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Economic benefit of chemical dependency treatment to employers
Journal of Substance Abuse Treatment 34 (2008) 311 – 319
Regular article
Economic benefit of chemical dependency treatment to employers Neil Jordan, (Ph.D.)a,b, Grant Grissom, (Ph.D.)c,4, Gregory Alonzo, (M.B.A.)c, Laura Dietzen, (M.A.)c, Scott Sangsland, (M.A.)d a
Mental Health Services and Policy Program, Department of Psychiatry and Behavioral Sciences, Feinberg School of Medicine, Northwestern University, Chicago, IL 60611, USA b Center for Management of Complex Chronic Care, Hines VA Hospital, Hines, IL 60141, USA c Polaris Health Directions, Fairless Hills, PA 19030, USA d Kaiser Permanente, Pasadena, CA 91188, USA Received 25 October 2006; received in revised form 16 April 2007; accepted 1 May 2007
Abstract Using assessment data from the Substance Abuse Treatment Support System, we estimated the economic benefit of chemical dependency treatment to employers. A cohort of individuals (N = 498) treated at Kaiser Permanente’s Addiction Medicine programs in Southern California completed assessments before and at least 30 days after treatment began. Compared to intake, subsequent assessments indicated substantial reduction in the number of patients who missed work, were late for work, were less productive than usual at work, and/or had conflict with coworkers or management. The net economic value of these improvements to their employers depended upon the utilization rate of the benefit and the salary level of the employees receiving treatment. For a utilization rate of 0.9% and a mean annual salary of US$45,000, the net benefit of treatment was US$1,538 for z 61 days of treatment. Based solely upon these employment-related measures, without factoring in the medical cost offset or indirect benefits of treatment that may help employees to maintain higher levels of productivity, employers break even on an investment of US$30 per member per year for a chemical dependency treatment benefit if the mean annual salary of the employees participating in treatment is US$36,565. D 2008 Elsevier Inc. All rights reserved. Keywords: Substance abuse; Treatment use; Economic benefit; Employers; Workplace productivity
1. Introduction The benefits of substance abuse treatment are well established. Numerous studies have demonstrated a positive effect of treatment on reducing substance use and improving health status and social functioning (McLellan, Belding, McKay, Zanis, & Alterman, 1996; Prendergast, Podus, & Chang, 2000). In addition to recovery from addiction, patients who comply with substance abuse treatment often experience gains in family functioning, mental health, and employment (Cartwright, 2000; JofreBonet & Sindelar, 2004).
4 Corresponding author. Polaris Health Directions, 446 Lincoln Highway, Fairless Hills, PA 19030, USA. Tel.: +1 267 583 6330; fax: +1 267 583 6335. E-mail address: [email protected] (G. Grissom). 0740-5472/08/$ – see front matter D 2008 Elsevier Inc. All rights reserved. doi:10.1016/j.jsat.2007.05.001
In the last 20 years, many studies have established the economic benefits of substance abuse treatment. One of the main conclusions from a recent literature review of costeffectiveness and cost–benefit analyses of substance abuse treatment is that the economic benefits of treatment generally exceed the cost of treatment (Harwood et al., 2002). Reduced criminal behavior and increased employment were found to be key drivers of the economic benefits of treatment. Most of these studies focused on publicly funded treatment and examined benefits from the perspective of patients, treatment programs, or society. Relatively few studies have considered the economic benefits of substance abuse treatment from the perspective of employers. Some studies have focused on the relationship between substance abuse and labor outcomes without considering the impact of treatment (Bray, Zarkin, Dennis, & French, 2000; French, Zarkin, & Dunlap, 1998). The employer perspective is important because a sizable
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number of individuals with substance dependence have full-time or part-time jobs (Office of Applied Studies, Substance Abuse and Mental Health Services Administration, 1999), and just b 50% of persons with alcohol or drug disorders in need of treatment are privately insured (Mark et al., 2000). Most employee health plans cover alcohol and drug detoxification and outpatient treatment (Bureau of Labor Statistics, 2003), although the extent of coverage varies widely. There are several employment-related outcomes that should be considered in evaluating the economic benefit of substance abuse treatment to employers. Studies to date have focused on absenteeism (Foster & Vaughan, 2005) or increase in employment hours (Worner, Chen, Ma, Xu, & McCarthy, 1993). One of those studies argued that employer costs due to substance-abuse-related absenteeism are not large enough to justify employer funding of treatment, but the authors lacked data on the costs associated with decreased performance, lateness, and disruption to business (Foster & Vaughan, 2005). Although there are two recent publications that analyze the economic benefits to employers of improved productivity due to depression treatment (LoSasso, Rost, & Beck, 2006; Wang et al., 2006), there have been no published studies in the substance abuse literature that have included measures of absenteeism, conflict with managers and coworkers, or productivity more broadly. Because N 70% of the estimated costs of alcohol abuse for 1998 can be ascribed to lost productivity (Harwood, 2000), understanding the effects of substance abuse treatment on workplace productivity may be of significant value to employers. The primary data for this study come from Kaiser Permanente’s Addiction Medicine (KPAM) program, a multisite substance abuse treatment provider serving private health plan patients at four locations participating in the study. This article describes the type, amount, and economic benefit of workplace performance improvements reported by patients who were treated for at least 30 days, and also examines whether there is an additional economic benefit to employers for patients who remain in treatment for N 60 days.
2. Materials and methods 2.1. Procedures Patients were assessed using the Substance Abuse Treatment Support System (SATSS). SATSS is a customized version of Polaris CD, an addictions treatment decision support system developed by Polaris Health Directions with funding support from the National Institute on Drug Abuse (Grissom, Sangsland, Jaeger, & Beers, 2004). The SATSS provides for computerized collection, storage, analysis, and real-time reporting of patient self-report data at the start of treatment and concurrently with treatment.
Outpatients at each of the four KPAM programs complete an intake assessment upon admission to treatment. Patients seeking treatment are asked to arrive 30 minutes prior to their scheduled appointment to complete the SATSS assessment. When the patient arrives, a staff person explains that, in order for the program to provide the best possible care, a thorough assessment is necessary, which begins with a computerized questionnaire prior to meeting with a clinician. Computer literacy is not required. All questions can be answered using only numeric keys and the bEnterQ key. All new patients should complete the assessment, except those who (in the judgment of staff) are unable to provide reliable self-report due to impairment or lack of sixth-grade English literacy. The assessment includes demographic items and questions relating to treatment history, motivation, strengths, self-efficacy, and risk factors for dropout and relapse. Quantitative measures include the severity of alcohol, drug, psychiatric, family/social, and medical problems, using the scales of the Addiction Severity Index (ASI; McLellan, Cacciola, Kushner, & Peters, 1992), and severity of employment problems, using a scale based upon the ASI model (see Measures section). The intake assessment provides a broad range of information relating to the patient’s clinical condition, including risk factors for dropout and relapse, and severity data identifying the need for supplemental services based upon a 5-year study of treatment–services bmatchingQ (Grissom, 2001; McLellan et al., 1997). Each location has one or more computers available to patients for completing SATSS assessments. Patients are asked to complete an update SATSS assessment after every 30 days of treatment. Questions on this assessment relate to the patient’s condition, progress, services received, and satisfaction with treatment. The ASI Alcohol, Drugs, Psychiatric, Medical, and Family/Social scales administered at intake are included in update assessment, as are questions relating to employment problems. Patient progress is evaluated using change scores (intake to update) on each of the scales separately. Changes in item-level data, as reported in this article, provide a concrete indication of the nature and the extent of patient progress. Counselors are encouraged to review progress reports with their patients to identify areas of improvement and areas that remain problematic. Update assessments require about 15 minutes to complete. Completion rates are substantially lower for update assessment than for intake assessment, primarily due to dropout. Other reasons for noncompletion are absence on the scheduled assessment date, lack of time, and unavailability of a SATSS computer. The most common reason for noncompletion is failure to provide reminders to patients to arrive early or to stay after their treatment session when an update assessment is due. Completion rates are related to the degree to which update assessments are integrated into the treatment process.
