Poor employee health costs employers plenty.

• Position: Medical Expenditures

Employers may be underestimating significantly the overall costs of poor employee health, while failing to assess fully the diseases and health conditions that drive these costs, maintains a study by the American College of Occupational and Environmental Medicine, Elk Grove Village, III.

Researchers found that "full cost" measures--that is, those that include health-related lost-productivity costs along with direct medical spending--were four times greater than measures of direct medical spending alone. When full costs were measured rather than medical costs alone, researchers found that health conditions such as musculoskeletal problems, depression, fatigue, and sleeping disorders took on new significance in driving costs upwards.

"The real eye-opener in this study is just how big an impact employee health has on the bottom line when both direct medical spending and productivity costs are combined," notes Ronald Loeppke, one of the lead researchers. "In a widening global economy and with new pressure to be competitive, American businesses clearly need to revisit how they are measuring productivity."

To gauge health-related productivity costs fully, researchers measured direct medical and pharmacy spending along with calculations of the monetary value of lost productivity when employees are absent or working at impaired levels (known as "presenteeism"). The study notes that employers historically have not assessed costs in this way, preferring instead a "siloed" approach that seeks to manage single health cost categories, such as medical visits or pharmaceuticals, through benefit-package design.

Accounting for medical...