratio; an Internal Rate of Return (IRR) and Net Present Value (NPV) formulas (available in Excel or any financial calculator). Note: be prepared to provide three variables as input: Dollar value of total cost savings; Discount rate (i.e., the opportunity cost of capital, which is usually the risk free interest rate of Treasury bills); Value of the investment in an EAP (which is the PEPY times the number of employees covered). 38

39 CASE STUDY I ROI RESULTS FOR THE UNITED STATES FEDERAL OCCUPATIONAL HEALTH EAP PROGRAM 39

40 CASE STUDY I ASSUMPTIONS REGION SOUTH ATLANTIC INDUTRY GOVERNMENT OCCUPATION COMMUNITY AND SOCIAL OCCUPATIONS DEFAULT DAILY PRODUCTIVITY LOSS $ ACTUAL MONTHLY COMPENSATION $7,197 NUMBER OF EMPLOYEES COVERED 905,939 COMPENSATION OF TEMPORARY EMPLOYE REPLACEMENT COST $7,197 RELOCATION COST REPLACEMENT EMPLOYEES $0 RETRAINING COST OF REPLACEMENT EMPLOYEES $0 DISABILITY PAYMENT TO EMPLOYEES ON DISABLITY $7,197 COST OF ACCIDENT CAUSED BY EAP RELATED ISSUE $0 MEDICAL COST OF TREATING EAP RELATED ISSUES $0 MEDICAL INFLATION RATE US 2.61% 40

41 CASE STUDY I ASSUMPTIONS - Continued PERCENT OF EMPLOYEES REPLACED WITH EAP RELATED ISSUES 10% PERCENT OF EMPLOYEES RELOCATED WITH EAP RELATED ISSUES 10% PERCENT OF EMPLOYEES RETRAINED WITH EAP RELATED ISSUES 50% PERCENT OF EMPLOYEES THAT GO ON DISABILITY FOR EAP RELATED ISSUES 5% PERCENT OF EMPLOYEES THAT INCUR MEDICAL COSTS 10% PREVALENCE RATE OF EAP RELATED ISSUES IN US POPULATION 25% NUMBER OF DAYS PER EAP EPISODE 90 PRESENTEEISM RATE OF US POPULATION FOR 90 DAYS EPISODE 12.30% NUMBER OF DAYS ABSENT FOR US POPULATION FOR 90 DAY EPISODE 1.5 OPPORTUNITY COST OF CAPITAL 2.03% AVERAGE WEIGHTED OUT OF POCKET EXPENSE TO VISIT PROVIDERS $288 PEPM $1.67 UTILIZATION RATE 1.63% PROGRAM TURNOVER RATE 0% 41

42 CASE STUDY I EFFECTIVENESS RATES PERCENT REDUCTION IN ABSENTEEISM 69.20% PERCENT REDUCTION IN PRESENTEEISM 22.80% PERCENT REDUCTION ACCIDENTS 10% PERCENT REDUCTION REPLACEMENT 10% PERCENT REDUCTION RELOCATION 10% PERCENT REDUCTION RETRAINING 10% PERCENT REDUCTION DISABILITY 10% ISSUE RESOLUTION RATE 86% 42

43 CASE STUDY I RESULTS CASES ADDRESSED BY EAP 12,699 REDUCTION OF OUT OF EMPLOYEE POCKET EXPENSES $3,657,440 REDUCTION OF ECONOMIC EXPENSES $32,332,200 INTERNAL RATE OF RETURN 78.50% NET PRESENT VALUE $13,533,900 COST BENEFIT ROI

44 CASE STUDY II: A COMPARISON OF CROSS BORDER ROI S What are the differences in ROI s between three countries (Australia, Brazil and United States) if all input variables are identical (after adjusting for exchange rates), with the exception of prevalence rate of issues, productivity contributions, and reductions in absenteeism and presenteeism, which are unique to each country? 44

45 CASE STUDY II: A COMPARISON OF CROSS BORDER ROI S Variables Kept Consistent Industry and occupation Number of employees PEPM Utilization rate Accident cost and rate Turnover cost and rate Financial discount rate Presenteeism rate Absenteeism rate Number of days per episode Program dropout rate Variables Modified Prevalence rates of issues Salary Productivity contributions (for the same industry) Gains in absenteeism and presenteeism (from the DuPont Company Study See next two slides): Asia for Australia Latin America for Brazil US for US Variables Not Considered Medical cost savings Insurance claims Disability claims 45