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At one location, update assessments are formally integrated: Patients and support staff monitor the assessment schedule and notify patients when they are due to complete an update assessment; counselors are expected to review reports with patients; and counselors refer to reports during staff discussions of patient progress. Completion rates for this program have reached 100% for some months and average about 60%. At the other extreme, at a second location, update assessments are not integrated into the treatment process. Counselors are not expected to use update reports, and do so only upon their own initiative. Patients complete update assessments only if they are asked to do so by their counselor. This program has the lowest overall rate of completion (20%); monthly completion rates rarely exceed 30%. 2.2. Measures An employment scale was constructed based on interviews with program administrators and clinicians (Sangsland, 2000). They felt that the employment scale of the ASI was not well suited for assessing the severity of their patients’ employment problems. It was decided to retain the two ASI items that are common to all seven ASI scales (bHow much have you been troubled or bothered [by employment problems]?Q and bHow important to you now is treatment for [employment problems]?Q) while replacing the remaining items with five performance indicators that are important to employers: being (1) late or (2) missing work; conflict with (3) coworkers or (4) supervisors; and (5) productivity on the job. As for standard ASI items, the patient is asked in each case to report behavior during the prior 30 days (e.g., bIn the past 30 days, how many days were you late for work?Q). The psychometric properties of the SATSS scales, including internal consistency and test–retest reliabilities, concurrent and predictive validity, and sensitivity to change, are described in Grissom et al. (2004). Internal consistency scale reliabilities (Cronbach’s a) are as follows: .91 (Medical), .76 (Family/Social), .83 (Psychiatric), .91 (Drugs), .91 (Alcohol), and .70 (Employment). The relatively low reliability of the employment scale is due to the heterogeneity of the items. Among employees reporting workplace difficulties, there is considerable variation regarding the nature and the severity of the problems. Few patients report all five of the problems covered by the scale. Eight of 10 interitem correlations, although all statistically significant and in the expected direction, are below .30. Treatment outcomes related to employment are measured using changes in the five workplace performance indicators in the course of treatment by comparing data collected at the start of treatment (intake assessment) with data collected after z 30 days of treatment (update assessments). Aggregate program-level patient outcomes data are reported to Kaiser Permanente both in terms of raw change scores
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(percentage of patients improved) and case mix adjusted data, showing the proportion of patients whose improvement equals or exceeds severity-adjusted expectation. Workplace performance data for patients who report employment problems at intake indicate that about 70% of these patients have improved workplace performance after 1 month of treatment. 2.3. Setting Subjects comprised patients receiving treatment for chemical dependency at four KPAM outpatient programs in Southern California: Fontana, San Diego, and Los Angeles (West Los Angeles and Carson locations). Addiction medicine physician specialists lead multidisciplined treatment teams. All of the programs offer a full range of chemical dependency services, including inpatient detoxification, outpatient detoxification, day treatment, and intensive outpatient services. Outpatient treatment occurs about 65% of the time in group settings, with specialized groups addressing anger management, gender-specific issues, relapse prevention, and so on. Comprehensive mental health services that are not already integrated into chemical dependency programs are available within the Kaiser Permanente system. Adjunctive community services vary by location based on the availability of community resources but may include Alcoholics Anonymous, Narcotics Anonymous, and Al-Anon groups; gay and lesbian issues; job skills; and other workshops or programs. Patient populations served by the four programs were similar with regard to gender (approximately two thirds of patients at each location were male) and employment (about 70% of patients at each location reported paid employment). About half of the patients at each site had a history of arrest. Other patient characteristics varied widely. The proportion of White patients at the San Diego program (70%) was twice that of the West Los Angeles program (35%). The proportion of married patients varied from one third (West Los Angeles, 34%) to nearly half (Fontana, 46%). The proportion with college degrees ranged from 16% (Fontana) to 27% (West Los Angeles). Eighty-four percent of patients seeking services at Fontana acknowledged their need for addictions treatment, versus three fourths at the San Diego (74.9%) and West Los Angeles (71.4%) locations. The remainder presented for treatment solely because of some form of compulsion (e.g., court, employer). Addictions treatment in KPAM programs varies in the nature and the duration of bstandardQ treatment, but patients are encouraged to attend as long as they find it helpful. Of those who engage in treatment, most attend sessions for at least 1–2 months, and some continue treatment for a year or more. Many patients drop out after one or two sessions due to the chronic relapsing nature of the disease or, in some cases, due to dissonance between a program’s objective (abstinence) and their personal goals for treatment. At the four KPAM settings of this study, only 66% of patients seeking
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treatment for alcoholism and 78% of patients seeking treatment for other drugs wanted to remain abstinent.
Table 1 Demographic characteristics and treatment history (N = 498)
2.4. Sample The study sample includes 498 employed patients who completed SATSS intake assessment in January 1999–May 2005, remained in treatment for at least 1 month, and completed an update assessment 30–60 days after the intake assessment. We compared this study sample to all employees who completed an intake assessment during that time based on the 14 demographic and treatment history characteristics shown in Table 1. The only significant differences were that patients in the sample had a slightly higher education level and were more likely to be strongly pressured by their supervisor to enter treatment. The sample was divided into two groups. The first group comprised patients who completed an update assessment 30–60 days after their intake assessment but had no further update assessments (n = 309). This group represents a common duration of treatment for patients. The median number of days between intake assessment and update assessment was 42 days. The second group comprised those who completed at least two update assessments: one at 30– 60 days after the intake assessment, and the second at least 61 days after the intake assessment (n = 189). The median number of days between the intake assessment and the second update assessment was 106 days, representing about two additional months of treatment. The demographic characteristics of the sample are shown in Table 1. The mean age was 42 years, and the majority of patients were male and Caucasian. Most patients reported good or better health status, but those with only one update assessment were more likely to report fair or poor health status than those who completed at least two update assessments. A higher proportion of patients with only one update assessment reported working part time (14.2%) or having been hospitalized during their lifetime for a psychological problem (23.6%) than patients with at least two update assessments (6.9% and 15.3%, respectively). Almost half of all patients reported having been in substance abuse treatment prior to their intake assessment. 2.5. Methods for calculating benefits and costs Formulas used to calculate employer costs and the benefits of work-related treatment outcomes to employers are presented. 2.5.1. Hourly/daily employee cost In each of the benefits analyses, the cost to the employer of an employee’s time is a key element. Our base case analysis was for an employee with a US$45,000 annual salary, whose cost to the employer, including fringe benefits and employerpaid taxes (e.g., Federal Insurance Contribution Act [FICA/ Social Security] and Federal Unemployment Tax Act
Characteristics
Patients with one update (30–60 days postintake) (n = 309)
Patients with two updates (30–60 and z 61 days postintake) (n = 189)
Age in years [M (SD)] 41.5 (10.1) 42.9 (9.5) Male (%) 71.8 69.8 Race/ethnicity (%) Caucasian/White 57.3 63.0 African American 14.6 15.3 Latino 20.1 13.2 Other 8.1 8.5 Highest level of education completed (%) High school or less 35.0 30.2 Some college 38.8 40.7 College or more 26.2 29.1 Current marital status (%) Never married 23.6 24.3 Married, remarried, 50.5 47.1 or living as married Separated/divorced/ 25.9 28.6 widowed With family history 70.6 75.7 of substance problems (%) Employment status at intake (%) Full time 85.8 93.1 Part time 14.2 6.9 Employment status at 30-day to 60-day update (%) Full time 89.0 93.0 Part time 11.0 7.0 Pressured to enter treatment by manager/supervisor (%) Not at all 79.6 77.8 Somewhat 8.7 10.6 Strongly 11.7 11.6 Number of hospitalizations for psychological or emotional problems in one’s lifetime (%) 0 76.4 84.7 1 7.4 2.6 z2 16.2 12.7 Has chronic illness 34.1 28.4 or persistent pain being treated with medication (%) General health status (%) Excellent 12.6 9.5 Very good 28.5 36.5 Good 36.9 42.9 Fair 19.4 10.1 Poor 2.6 1.1 Number of times entered treatment for substance abuse in one’s lifetime (%) 0 57.3 54.0 1 22.7 22.2 z2 20.1 23.8 Number of times entered treatment for detoxification (%) 0 80.3 84.1 1 9.7 11.1 z2 10.0 4.8
Significance ns ns ns
ns
ns
ns
v 2(1) = 5.56, p b .05 ns
ns
v 2(2) = 6.77, p b .05 ns
v 2(4) = 12.30, p b .05
ns
ns
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[FUTA]), was estimated to be US$67,500 per year. The cost to the employer per employee work hour was calculated based on an annual 1,920 working hours, reflecting paid but nonworking time off for vacation, holiday, and sick/personal days employers typically offer employees. The effective hourly employer cost used in benefits analyses was then US$35.16 (or US$281.25 for a standard 8-hour day). 2.5.2. Reduced absenteeism The annual savings from reduced absenteeism were calculated as: s ¼ 12dr cd where d r is the reduction in days absent per month posttreatment versus pretreatment, and c d is the cost per working day to the employer (US$281.25). 2.5.3. Reduced tardiness The annual savings from reduced tardiness were calculated using the assumption that, when employees were late, they were, on average, 1 hour late. The savings were calculated as: s ¼ 12dr ch where d r is the reduction in days late to work per month posttreatment versus pretreatment, and c h is the cost per working hour to the employer (US$35.16). 2.5.4. Reduced conflict with managers The annual savings from reduced conflict with managers were calculated using the following assumptions: (1) Managers’ salaries are 33% higher than that of the employee with whom they had conflict; (2) each day with conflict resulted in 0.5 hour of unproductive employee time; and (3) each day with conflict resulted in 0.25 hour of unproductive manager time. The savings were then calculated as: s ¼ dr ch ð0:5 þ ð0:25 1:33ÞÞ12 where d r is the monthly reduction in days with manager conflict posttreatment versus pretreatment, and c h is the employee cost per working hour to the employer (US$35.16). 2.5.5. Reduced conflict with coworkers The annual savings from reduced conflict with coworkers were calculated using the following assumptions: (1) Coworkers’ salaries are, on average, the same as that of the employee with whom they had conflict; (2) the conflict involved only one coworker; (3) each day with conflict resulted in 0.5 hour of unproductive employee time; and (4) each day with conflict resulted in 0.5 hour of unproductive coworker time. The savings were then calculated as: s ¼ 12dr ch ð0:5 þ 0:5Þ
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where d r is the monthly reduction in days with coworker conflict posttreatment versus pretreatment, and c h is the cost per working hour to the employer (US$35.16). 2.5.6. Increased productivity The annual savings from increased personal productivity were calculated based on the assumption that days on which the employee reported reduced productivity resulted in a 20% loss of productivity for the day. The savings were then calculated as: s ¼ dr 0:2cd 12 where d r is the reduction in days with productivity problems per month posttreatment versus pretreatment, and c d is the cost per working day to the employer (US$281.25). 2.5.7. Marginal cost The marginal cost to employers of a chemical dependency benefit is a function of the number of persons covered by the benefit, the utilization rate of chemical dependency treatment among those covered, and the per-person-per-year (PPPY) insurance premium associated with a chemical dependency benefit. The base case marginal cost was calculated under the following assumptions, based on estimates provided by KPAM: (1) 0.9% of employees covered by a chemical dependency benefit engage in some chemical dependency treatment during a given year (utilization rate); (2) 50% of those who engage in chemical dependency treatment complete at least 1 month of treatment; and (3) the PPPY insurance premium associated with a chemical dependency benefit is US$30. The marginal cost was then calculated as: MC ¼ ð jpÞ=k where MC is the marginal cost per person engaged in treatment for at least 30 days, j is the total number of employees covered by the chemical dependency benefit in a given year, p is the PPPY insurance premium associated with a chemical dependency benefit, and k is the number of employees who participate in treatment for at least 30 days. Via sensitivity analysis, we varied the utilization rate using the median (0.7%) and 90th percentile (1.2%) utilization rates for privately insured populations published by the National Committee for Quality Assurance (2007).
