Economic Burden of Pneumonia in an Employed Population

Birnbaum HG, Morley M, Greenberg PE, Cifaldi M, Colice GL
Arch Intern Med. 2001;161:2725-2731

Employers increasingly are demanding cost-effective health care, which has generated efforts to measure quantitatively the overall economic burden of illness and the relative costs of individual diseases. In this article, the authors sought to
determine the total price tag to employers for workers diagnosed with pneumonia. Although the direct costs for treating
pneumonia are known to be high, the authors conclude that employers may be significantly underestimating the total
financial burden, overlooking indirect costs and treatments for other problems related to a patient's pneumonia.

The annual per capita cost of pneumonia was determined for beneficiaries of a national Fortune 100 company by analyzing medical, pharmaceutical, and disability claims data. The costs for pneumonia patients were compared with a random sample of beneficiaries from the same employer population. Annual costs for the pneumonia patients were about 5 times higher than for the other workers. In addition, about 10% of the pneumonia patients accounted for a majority of the total pneumonia-related costs.

The authors found that, for every $1 spent on pneumonia health care costs, the employer spent another $12 on direct and indirect costs related to the worker's pneumonia. Failure to properly account fully for these broader consequences of pneumonia could result in a significant under assessment of the cost of pneumonia to employers.

Objective To estimate the overall economic burden of pneumonia from an employer perspective.

Methods The annual, per capita cost of pneumonia was determined for beneficiaries of a major employer by analyzing medical, pharmaceutical, and disability claims data.The incremental costs of 4036 patients with a diagnosis of pneumonia identified in a health claims database of a national Fortune 100 company were compared with a 10% random sample of beneficiaries in the employer overall population.

Results Total annual, per capita, employer costs were approximately 5 times higher for patients with pneumonia ($11 544) than among typical beneficiaries in the employer overall population ($2368). The increases in costs were for all components (eg, medical care, prescription drug, disability, and particularly for inpatient services). A small proportion (10%) of pneumonia patients (almost all of whom were hospitalized) accounted for most (59%) of the costs.

Conclusions Patients with pneumonia present an important financial burden to
employers. These patients use more medical care services, particularly inpatient
services, than the average beneficiary in the employer overall population. In addition to direct health care costs related to medical utilization and the use of prescription drugs, indirect costs due to disability and absenteeism also contribute to the high cost of pneumonia to an employer.

Arch Intern Med. 2001;161:2725-2731

Author/Article Information

Corresponding author and reprints: Howard G. Birnbaum, PhD, Analysis
Group/Economics, One Brattle Square, Fifth Floor, Cambridge, MA 02138 (e-mail:hbirnbaum@analysisgroup.com). Accepted for publication July 31, 2001.

This study was supported by Aventis Pharmaceuticals.