NEW YORK, April 22, 2008 (PRIME NEWSWIRE) -- The rising cost of chronic diseases, including direct medical costs and indirect costs associated with lost productivity, is a growing burden for businesses, according to research prepared by PricewaterhouseCoopers in conjunction with the World Economic Forum. The report outlines the business rationale for workplace wellness programs, warning that over the next 25 years, chronic disease will reduce the available labor supply, savings and investments, and will ultimately affect the capital markets. It states that in an interdependent global economy, chronic conditions such as cardiovascular disease, diabetes and respiratory illness are creating a significant societal risk that threatens health systems and economic sustainability.
PricewaterhouseCoopers analysis found that productivity losses associated with workers who have chronic diseases are as much as 400 percent more than the cost of treating chronic diseases. Losses in productivity include disability, unplanned absences, reduced workplace effectiveness, increased accidents and negative impacts on work quality or customer service.
Moreover, the incidence of chronic disease is growing at an astonishing rate. Globally, chronic diseases represent more than half (57 percent) of all deaths annually, and this is expected to rise by 23 percent over the next 20 to 25 years, while deaths due to other causes are expected to remain roughly stable through 2030. This progression of chronic disease is occurring despite the fact that these diseases are largely preventable. While the relative burden of chronic disease is still greatest in industrialized countries, the convergence of the global economies and the Western influence on lifestyles throughout the world will increasingly impact emerging economies at a similar rate.
Given the growing incidence of chronic diseases throughout the world and new evidence that workplace wellness programs are effective at reducing the risk of these diseases, the report suggests that businesses have a vested interest in workplace wellness programs and that public-private partnerships are imperative from a health, bottom-line and national perspective.
"Workplace wellness is evolving from a project for the human resources department to a priority for the C-suite. It is drawing the highest levels of attention of senior management and government," said Michael J. Thompson, a principal in PricewaterhouseCoopers Human Resource Services practice. "Global companies already engaged in wellness programs are demonstrating that these programs are a way to enhance attraction, retention and the loyalty of employees, while reducing their own health costs, improving productivity and supporting their social commitments."
The PricewaterhouseCoopers and World Economic Forum report, entitled "Working Toward Wellness: The Business Rationale," identifies four primary reasons that business should invest in the prevention of chronic disease:
Chronic disease drives national healthcare costs
People with chronic disease account for the majority of national health expenditures and approximately 40 percent of total lost work time. The impact of chronic disease is placing an increasing burden on health systems, taxes and costs of coverage, which increasingly burden organizations and their employees.
Wellness and health promotion programs are generally focused on the reduction of risky health behaviors that lead to the development of chronic diseases. Healthcare costs for those with more health risks increases in proportion with the number of risks they have, even in the absence of a chronic disease.
Productivity losses associated with chronic disease are even greater
Studies have consistently shown productivity costs related to health risk factors to be up to four times those of healthcare costs for employers. The most costly conditions and health risk factors related to productivity are different from those when considering only the cost of treating the disease. Depression, fatigue and sleeping problems -- conditions or risks that are often associated with chronic diseases -- have the largest impact on productivity. As with healthcare costs, more risk factors multiply the losses in productivity.
In the next 10 years, China, India and the UK are projected to lose $558 billion, $237 billion and $33 billion, respectively, in national income as a result of heart disease, stroke and diabetes and partly as a result of reduced economic productivity.
In many emerging economies, lack of effective treatment of chronic disease during the working years also contributes to the higher numbers of lost years of productive life. For example, by 2030, the total number of productive years lost in Brazil, South Africa, Russia, China and India is expected to increase 64 percent from 20.6 million in 2000 to 33.7 million in 2030, due to cardiovascular disease alone. This poses significant threats to the vitality of a highly interdependent global ecosystem, which, in turn, can threaten the sustainability of already burdened social security systems in industrialized societies.
Workplace wellness efforts can positively impact human capital investments
Human capital is an increasingly scarce organizational resource on a global level. The demand for talented people is increasing, and an aging workforce is creating an additional drain on organizations' workforces. For example, China will be moving from an era of labor surplus into an era of labor shortage as early as 2010, according to the Chinese Academy of Social Sciences.
PricewaterhouseCoopers analysis found that organizations invest an average of $290 in labor costs to generate $1,000 in revenue and because the amount of labor investment per dollar generated is increasing, there is a significant opportunity for improvement of return on investment in the workforce. By helping employees work longer and have more productive lives, organizations can protect this asset in the face of growing labor shortages globally.
Furthermore, an organization that shows that it values workers' health is more likely to attract, retain and motivate employees. Leading organizations have utilized prevention and wellness programs to demonstrate the value they place on their workers.
Sustainability is threatened by the epidemic of chronic disease
In a globally interdependent economy, the epidemic of chronic disease -- a product of both environment and behaviors -- is a social phenomenon that is as equally prevalent and preventable as issues such as global warming, infectious diseases, poverty, terrorism, clean water and basic infrastructure. In fact, many of those issues are intertwined with the issue of chronic disease.
As Mr. Thompson explains, "With appropriate leadership, organizations can and should help to drive change. There is a paradigm shift that must occur to focus greater attention on wellness, not sickness, and companies have a unique and vital role to play in improving the health and wellness of their employees. As concerned members of the global community, all businesses have the capability to take action and engage in more extensive partnerships with the public sector to address this as a societal issue."
About PricewaterhouseCoopers
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 146,000 people in 150 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.
"PricewaterhouseCoopers" refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
Note to Editors:
For a copy of the report, "Working Toward Wellness: The Business Rationale, please visit pwc.com/globalhealthcare. The entire Wellness series released at the World Economic Forum in Davos in January 2008 is available at pwc.com/globalhealthcare.