3. Results The proportion of patients who reported work-related problems after treatment was lower than the proportion of patients who reported work-related problems before treatment (Table 2). The proportion that reported past-month absence from work dropped from 58.5% at admission to treatment (baseline) to 26.9% after 30–60 days (Mdn = 42 days) of treatment. The proportion of patients who reported lateness declined from 37.3% to 20.4%. There were
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Table 2 Patient-reported work-related problems before and after two periods of treatment (N = 498) Patients with 30–60 days of treatment (n = 498)
Patients with z 61 days of treatment (n = 189)
Performance problem
Baseline
Post 30–60 days
Baseline
Post z 61 days
Absent from work (%) Days of work missed [M (SD)] Tardiness (%) Days arrived late for work [M (SD)] Conflict with managers (%) Days of conflict with managers [M (SD)] Conflict with coworkers (%) Days of conflict with coworkers [M (SD)] Lost productivity (%) Days of reduced productivity [M (SD)]
58.5 2.32 37.3 1.49 19.7 1.32 18.1 1.13 39.8 3.93
26.9 1.07 20.4 0.56 14.9 0.59 11.8 0.51 25.3 1.66
54.7 2.40 35.8 2.21 15.3 1.17 18.0 1.09 40.7 4.32
25.3 0.81 22.1 0.74 12.2 0.55 15.3 0.54 21.7 1.70
(2.98) (2.87) (4.58) (4.17) (7.29)
(2.78) (1.48) (2.46) (2.44) (4.66)
(3.31) (5.41) (4.48) (4.01) (7.51)
(2.12) (2.11) (2.84) (2.74) (5.26)
Notes. Mean days for each performance problem reflect the mean for everyone in the treatment group; mean values are not limited to only those group members who reported having the particular performance problem.
also reductions in the proportion of patients reporting lost productivity, or conflict with managers or coworkers. In addition to reducing the scope of work-related problems, addictions treatment also led to substantial reductions in the severity of these problems. The mean number of days of reduced productivity per month was reduced by 58% (from 3.93 to 1.66 days). The mean number of workdays missed was reduced by 54% (from 2.32 to 1.07 days/month). Patients (n = 189) assessed after N 60 days of treatment showed similar improvements. The rate of absenteeism dropped from 54.7% at baseline to 25.3% after 106 days (median) of treatment. The proportion of patients who reported lost productivity was reduced by nearly half, falling from 40.7% at baseline to 21.7%. Reductions in tardiness and conflict with coworkers were similar to those associated with 42 days of treatment. The improvement in performance associated with z 61 days of substance abuse treatment represents considerable economic value (Table 3). Reduced absenteeism had the most significant direct economic impact. The 66% reduction in the mean number of days absent (from 2.40 to 0.81 days/month) represents an annual savings to the employer of US$5,366 (1.59 US$281.25 12) for an employee receiving a US$45,000 annual salary. Similarly, the 61% decline in mean days per month of productivity problems after z 61 days of treatment was associated with an economic benefit of US$1,769 (2.62 0.2(US$281.25) Table 3 Average economic value per person associated with substance abuse treatment (US$) Performance problem
Baseline
Post z 61 days of treatment
Difference from baseline
Absenteeism Tardiness Conflict with managers Conflict with coworkers Lost productivity Aggregate value
8,100 932 411 460 2,916 12,819
2,734 312 193 228 1,147 4,614
5,366 620 218 232 1,769 8,205
Note. Economic value calculation based on an average salary of US$45,000 plus a 50% fringe benefit rate.
12). There was a smaller but positive economic benefit associated with reduced tardiness and conflict with managers and coworkers. The aggregate economic benefit associated with z 61 days of substance abuse treatment was US$8,205 per person. After considering the marginal cost of investing in chemical dependency treatment, there is a considerable net benefit to employers (Table 4) associated with providing an insurance benefit that includes such treatment. The net benefit, however, depends upon the utilization of the benefit and the mean salary level of the employees receiving treatment. With the assumptions of our base case (0.9% utilization, 50% dropout, and US$30 per member per year), the marginal cost of treatment is US$6,667 PPPY. For the base case of an individual earning US$45,000 per year with a 50% fringe benefit loading rate, the net benefit of z 61 days of treatment related to our five performance measures is US$1,538, yielding a return on investment (ROI) of 23%. For an individual earning US$60,000 per year, the net benefit of z 61 days of treatment is US$4,273 per person, yielding an ROI of 64%. For an individual earning US$30,000, there is a net cost of US$1,196 per person associated with z 61 days of treatment, yielding an ROI of 18%. An employer will break even on an investment in a chemical dependency benefit, when considering only absenteeism, tardiness, conflict, and productivity outcomes, if the mean salary of employees participating in treatment is US$36,565. Sensitivity analysis shows that the ROI is highly sensitive to the utilization rate for chemical dependency Table 4 Net benefit estimates and ROI for employers associated with z 61 days of chemical dependency treatment (US$ per worker) Salary level Parameter
US$30,000
US$45,000 (base case)
US$60,000
Benefits Marginal cost Net benefit ROI (%)
5,471 6,667 1,196 18
8,205 6,667 1,538 23
10,940 6,667 4,273 64
N. Jordan et al. / Journal of Substance Abuse Treatment 34 (2008) 311 – 319 Table 5 Sensitivity analysis for ROI Salary level Utilization rate (%)
US$30,000
US$45,000
US$60,000
0.7 0.9 1.2
36% 4% 28%
18% 23% 64%
9% 64% 119%
services (Table 5). Increasing the utilization rate to 1.2% improves the ROI to 64% when the mean salary is US$45,000 and yields a positive ROI of 28% when the mean salary is US$30,000. As utilization increases, the break-even point for investing in a chemical dependency benefit decreases.