46 Percent Reduction AUSTRALIA BRAZIL USA STUDY II: A COMPARISON OF CROSS BORDER ROI S Source of Absenteeism Reduction Rates 89% 88% 83% 60% 55% Asia (n=99) Europe (n=65) Latin America (n=55) United States (n=921) Pooled (n=3,645) WORKPLACE OUTCOMES SUITE (WOS) ABSENTEEISM RESULTS: DUPONT COMPANY BY COUNTRY & WOS POOLED NORM DATA SEPTEMBER, 2015 ITEM: For the period of the past 30 days, please total the number of hours your personal concern caused you to miss work. Include complete eight-hour days and partial days when you came in late or left early. Percent Reduction in Absence Hours = (difference in Pre EAP Post EAP) / Pre EAP 46

47 Percent Improvement AUSTRALIA BRAZIL USA STUDY II: A COMPARISON OF CROSS BORDER ROI S Source of Presenteeism Reduction Rates 26% 32% 36% 28% 29% WORKPLACE OUTCOMES SUITE (WOS) PRESENTEEISM RESULTS: DUPONT COMPANY BY COUNTRY & WOS POOLED NORM DATA SEPTEMBER, 2015 Asia (n=99) Europe (n=65) Latin America (n=55) United States (n=921) Pooled (n=3,644) ITEM: My personal problems kept me from concentrating on my work. Percent improvement = (difference in Pre EAP Post EAP) / Pre EAP 47

48 CASE STUDY II: A COMPARISON OF CROSS BORDER ROI S RESULTS Australia Brazil US IRR 448% 342% 459% NPV $498,817 $64,991 $891,036 COST/BENEFIT COST SAVINGS $625,392 $86,250 $1,112,143 Note 1: For consistency in comparison, results have been converted to $US Note 2: Exchange Rates

49 CASE STUDY III: HOW TO DETERMINE A BREAK-EVEN ROI (COST/BENEFIT = 1:1) Data from AUSTRALIA What are the differences in ROI results if all input variables are identical, with the exception of the PEPM and Utilization Rates? Variables Not Modified Industry and occupation Number of employees Prevalence rates of issues Salary Accident cost and rate Turnover cost and rate Productivity contributions (for the same industry) Gains in absenteeism and presenteeism Financial discount rate Presenteeism rate Absenteeism rate Number of days per episode Program dropout rate Variables Modified PEPM Utilization rate of EAP Outcomes Not Considered Medical cost savings Insurance claims Disability claims 49

50 NOTE: WHAT IS A BREAK-EVEN PEPY AND/OR UTILIZATION RATE? Break-even PEPY or Utilization Rates are those that result in: Cost/Benefit of 1/1 NPV = 0 IRR = opportunity cost of capital 50

51 STUDY III: AUSTRALIAN BREAK-EVEN STUDY RESULTS Vary Utilization Case Rates but not PEPM PEPY Aus$ UTILIZATION EAP CASE RATE ROI COST/BENEFIT % 6.00% 1.06/ % % 2.56/ % % 5.12/1 Note 1: Values in green is the breakeven utilization rate. Note 2: 6% is the opportunity cost of capital (Australian Treasury Notes). 51

52 STUDY III: AUSTRALIAN BREAK-EVEN STUDY RESULTS Vary PEPM Investment but not Utilization Case Rate PEPY Aus$ UTILIZATION EAP CASE RATE ROI COST/BENEFIT % 6.00% 1.06/ % % 2.56/ % % 5.12/1 Note 1: Values in green is the breakeven PEPY rate. Note 2: 6% is the opportunity cost of capital (Australian Treasury Notes). 52

53 HOW DOES EAP USE PROVIDE COST SAVINGS FOR THE EMPLOYEE? Without an EAP, employees would have to pay for visits to providers out of their own pockets. With an EAP, the company pays for a (limited but usually sufficient) number of visits. This results in savings in out of pocket expenses for the employee; The key variables utilized to calculate these savings include: the prevalence rate of issues, the average weighted cost of visiting providers, the utilization rate, and the EAP success rate in resolving their issues; The value of the these savings are not really part of the ROI to the employer but is of value to the employees. The value of these savings should be announced to employees periodically to gain support of the Program. 53

54 TAKEAWAY S EAP s generate expense reductions in a variety of areas. These reductions are real and quantifiable. Based on hundreds of simulations in various countries, by far, the reduction in presenteeism generates the greatest savings and thus is the largest contributor to ROI. + $ EAP s generate attractive ROI s in most countries. 54

55 TAKEAWAYS - Continued Even modest use rates generate attractive ROI s. It is possible to calculate minimal utilization rates needed to break-even on the investment in EAP. + $ It is possible to calculate the savings in employee out-of-pocket expenses from your EAP. The business value from EAP should be announced to all employees periodically to gain support for the EAP. 55

56 FINAL MESSAGE THE QUESTION IS NOT WHETHER YOU SHOULD CARE ABOUT BEHAVIORAL HEALTH ISSUES. RATHER CAN YOU AFFORD NOT TO CARE! 56

57 Thanks! Any Questions? LOU SERVIZIO 57

58 cgpbrasil.com 58