In Annual U.S. Healthcare Costs

BY MlCHAEL BLANDlNG
Our work can literally make us sick. Long hours. impossible demands from bosses. and uncertain job

security can take their toll on our mental and
physical well-being. leading to stress-induced aches and pains and anxiety. In extreme cases. the

consequences can be worse-heart disease. high
blood pressure. alcoholism. mental illness.

Even so. the connections between job pressures and health-and what management can do to address the

problem-have been little studied.

We have this body of research that shows workplace stress is very bad for health. and we have this

other information that says our health costs are
way above that of other countries,” says Joel Goh. Harvard Business School assistant professor of

business administration in the Technology and
Operations Management unit. “But traditionally in the US we have not placed a lot of emphasis on

the role of workplace stress in the high cost of
health care.”

In recent years. General Motors GM +0.95% spent more on health care than it did on steel. and

across the country. companies are struggling to find
affordable plans for their workers. in some cases dropping health coverage or raising premiums on

employees in order to combat escalating costs.
On the other hand. companies are implementing health programs in an effort to keep workers

healthy-and productive.

But those programs can only wor if companies aren’t at the same time undermining them with stress-

inducing management practices.

Health care programs are no good if your guy is so stressed that he can’t take advantage of them.”

says Goh.

Making the stress-health connection

Unlike in Europe. little or no data exists in the US that correlates exposure to workplace stress

with health outcomes or health care costs. Goh
tackles that gap in a new working paper. The Relationship Between Workplace Stressors and Mortality

and Health Costs in the United States. written
with Stanford business professors Jeffrey Pfeffer and Stefanos A. Zenios.

Goh specializes in developing complex mathematical models that can aid decision making. especially

in the presence of uncertainty. “The idea that
we can structure the world mathematically and use that to make decisions is very interesting to

me.” he says. “The world is not deterministic-there
is a randomness built into it. And yet. by using robust optimization techniques we can tackle a

wide range of problems.”

After working for a few years analyzing business operations. he settled on the field of health care

as an area where he could really make a
difference. “There is no lack of problems in health care. and I think that someone with a

structured analytical background can make a unique
contribution.” he says. Goh has used mathematics to examine such issues as adverse drug

interactions and cost-effectiveness of cancer screening.
Structuring the world mathematically can lead to insights and ideas that might not be obvious.” he

says.

Sources of stress

For their latest research. Goh. Pfeffer. and Zenios began by identifying 10 sources of stress that

can affect health. Some of these contributors were
directly related to on-the-job dynamics. such as long hours. lack of control. job insecurity. and

perceptions of unfairness in the workplace. These
factors affect health in two ways. says Goh. “They are both inherently stressful on the body. and

also lead to unhealthy behaviors like alcoholism
and overeating.” Other factors the researchers investigated stretched beyond the workplace. for

example, work-family conflict. lack of health
insurance. and layoffs or unemployment.

Once they had these 10 factors. the researchers scoured the medical literature to determine how

these factors affect health. looking at four
outcomes: self-reported physical problems: self-reported mental problems: doctors’ diagnoses: and

mortality rates. The difficulty came in
determining how these factors combined.

Since workers rarely experience just one form of stress. Goh. Pfeffer. and Zenios developed a

mathematical model that enabled them to rigorously
assess the impact of co-occurring factors. After coming up with formulas to take these factors into

account. the researchers finally added in data on
the costs of negative health outcomes.
The determined. amono other findinos. that work-lace stress contributes to at least 120.000 deaths

each ear. The bi onl'”e _ (“Emmi ELM-“j”They determined. among other findings. that workplace

stress contributes to at least 120.000 deaths each year . The biggest factor in this
calculation is lack of health insurance (leading to lack of treatment). which contributes to 49.000

deaths: followed by unemployment. which
contributes to 34.000 deaths: and job insecurity and high work demands. which each contribute to

about 30000 deaths.

While there was more variation when it came to estimating costs. the researchers determined that

workplace stress caused additional expenditures
of anywhere from $125 to $190 billion dollars a year-representing 5 to 8 percent of national

spending on health care. The biggest factor in these
costs was high demands at work. responsible for an estimated $48 billion in spending: followed by

lack of insurance. contributing to $40 billion: and
work-family conflict. contributing to $24 billion.

All of these numbers point to conclusions that they suspected-that workplace stress is a

significant contributor to both health problems and costs.
Goh hopes that by attaching hard numbers to these effects for the first time. policymakers might

place more emphasis on investigating this
connection.

At the same. time. employers can help address these problems by looking beyond health care programs

to changes in their management and
operations structures. “The workplace is where we spend a lot of the time-a third of our day.” says

Goh. “It’s an avenue for stress and an avenue
for ameliorating stress. and by and large the costs are borne by employers.”

It’s in the employers’ best interest to look into this connection. both for the good of their

employees and for their own organizations.

Companies are always looking for ways to control health costs in their organizations. and these

costs are not small.” says Goh. “An integrated
approach that looks at both management structures as well as internal health programs is the way

foward to address these concerns.”

Michael Blanding is a senior writer for Harvard Business School Working Knowledge.

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