4. Discussion The findings reported in this article indicate that patients who engage in addictions treatment for z 1 month achieve sharp reductions in workplace-related problems. Gains relating to tardiness and workplace conflict are maintained after 60 days of treatment, whereas absenteeism and productivity continue to improve. Patients who remained in treatment beyond 2 months experienced gains that resulted in an economic benefit to employers if their mean annual salary was z US$36,565. ROI estimates reflect a series of assumptions and outcomes data available for analysis. In addition to the assumptions identified above concerning the impact of tardiness, conflict, and reduced productivity, the findings of this study reflect assumptions concerning the duration of pretreatment impaired work performance; the duration of treatment-related performance improvement; and the cost of absenteeism to the employer. ROI estimates reflect the economic value of five workplace-related treatment outcomes available for analysis but do not account for indirect employer benefits associated with treatment. Estimates of the economic benefit of addictions treatment presume that the workplace problems reported by a patient on SATSS intake assessment are representative of the 12-month period prior to treatment, and that the improvement reflected in update assessments will persist for 12 months. If the employee’s work performance was impaired for b 1 year prior to treatment or if treatment gains persisted for less than a year, the ROI would be reduced. Alternatively, if the employee was impaired for N 1 year prior to treatment or if the gains in workplace performance persisted beyond 12 months, the ROI would increase. Our estimates of the costs of absenteeism are based upon employee wage rates, which may underestimate the ROI associated with reduced absenteeism. Employees whose absenteeism exceeds their paid vacation and sick leave experience financial strain, which can contribute to increased stress and reduced productivity on the job. Productivity gains from interventions that reduce absentee-
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ism due to illness are likely to be larger than the wage rate (Pauly et al., 2002). The ROI estimates provided in Tables 4 and 5 are conservative in that they do not account for indirect benefits associated with addictions treatment and are themselves based on conservative assumptions of factors driving the direct costs measured. These indirect benefits include the decreased cost of work product defects and the decreased cost of poor decision making that result from improved employee workplace performance after addictions treatment. The cost of work product defects can be considerable; at a minimum, they require rework and repair, whereas in the worst case, they could trigger further mistakes by others downstream, multiplying the negative impact. As the level of employee decision-making responsibility increases, so do the costs of poor decisions made by these employees; poor decisions by a front-line worker may affect a handful of employees and cost hundreds of dollars, whereas poor decisions by a senior manager could affect hundreds of employees and incur significant economic loss to the employer. Other indirect benefits of chemical dependency treatment to employees and employers that we were unable to measure include reduction in medical costs and the value of improved life functioning (e.g., psychiatric and family/ social functioning). A review of interventions evaluated during the last 20 years reported that reduced use of medical services is a significant economic benefit of addictions treatment (McCollister & French, 2003). Improved life functioning benefits the employer insofar as it helps the employee to avoid relapse and to maintain treatment gains, including improved work performance. Finally, it should be noted that the posttreatment reduction in mean days per month of problems reported in Table 2 (absenteeism, tardiness, and so on) is based upon the entire sample. To estimate the economic benefit associated with treatment, everyone in the sample was included in the analyses regardless of whether the employees reported problems when admitted to treatment because gains based upon the entire sample are required to calculate ROI. Average gains based upon the whole sample are markedly smaller than the gains of patients who report problems at intake. For example, 98 (19.7%) of the 498 patients in the sample reported having had a conflict with managers at intake. Those 98 persons reported an average of 6.7 days of prior-month conflict with managers at admission and 3.0 days of prior-month conflict after 30–60 days of treatment. The reduction in mean days of conflict (3.7 days) is five times greater than for the sample as a whole (0.73 days).
5. Study limitations There are several limitations to this study that might be addressed in future research.
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Although the study sample reported significant improvement in work performance following treatment, it cannot be inferred that the improvement was due to the treatment. Because work performance data were not available for impaired employees who did not engage in treatment, it was not possible to determine how much of the improved performance can be attributed to participation in treatment. Costs associated with missed work, lateness, and reduced productivity vary by type of job (Nicholson et al., 2006). Many jobs require workers to perform as part of teams, so performance problems may lead to additional productivity losses for team members. We lacked data on job type and on the team orientation of an employee’s job for the individuals in our sample, so we were unable to account for these factors in estimating ROI. The sample may not be representative of all patients treated for z 1 month because it does not include patients who remained in treatment for N 30 days but did not complete an update assessment. According to program staff, it is rare for patients to refuse to complete the update assessment. The primary factor in the completion of updates was staff diligence in reminding patients when the assessments were due. However, it remains possible that patients who completed the update were more conscientious about their treatment than those who did not complete their update. Workplace improvement for less conscientious patients may not be as positive as reported for the sample in this study. This study did not account for employees who benefited from treatment but were unavailable for the 30-day to the 60-day update, which would increase the ROI, or for persons who were employed at intake but not at update, which would reduce ROI. The first group includes persons who remained in treatment but had transferred to a different location and did not complete an update (9.7% of all admissions); persons who baccomplished treatment goalsQ prior to 30 days (1.2% of admissions); and persons who dropped out prior to 30 days but nonetheless had received at least some benefit from treatment. The second group includes persons who were employed at intake but were unemployed at the 30-day to the 60-day update (11.2%). We believe that the benefit derived by the employer from the first group is offset by the loss of benefit from the second group because the two groups are nearly equal in size (10.9% vs. 11.2%). Assuming that employers derived some benefit from persons who dropped out before the update, we believe that the absence of data for these two groups had a negligible impact or may have underestimated the actual ROI. The outpatient programs that participated in this study offer an abstinence-based treatment utilizing a multidisciplinary treatment approach. Modalities include group and individual counseling, education, and others. Treatment is targeted primarily at addictions issues, but counselors are encouraged to address mental health, family, medical, and employment problems as well. Most of the programs have a formal treatment model of fixed duration, but patients are
encouraged to remain in treatment as long as they find it helpful. Findings may not generalize to other treatment models (e.g., models with a more rigidly fixed term of treatment, or those based solely upon a 12-step approach).
6. Summary Employed patients remaining in chemical dependency treatment for z 1 month reported marked improvement across multiple dimensions of work performance. The net economic value of these improvements to their employers depended upon the treatment utilization rate and the salary level. For a utilization rate of 0.9% and an employee with a US$45,000 annual salary, the net benefit of treatment on these work performance measurements alone was US$1,538. Based upon the data and assumptions used in this study, employers can break even on an investment in a chemical dependency treatment benefit if the mean annual salary of employees participating in treatment is US$36,565. Substantial employment-related gains were realized within the first 30–60 days of treatment. Patients who remained in treatment for longer periods reported additional but diminishing gains, primarily in the areas of absenteeism and productivity on the job. Because there is no additional cost to employers associated with higher utilization and longer treatment, and because both are associated with additional benefits, the ROI for employers increases along with the utilization and duration of treatment. It is to the employer’s benefit to encourage early identification of addiction problems and treatment engagement, thereby averting costs associated with employee impairment and realizing enhanced ROI from the addictions treatment benefit. For companies with an average salary of b US$36,565, there is a negative ROI associated with offering a chemical dependency treatment benefit when considering only the five outcome dimensions assessed for this study. However, future research may demonstrate a positive ROI for lower salary levels when indirect benefits such as medical cost offsets and improved psychiatric and family/social functioning are considered. The latter may help employees to avoid relapse and to maintain work performance gains beyond 12 months, contributing to a positive ROI. This study illustrates the benefits of integrating outcomes assessment into routine clinical care. Such assessments can enable program managers to better match treatment to patient needs (Grissom et al., 2004; McLellan et al., 1997; Sangsland, 2000) and can enable administrators, program planners, and researchers to better understand the impact of chemical dependency treatment. Several threats to the internal validity of the study design are noted above. These must be weighed against the gains in external validity derived from studies of patients in actual treatment settings. Naturalistic studies are free of many of the threats to external validity (sample exclusions, informed
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consent procedures, refusal to participate, and others) that are common in experimental research designs. Both types of studies can contribute to improvement in clinical outcomes and to our understanding of what works. In an era of declining support for research, it is important to be clear about the value of experimental research for internal validity while working to harvest meaningful data from naturalistic studies of routine treatment. References Bray, J. W., Zarkin, G. A., Dennis, M. L., & French, M. T. (2000). Symptoms of dependence, multiple substance use, and labor market outcomes. American Journal of Drug and Alcohol Abuse, 26, 77 – 95. Bureau of Labor Statistics: (2003). National compensation survey: Employee benefits in private industry in the United States, 2000 (bulletin no. 2555). Washington, DC7 Bureau of Labor Statistics. Cartwright, W. S. (2000). Cost–benefit analysis of drug treatment services: Review of the literature. Journal of Mental Health Policy and Economics, 3, 11 – 26. Foster, W. H., & Vaughan, R. D. (2005). Absenteeism and business costs: Does substance abuse matter? Journal of Substance Abuse Treatment, 28, 27 – 33. French, M. T., Zarkin, G. A., & Dunlap, L. J. (1998). Illicit drug use, absenteeism, and earnings at six US worksites. Contemporary Economic Policy, 16, 334 – 346. Grissom, G. (2001). Matching substance abuse patients to services. In B. Dickey, & L. Sederer (Eds.), Achieving quality in psychiatric and substance abuse services (pp. 241 – 250). Washington, DC7 American Psychiatric Press. Grissom, G., Sangsland, S., Jaeger, G., & Beers, T. (2004). PsyberCare CD: An outcomes assessment and clinical decision support system for chemical dependency treatment. In M. Maruish (Ed.), The use of psychological testing for treatment planning and outcome assessment (pp. 641–675). New Jersey7 Lawrence Erlbaum Associates. Harwood, H. J. (2000). Updating estimates of the economic costs of alcohol abuse in the United States: Estimates, update methods, and data. Falls Church, VA7 Lewin Group. Harwood, H. J., Malhotra, D., Villariver, C., Liu, C., Chong, U., & Gilani, J. (2002). Cost-effectiveness and cost–benefit analysis of substance abuse treatment: A literature review. Rockville, MD7 Substance Abuse and Mental Health Services Administration, Center for Substance Abuse Treatment. Jofre-Bonet, M., & Sindelar, J. L. (2004). Creating an aggregate outcome index: Cost-effectiveness analysis of substance abuse treatment. Journal of Behavioral Health Services and Research, 31, 229 – 241.
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LoSasso, A. T., Rost, K., & Beck, A. (2006). Modeling the impact of enhanced depression treatment on workplace functioning and costs: A cost–benefit approach. Medical Care, 44, 352 – 358. Mark, T. L., Coffey, R. M., King, E., Harwood, H., McKusick, D., Genuardi, J., et al. (2000). Spending on mental health and substance abuse treatment, 1987–1997. Health Affairs, 19, 108 – 120. McCollister, K. E., & French, M. T. (2003). The relative contribution of outcome domains in the total economic benefit of addiction interventions: A review of first findings. Addiction, 98, 1647 – 1659. McLellan, A. T., Belding, M., McKay, J. R., Zanis, D., & Alterman, A. I. (1996). Can the outcomes research literature inform the search for quality indicators in substance abuse treatment? In M. Edmunds, R. Frank, M. Hogan, D. McCarty, R. Robinson-Beale, & C. Weisner (Eds.), Managing managed mare: Quality improvement in behavioral health (pp. 207 – 220). Washington, DC7 National Academy Press. McLellan, A. T., Cacciola, J., Kushner, H., & Peters, F. (1992). The fifth edition of the Addiction Severity Index. Journal of Substance Abuse Treatment, 9, 199 – 213. McLellan, A. T., Grissom, G. R., Zanis, D., Randall, M., Brill, P. L., & O’Brien, C. P. (1997). Problem–service bmatchingQ in addiction treatment: A prospective study in four programs. Archives of General Psychiatry, 54, 730 – 735. National Committee for Quality Assurance. (2007). HEDIS audit means, percentiles and ratios: 2006 Downloaded on April 5, 2007 from http:// web.ncqa.org/Default.aspx?tabid=172. Nicholson, S., Pauly, M. V., Polsky, D., Sharda, C., Szrek, H., & Berger, M. L. (2006). Measuring the effects of work loss on productivity with team production. Health Economics, 15, 111 – 123. Office of Applied Studies, Substance Abuse and Mental Health Services Administration. (1999). Substance use and mental health characteristics by employment status. Rockville, MD7 US Department of Health and Human Services. Pauly, M. V., Nicholson, S., Xu, J., Polsky, D., Danzon, P. M., Murray, J. F., et al. (2002). A general model of the impact of absenteeism on employers and employees. Health Economics, 11, 221 – 231. Prendergast, M. L., Podus, D., & Chang, E. (2000). Program factors and treatment outcomes in drug dependence treatment: An examination using meta-analysis. Substance Use and Misuse, 35, 1931 – 1965. Sangsland, S. B. (2000). Chemical dependency outcomes management: A case study of implementation—Strategy and experience. In K. M. Coughlin (Ed.), 2001 behavioral outcomes and guidelines sourcebook (pp. 312 – 320). New York7 Faulkner & Gray. Wang, P. S., Patrick, A., Avorn, J., Azocar, F., Ludman, E., McCulloch, J., et al. (2006). The cost and benefits of enhanced depression care to employers. Archives of General Psychiatry, 63, 1345 – 1353. Worner, T. M., Chen, P., Ma, H., Xu, S., & McCarthy, E. G. (1993). An analysis of substance abuse patterns, medical expenses and effectiveness of treatment in the workplace: Long-term follow-up. Employee Benefits Journal, 18, 15 – 19.
Regular article
Economic benefit of chemical dependency treatment to employers Neil Jordan, (Ph.D.)a,b, Grant Grissom, (Ph.D.)c,4, Gregory Alonzo, (M.B.A.)c, Laura Dietzen, (M.A.)c, Scott Sangsland, (M.A.)d a
Mental Health Services and Policy Program, Department of Psychiatry and Behavioral Sciences, Feinberg School of Medicine, Northwestern University, Chicago, IL 60611, USA b Center for Management of Complex Chronic Care, Hines VA Hospital, Hines, IL 60141, USA c Polaris Health Directions, Fairless Hills, PA 19030, USA d Kaiser Permanente, Pasadena, CA 91188, USA Received 25 October 2006; received in revised form 16 April 2007; accepted 1 May 2007
Abstract Using assessment data from the Substance Abuse Treatment Support System, we estimated the economic benefit of chemical dependency treatment to employers. A cohort of individuals (N = 498) treated at Kaiser Permanente’s Addiction Medicine programs in Southern California completed assessments before and at least 30 days after treatment began. Compared to intake, subsequent assessments indicated substantial reduction in the number of patients who missed work, were late for work, were less productive than usual at work, and/or had conflict with coworkers or management. The net economic value of these improvements to their employers depended upon the utilization rate of the benefit and the salary level of the employees receiving treatment. For a utilization rate of 0.9% and a mean annual salary of US$45,000, the net benefit of treatment was US$1,538 for z 61 days of treatment. Based solely upon these employment-related measures, without factoring in the medical cost offset or indirect benefits of treatment that may help employees to maintain higher levels of productivity, employers break even on an investment of US$30 per member per year for a chemical dependency treatment benefit if the mean annual salary of the employees participating in treatment is US$36,565. D 2008 Elsevier Inc. All rights reserved. Keywords: Substance abuse; Treatment use; Economic benefit; Employers; Workplace productivity
1. Introduction The benefits of substance abuse treatment are well established. Numerous studies have demonstrated a positive effect of treatment on reducing substance use and improving health status and social functioning (McLellan, Belding, McKay, Zanis, & Alterman, 1996; Prendergast, Podus, & Chang, 2000). In addition to recovery from addiction, patients who comply with substance abuse treatment often experience gains in family functioning, mental health, and employment (Cartwright, 2000; JofreBonet & Sindelar, 2004).
4 Corresponding author. Polaris Health Directions, 446 Lincoln Highway, Fairless Hills, PA 19030, USA. Tel.: +1 267 583 6330; fax: +1 267 583 6335. E-mail address: [email protected] (G. Grissom). 0740-5472/08/$ – see front matter D 2008 Elsevier Inc. All rights reserved. doi:10.1016/j.jsat.2007.05.001
In the last 20 years, many studies have established the economic benefits of substance abuse treatment. One of the main conclusions from a recent literature review of costeffectiveness and cost–benefit analyses of substance abuse treatment is that the economic benefits of treatment generally exceed the cost of treatment (Harwood et al., 2002). Reduced criminal behavior and increased employment were found to be key drivers of the economic benefits of treatment. Most of these studies focused on publicly funded treatment and examined benefits from the perspective of patients, treatment programs, or society. Relatively few studies have considered the economic benefits of substance abuse treatment from the perspective of employers. Some studies have focused on the relationship between substance abuse and labor outcomes without considering the impact of treatment (Bray, Zarkin, Dennis, & French, 2000; French, Zarkin, & Dunlap, 1998). The employer perspective is important because a sizable
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number of individuals with substance dependence have full-time or part-time jobs (Office of Applied Studies, Substance Abuse and Mental Health Services Administration, 1999), and just b 50% of persons with alcohol or drug disorders in need of treatment are privately insured (Mark et al., 2000). Most employee health plans cover alcohol and drug detoxification and outpatient treatment (Bureau of Labor Statistics, 2003), although the extent of coverage varies widely. There are several employment-related outcomes that should be considered in evaluating the economic benefit of substance abuse treatment to employers. Studies to date have focused on absenteeism (Foster & Vaughan, 2005) or increase in employment hours (Worner, Chen, Ma, Xu, & McCarthy, 1993). One of those studies argued that employer costs due to substance-abuse-related absenteeism are not large enough to justify employer funding of treatment, but the authors lacked data on the costs associated with decreased performance, lateness, and disruption to business (Foster & Vaughan, 2005). Although there are two recent publications that analyze the economic benefits to employers of improved productivity due to depression treatment (LoSasso, Rost, & Beck, 2006; Wang et al., 2006), there have been no published studies in the substance abuse literature that have included measures of absenteeism, conflict with managers and coworkers, or productivity more broadly. Because N 70% of the estimated costs of alcohol abuse for 1998 can be ascribed to lost productivity (Harwood, 2000), understanding the effects of substance abuse treatment on workplace productivity may be of significant value to employers. The primary data for this study come from Kaiser Permanente’s Addiction Medicine (KPAM) program, a multisite substance abuse treatment provider serving private health plan patients at four locations participating in the study. This article describes the type, amount, and economic benefit of workplace performance improvements reported by patients who were treated for at least 30 days, and also examines whether there is an additional economic benefit to employers for patients who remain in treatment for N 60 days.
2. Materials and methods 2.1. Procedures Patients were assessed using the Substance Abuse Treatment Support System (SATSS). SATSS is a customized version of Polaris CD, an addictions treatment decision support system developed by Polaris Health Directions with funding support from the National Institute on Drug Abuse (Grissom, Sangsland, Jaeger, & Beers, 2004). The SATSS provides for computerized collection, storage, analysis, and real-time reporting of patient self-report data at the start of treatment and concurrently with treatment.
Outpatients at each of the four KPAM programs complete an intake assessment upon admission to treatment. Patients seeking treatment are asked to arrive 30 minutes prior to their scheduled appointment to complete the SATSS assessment. When the patient arrives, a staff person explains that, in order for the program to provide the best possible care, a thorough assessment is necessary, which begins with a computerized questionnaire prior to meeting with a clinician. Computer literacy is not required. All questions can be answered using only numeric keys and the bEnterQ key. All new patients should complete the assessment, except those who (in the judgment of staff) are unable to provide reliable self-report due to impairment or lack of sixth-grade English literacy. The assessment includes demographic items and questions relating to treatment history, motivation, strengths, self-efficacy, and risk factors for dropout and relapse. Quantitative measures include the severity of alcohol, drug, psychiatric, family/social, and medical problems, using the scales of the Addiction Severity Index (ASI; McLellan, Cacciola, Kushner, & Peters, 1992), and severity of employment problems, using a scale based upon the ASI model (see Measures section). The intake assessment provides a broad range of information relating to the patient’s clinical condition, including risk factors for dropout and relapse, and severity data identifying the need for supplemental services based upon a 5-year study of treatment–services bmatchingQ (Grissom, 2001; McLellan et al., 1997). Each location has one or more computers available to patients for completing SATSS assessments. Patients are asked to complete an update SATSS assessment after every 30 days of treatment. Questions on this assessment relate to the patient’s condition, progress, services received, and satisfaction with treatment. The ASI Alcohol, Drugs, Psychiatric, Medical, and Family/Social scales administered at intake are included in update assessment, as are questions relating to employment problems. Patient progress is evaluated using change scores (intake to update) on each of the scales separately. Changes in item-level data, as reported in this article, provide a concrete indication of the nature and the extent of patient progress. Counselors are encouraged to review progress reports with their patients to identify areas of improvement and areas that remain problematic. Update assessments require about 15 minutes to complete. Completion rates are substantially lower for update assessment than for intake assessment, primarily due to dropout. Other reasons for noncompletion are absence on the scheduled assessment date, lack of time, and unavailability of a SATSS computer. The most common reason for noncompletion is failure to provide reminders to patients to arrive early or to stay after their treatment session when an update assessment is due. Completion rates are related to the degree to which update assessments are integrated into the treatment process.
N. Jordan et al. / Journal of Substance Abuse Treatment 34 (2008) 311 – 319
At one location, update assessments are formally integrated: Patients and support staff monitor the assessment schedule and notify patients when they are due to complete an update assessment; counselors are expected to review reports with patients; and counselors refer to reports during staff discussions of patient progress. Completion rates for this program have reached 100% for some months and average about 60%. At the other extreme, at a second location, update assessments are not integrated into the treatment process. Counselors are not expected to use update reports, and do so only upon their own initiative. Patients complete update assessments only if they are asked to do so by their counselor. This program has the lowest overall rate of completion (20%); monthly completion rates rarely exceed 30%. 2.2. Measures An employment scale was constructed based on interviews with program administrators and clinicians (Sangsland, 2000). They felt that the employment scale of the ASI was not well suited for assessing the severity of their patients’ employment problems. It was decided to retain the two ASI items that are common to all seven ASI scales (bHow much have you been troubled or bothered [by employment problems]?Q and bHow important to you now is treatment for [employment problems]?Q) while replacing the remaining items with five performance indicators that are important to employers: being (1) late or (2) missing work; conflict with (3) coworkers or (4) supervisors; and (5) productivity on the job. As for standard ASI items, the patient is asked in each case to report behavior during the prior 30 days (e.g., bIn the past 30 days, how many days were you late for work?Q). The psychometric properties of the SATSS scales, including internal consistency and test–retest reliabilities, concurrent and predictive validity, and sensitivity to change, are described in Grissom et al. (2004). Internal consistency scale reliabilities (Cronbach’s a) are as follows: .91 (Medical), .76 (Family/Social), .83 (Psychiatric), .91 (Drugs), .91 (Alcohol), and .70 (Employment). The relatively low reliability of the employment scale is due to the heterogeneity of the items. Among employees reporting workplace difficulties, there is considerable variation regarding the nature and the severity of the problems. Few patients report all five of the problems covered by the scale. Eight of 10 interitem correlations, although all statistically significant and in the expected direction, are below .30. Treatment outcomes related to employment are measured using changes in the five workplace performance indicators in the course of treatment by comparing data collected at the start of treatment (intake assessment) with data collected after z 30 days of treatment (update assessments). Aggregate program-level patient outcomes data are reported to Kaiser Permanente both in terms of raw change scores
313
(percentage of patients improved) and case mix adjusted data, showing the proportion of patients whose improvement equals or exceeds severity-adjusted expectation. Workplace performance data for patients who report employment problems at intake indicate that about 70% of these patients have improved workplace performance after 1 month of treatment. 2.3. Setting Subjects comprised patients receiving treatment for chemical dependency at four KPAM outpatient programs in Southern California: Fontana, San Diego, and Los Angeles (West Los Angeles and Carson locations). Addiction medicine physician specialists lead multidisciplined treatment teams. All of the programs offer a full range of chemical dependency services, including inpatient detoxification, outpatient detoxification, day treatment, and intensive outpatient services. Outpatient treatment occurs about 65% of the time in group settings, with specialized groups addressing anger management, gender-specific issues, relapse prevention, and so on. Comprehensive mental health services that are not already integrated into chemical dependency programs are available within the Kaiser Permanente system. Adjunctive community services vary by location based on the availability of community resources but may include Alcoholics Anonymous, Narcotics Anonymous, and Al-Anon groups; gay and lesbian issues; job skills; and other workshops or programs. Patient populations served by the four programs were similar with regard to gender (approximately two thirds of patients at each location were male) and employment (about 70% of patients at each location reported paid employment). About half of the patients at each site had a history of arrest. Other patient characteristics varied widely. The proportion of White patients at the San Diego program (70%) was twice that of the West Los Angeles program (35%). The proportion of married patients varied from one third (West Los Angeles, 34%) to nearly half (Fontana, 46%). The proportion with college degrees ranged from 16% (Fontana) to 27% (West Los Angeles). Eighty-four percent of patients seeking services at Fontana acknowledged their need for addictions treatment, versus three fourths at the San Diego (74.9%) and West Los Angeles (71.4%) locations. The remainder presented for treatment solely because of some form of compulsion (e.g., court, employer). Addictions treatment in KPAM programs varies in the nature and the duration of bstandardQ treatment, but patients are encouraged to attend as long as they find it helpful. Of those who engage in treatment, most attend sessions for at least 1–2 months, and some continue treatment for a year or more. Many patients drop out after one or two sessions due to the chronic relapsing nature of the disease or, in some cases, due to dissonance between a program’s objective (abstinence) and their personal goals for treatment. At the four KPAM settings of this study, only 66% of patients seeking
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treatment for alcoholism and 78% of patients seeking treatment for other drugs wanted to remain abstinent.
Table 1 Demographic characteristics and treatment history (N = 498)
2.4. Sample The study sample includes 498 employed patients who completed SATSS intake assessment in January 1999–May 2005, remained in treatment for at least 1 month, and completed an update assessment 30–60 days after the intake assessment. We compared this study sample to all employees who completed an intake assessment during that time based on the 14 demographic and treatment history characteristics shown in Table 1. The only significant differences were that patients in the sample had a slightly higher education level and were more likely to be strongly pressured by their supervisor to enter treatment. The sample was divided into two groups. The first group comprised patients who completed an update assessment 30–60 days after their intake assessment but had no further update assessments (n = 309). This group represents a common duration of treatment for patients. The median number of days between intake assessment and update assessment was 42 days. The second group comprised those who completed at least two update assessments: one at 30– 60 days after the intake assessment, and the second at least 61 days after the intake assessment (n = 189). The median number of days between the intake assessment and the second update assessment was 106 days, representing about two additional months of treatment. The demographic characteristics of the sample are shown in Table 1. The mean age was 42 years, and the majority of patients were male and Caucasian. Most patients reported good or better health status, but those with only one update assessment were more likely to report fair or poor health status than those who completed at least two update assessments. A higher proportion of patients with only one update assessment reported working part time (14.2%) or having been hospitalized during their lifetime for a psychological problem (23.6%) than patients with at least two update assessments (6.9% and 15.3%, respectively). Almost half of all patients reported having been in substance abuse treatment prior to their intake assessment. 2.5. Methods for calculating benefits and costs Formulas used to calculate employer costs and the benefits of work-related treatment outcomes to employers are presented. 2.5.1. Hourly/daily employee cost In each of the benefits analyses, the cost to the employer of an employee’s time is a key element. Our base case analysis was for an employee with a US$45,000 annual salary, whose cost to the employer, including fringe benefits and employerpaid taxes (e.g., Federal Insurance Contribution Act [FICA/ Social Security] and Federal Unemployment Tax Act
Characteristics
Patients with one update (30–60 days postintake) (n = 309)
Patients with two updates (30–60 and z 61 days postintake) (n = 189)
Age in years [M (SD)] 41.5 (10.1) 42.9 (9.5) Male (%) 71.8 69.8 Race/ethnicity (%) Caucasian/White 57.3 63.0 African American 14.6 15.3 Latino 20.1 13.2 Other 8.1 8.5 Highest level of education completed (%) High school or less 35.0 30.2 Some college 38.8 40.7 College or more 26.2 29.1 Current marital status (%) Never married 23.6 24.3 Married, remarried, 50.5 47.1 or living as married Separated/divorced/ 25.9 28.6 widowed With family history 70.6 75.7 of substance problems (%) Employment status at intake (%) Full time 85.8 93.1 Part time 14.2 6.9 Employment status at 30-day to 60-day update (%) Full time 89.0 93.0 Part time 11.0 7.0 Pressured to enter treatment by manager/supervisor (%) Not at all 79.6 77.8 Somewhat 8.7 10.6 Strongly 11.7 11.6 Number of hospitalizations for psychological or emotional problems in one’s lifetime (%) 0 76.4 84.7 1 7.4 2.6 z2 16.2 12.7 Has chronic illness 34.1 28.4 or persistent pain being treated with medication (%) General health status (%) Excellent 12.6 9.5 Very good 28.5 36.5 Good 36.9 42.9 Fair 19.4 10.1 Poor 2.6 1.1 Number of times entered treatment for substance abuse in one’s lifetime (%) 0 57.3 54.0 1 22.7 22.2 z2 20.1 23.8 Number of times entered treatment for detoxification (%) 0 80.3 84.1 1 9.7 11.1 z2 10.0 4.8
Significance ns ns ns
ns
ns
ns
v 2(1) = 5.56, p b .05 ns
ns
v 2(2) = 6.77, p b .05 ns
v 2(4) = 12.30, p b .05
ns
ns
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[FUTA]), was estimated to be US$67,500 per year. The cost to the employer per employee work hour was calculated based on an annual 1,920 working hours, reflecting paid but nonworking time off for vacation, holiday, and sick/personal days employers typically offer employees. The effective hourly employer cost used in benefits analyses was then US$35.16 (or US$281.25 for a standard 8-hour day). 2.5.2. Reduced absenteeism The annual savings from reduced absenteeism were calculated as: s ¼ 12dr cd where d r is the reduction in days absent per month posttreatment versus pretreatment, and c d is the cost per working day to the employer (US$281.25). 2.5.3. Reduced tardiness The annual savings from reduced tardiness were calculated using the assumption that, when employees were late, they were, on average, 1 hour late. The savings were calculated as: s ¼ 12dr ch where d r is the reduction in days late to work per month posttreatment versus pretreatment, and c h is the cost per working hour to the employer (US$35.16). 2.5.4. Reduced conflict with managers The annual savings from reduced conflict with managers were calculated using the following assumptions: (1) Managers’ salaries are 33% higher than that of the employee with whom they had conflict; (2) each day with conflict resulted in 0.5 hour of unproductive employee time; and (3) each day with conflict resulted in 0.25 hour of unproductive manager time. The savings were then calculated as: s ¼ dr ch ð0:5 þ ð0:25 1:33ÞÞ12 where d r is the monthly reduction in days with manager conflict posttreatment versus pretreatment, and c h is the employee cost per working hour to the employer (US$35.16). 2.5.5. Reduced conflict with coworkers The annual savings from reduced conflict with coworkers were calculated using the following assumptions: (1) Coworkers’ salaries are, on average, the same as that of the employee with whom they had conflict; (2) the conflict involved only one coworker; (3) each day with conflict resulted in 0.5 hour of unproductive employee time; and (4) each day with conflict resulted in 0.5 hour of unproductive coworker time. The savings were then calculated as: s ¼ 12dr ch ð0:5 þ 0:5Þ
315
where d r is the monthly reduction in days with coworker conflict posttreatment versus pretreatment, and c h is the cost per working hour to the employer (US$35.16). 2.5.6. Increased productivity The annual savings from increased personal productivity were calculated based on the assumption that days on which the employee reported reduced productivity resulted in a 20% loss of productivity for the day. The savings were then calculated as: s ¼ dr 0:2cd 12 where d r is the reduction in days with productivity problems per month posttreatment versus pretreatment, and c d is the cost per working day to the employer (US$281.25). 2.5.7. Marginal cost The marginal cost to employers of a chemical dependency benefit is a function of the number of persons covered by the benefit, the utilization rate of chemical dependency treatment among those covered, and the per-person-per-year (PPPY) insurance premium associated with a chemical dependency benefit. The base case marginal cost was calculated under the following assumptions, based on estimates provided by KPAM: (1) 0.9% of employees covered by a chemical dependency benefit engage in some chemical dependency treatment during a given year (utilization rate); (2) 50% of those who engage in chemical dependency treatment complete at least 1 month of treatment; and (3) the PPPY insurance premium associated with a chemical dependency benefit is US$30. The marginal cost was then calculated as: MC ¼ ð jpÞ=k where MC is the marginal cost per person engaged in treatment for at least 30 days, j is the total number of employees covered by the chemical dependency benefit in a given year, p is the PPPY insurance premium associated with a chemical dependency benefit, and k is the number of employees who participate in treatment for at least 30 days. Via sensitivity analysis, we varied the utilization rate using the median (0.7%) and 90th percentile (1.2%) utilization rates for privately insured populations published by the National Committee for Quality Assurance (2007).
3. Results The proportion of patients who reported work-related problems after treatment was lower than the proportion of patients who reported work-related problems before treatment (Table 2). The proportion that reported past-month absence from work dropped from 58.5% at admission to treatment (baseline) to 26.9% after 30–60 days (Mdn = 42 days) of treatment. The proportion of patients who reported lateness declined from 37.3% to 20.4%. There were
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Table 2 Patient-reported work-related problems before and after two periods of treatment (N = 498) Patients with 30–60 days of treatment (n = 498)
Patients with z 61 days of treatment (n = 189)
Performance problem
Baseline
Post 30–60 days
Baseline
Post z 61 days
Absent from work (%) Days of work missed [M (SD)] Tardiness (%) Days arrived late for work [M (SD)] Conflict with managers (%) Days of conflict with managers [M (SD)] Conflict with coworkers (%) Days of conflict with coworkers [M (SD)] Lost productivity (%) Days of reduced productivity [M (SD)]
58.5 2.32 37.3 1.49 19.7 1.32 18.1 1.13 39.8 3.93
26.9 1.07 20.4 0.56 14.9 0.59 11.8 0.51 25.3 1.66
54.7 2.40 35.8 2.21 15.3 1.17 18.0 1.09 40.7 4.32
25.3 0.81 22.1 0.74 12.2 0.55 15.3 0.54 21.7 1.70
(2.98) (2.87) (4.58) (4.17) (7.29)
(2.78) (1.48) (2.46) (2.44) (4.66)
(3.31) (5.41) (4.48) (4.01) (7.51)
(2.12) (2.11) (2.84) (2.74) (5.26)
Notes. Mean days for each performance problem reflect the mean for everyone in the treatment group; mean values are not limited to only those group members who reported having the particular performance problem.
also reductions in the proportion of patients reporting lost productivity, or conflict with managers or coworkers. In addition to reducing the scope of work-related problems, addictions treatment also led to substantial reductions in the severity of these problems. The mean number of days of reduced productivity per month was reduced by 58% (from 3.93 to 1.66 days). The mean number of workdays missed was reduced by 54% (from 2.32 to 1.07 days/month). Patients (n = 189) assessed after N 60 days of treatment showed similar improvements. The rate of absenteeism dropped from 54.7% at baseline to 25.3% after 106 days (median) of treatment. The proportion of patients who reported lost productivity was reduced by nearly half, falling from 40.7% at baseline to 21.7%. Reductions in tardiness and conflict with coworkers were similar to those associated with 42 days of treatment. The improvement in performance associated with z 61 days of substance abuse treatment represents considerable economic value (Table 3). Reduced absenteeism had the most significant direct economic impact. The 66% reduction in the mean number of days absent (from 2.40 to 0.81 days/month) represents an annual savings to the employer of US$5,366 (1.59 US$281.25 12) for an employee receiving a US$45,000 annual salary. Similarly, the 61% decline in mean days per month of productivity problems after z 61 days of treatment was associated with an economic benefit of US$1,769 (2.62 0.2(US$281.25) Table 3 Average economic value per person associated with substance abuse treatment (US$) Performance problem
Baseline
Post z 61 days of treatment
Difference from baseline
Absenteeism Tardiness Conflict with managers Conflict with coworkers Lost productivity Aggregate value
8,100 932 411 460 2,916 12,819
2,734 312 193 228 1,147 4,614
5,366 620 218 232 1,769 8,205
Note. Economic value calculation based on an average salary of US$45,000 plus a 50% fringe benefit rate.
12). There was a smaller but positive economic benefit associated with reduced tardiness and conflict with managers and coworkers. The aggregate economic benefit associated with z 61 days of substance abuse treatment was US$8,205 per person. After considering the marginal cost of investing in chemical dependency treatment, there is a considerable net benefit to employers (Table 4) associated with providing an insurance benefit that includes such treatment. The net benefit, however, depends upon the utilization of the benefit and the mean salary level of the employees receiving treatment. With the assumptions of our base case (0.9% utilization, 50% dropout, and US$30 per member per year), the marginal cost of treatment is US$6,667 PPPY. For the base case of an individual earning US$45,000 per year with a 50% fringe benefit loading rate, the net benefit of z 61 days of treatment related to our five performance measures is US$1,538, yielding a return on investment (ROI) of 23%. For an individual earning US$60,000 per year, the net benefit of z 61 days of treatment is US$4,273 per person, yielding an ROI of 64%. For an individual earning US$30,000, there is a net cost of US$1,196 per person associated with z 61 days of treatment, yielding an ROI of 18%. An employer will break even on an investment in a chemical dependency benefit, when considering only absenteeism, tardiness, conflict, and productivity outcomes, if the mean salary of employees participating in treatment is US$36,565. Sensitivity analysis shows that the ROI is highly sensitive to the utilization rate for chemical dependency Table 4 Net benefit estimates and ROI for employers associated with z 61 days of chemical dependency treatment (US$ per worker) Salary level Parameter
US$30,000
US$45,000 (base case)
US$60,000
Benefits Marginal cost Net benefit ROI (%)
5,471 6,667 1,196 18
8,205 6,667 1,538 23
10,940 6,667 4,273 64
N. Jordan et al. / Journal of Substance Abuse Treatment 34 (2008) 311 – 319 Table 5 Sensitivity analysis for ROI Salary level Utilization rate (%)
US$30,000
US$45,000
US$60,000
0.7 0.9 1.2
36% 4% 28%
18% 23% 64%
9% 64% 119%
services (Table 5). Increasing the utilization rate to 1.2% improves the ROI to 64% when the mean salary is US$45,000 and yields a positive ROI of 28% when the mean salary is US$30,000. As utilization increases, the break-even point for investing in a chemical dependency benefit decreases.
4. Discussion The findings reported in this article indicate that patients who engage in addictions treatment for z 1 month achieve sharp reductions in workplace-related problems. Gains relating to tardiness and workplace conflict are maintained after 60 days of treatment, whereas absenteeism and productivity continue to improve. Patients who remained in treatment beyond 2 months experienced gains that resulted in an economic benefit to employers if their mean annual salary was z US$36,565. ROI estimates reflect a series of assumptions and outcomes data available for analysis. In addition to the assumptions identified above concerning the impact of tardiness, conflict, and reduced productivity, the findings of this study reflect assumptions concerning the duration of pretreatment impaired work performance; the duration of treatment-related performance improvement; and the cost of absenteeism to the employer. ROI estimates reflect the economic value of five workplace-related treatment outcomes available for analysis but do not account for indirect employer benefits associated with treatment. Estimates of the economic benefit of addictions treatment presume that the workplace problems reported by a patient on SATSS intake assessment are representative of the 12-month period prior to treatment, and that the improvement reflected in update assessments will persist for 12 months. If the employee’s work performance was impaired for b 1 year prior to treatment or if treatment gains persisted for less than a year, the ROI would be reduced. Alternatively, if the employee was impaired for N 1 year prior to treatment or if the gains in workplace performance persisted beyond 12 months, the ROI would increase. Our estimates of the costs of absenteeism are based upon employee wage rates, which may underestimate the ROI associated with reduced absenteeism. Employees whose absenteeism exceeds their paid vacation and sick leave experience financial strain, which can contribute to increased stress and reduced productivity on the job. Productivity gains from interventions that reduce absentee-
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ism due to illness are likely to be larger than the wage rate (Pauly et al., 2002). The ROI estimates provided in Tables 4 and 5 are conservative in that they do not account for indirect benefits associated with addictions treatment and are themselves based on conservative assumptions of factors driving the direct costs measured. These indirect benefits include the decreased cost of work product defects and the decreased cost of poor decision making that result from improved employee workplace performance after addictions treatment. The cost of work product defects can be considerable; at a minimum, they require rework and repair, whereas in the worst case, they could trigger further mistakes by others downstream, multiplying the negative impact. As the level of employee decision-making responsibility increases, so do the costs of poor decisions made by these employees; poor decisions by a front-line worker may affect a handful of employees and cost hundreds of dollars, whereas poor decisions by a senior manager could affect hundreds of employees and incur significant economic loss to the employer. Other indirect benefits of chemical dependency treatment to employees and employers that we were unable to measure include reduction in medical costs and the value of improved life functioning (e.g., psychiatric and family/ social functioning). A review of interventions evaluated during the last 20 years reported that reduced use of medical services is a significant economic benefit of addictions treatment (McCollister & French, 2003). Improved life functioning benefits the employer insofar as it helps the employee to avoid relapse and to maintain treatment gains, including improved work performance. Finally, it should be noted that the posttreatment reduction in mean days per month of problems reported in Table 2 (absenteeism, tardiness, and so on) is based upon the entire sample. To estimate the economic benefit associated with treatment, everyone in the sample was included in the analyses regardless of whether the employees reported problems when admitted to treatment because gains based upon the entire sample are required to calculate ROI. Average gains based upon the whole sample are markedly smaller than the gains of patients who report problems at intake. For example, 98 (19.7%) of the 498 patients in the sample reported having had a conflict with managers at intake. Those 98 persons reported an average of 6.7 days of prior-month conflict with managers at admission and 3.0 days of prior-month conflict after 30–60 days of treatment. The reduction in mean days of conflict (3.7 days) is five times greater than for the sample as a whole (0.73 days).
5. Study limitations There are several limitations to this study that might be addressed in future research.
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Although the study sample reported significant improvement in work performance following treatment, it cannot be inferred that the improvement was due to the treatment. Because work performance data were not available for impaired employees who did not engage in treatment, it was not possible to determine how much of the improved performance can be attributed to participation in treatment. Costs associated with missed work, lateness, and reduced productivity vary by type of job (Nicholson et al., 2006). Many jobs require workers to perform as part of teams, so performance problems may lead to additional productivity losses for team members. We lacked data on job type and on the team orientation of an employee’s job for the individuals in our sample, so we were unable to account for these factors in estimating ROI. The sample may not be representative of all patients treated for z 1 month because it does not include patients who remained in treatment for N 30 days but did not complete an update assessment. According to program staff, it is rare for patients to refuse to complete the update assessment. The primary factor in the completion of updates was staff diligence in reminding patients when the assessments were due. However, it remains possible that patients who completed the update were more conscientious about their treatment than those who did not complete their update. Workplace improvement for less conscientious patients may not be as positive as reported for the sample in this study. This study did not account for employees who benefited from treatment but were unavailable for the 30-day to the 60-day update, which would increase the ROI, or for persons who were employed at intake but not at update, which would reduce ROI. The first group includes persons who remained in treatment but had transferred to a different location and did not complete an update (9.7% of all admissions); persons who baccomplished treatment goalsQ prior to 30 days (1.2% of admissions); and persons who dropped out prior to 30 days but nonetheless had received at least some benefit from treatment. The second group includes persons who were employed at intake but were unemployed at the 30-day to the 60-day update (11.2%). We believe that the benefit derived by the employer from the first group is offset by the loss of benefit from the second group because the two groups are nearly equal in size (10.9% vs. 11.2%). Assuming that employers derived some benefit from persons who dropped out before the update, we believe that the absence of data for these two groups had a negligible impact or may have underestimated the actual ROI. The outpatient programs that participated in this study offer an abstinence-based treatment utilizing a multidisciplinary treatment approach. Modalities include group and individual counseling, education, and others. Treatment is targeted primarily at addictions issues, but counselors are encouraged to address mental health, family, medical, and employment problems as well. Most of the programs have a formal treatment model of fixed duration, but patients are
encouraged to remain in treatment as long as they find it helpful. Findings may not generalize to other treatment models (e.g., models with a more rigidly fixed term of treatment, or those based solely upon a 12-step approach).
6. Summary Employed patients remaining in chemical dependency treatment for z 1 month reported marked improvement across multiple dimensions of work performance. The net economic value of these improvements to their employers depended upon the treatment utilization rate and the salary level. For a utilization rate of 0.9% and an employee with a US$45,000 annual salary, the net benefit of treatment on these work performance measurements alone was US$1,538. Based upon the data and assumptions used in this study, employers can break even on an investment in a chemical dependency treatment benefit if the mean annual salary of employees participating in treatment is US$36,565. Substantial employment-related gains were realized within the first 30–60 days of treatment. Patients who remained in treatment for longer periods reported additional but diminishing gains, primarily in the areas of absenteeism and productivity on the job. Because there is no additional cost to employers associated with higher utilization and longer treatment, and because both are associated with additional benefits, the ROI for employers increases along with the utilization and duration of treatment. It is to the employer’s benefit to encourage early identification of addiction problems and treatment engagement, thereby averting costs associated with employee impairment and realizing enhanced ROI from the addictions treatment benefit. For companies with an average salary of b US$36,565, there is a negative ROI associated with offering a chemical dependency treatment benefit when considering only the five outcome dimensions assessed for this study. However, future research may demonstrate a positive ROI for lower salary levels when indirect benefits such as medical cost offsets and improved psychiatric and family/social functioning are considered. The latter may help employees to avoid relapse and to maintain work performance gains beyond 12 months, contributing to a positive ROI. This study illustrates the benefits of integrating outcomes assessment into routine clinical care. Such assessments can enable program managers to better match treatment to patient needs (Grissom et al., 2004; McLellan et al., 1997; Sangsland, 2000) and can enable administrators, program planners, and researchers to better understand the impact of chemical dependency treatment. Several threats to the internal validity of the study design are noted above. These must be weighed against the gains in external validity derived from studies of patients in actual treatment settings. Naturalistic studies are free of many of the threats to external validity (sample exclusions, informed
N. Jordan et al. / Journal of Substance Abuse Treatment 34 (2008) 311 – 319
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