National Health Costs Could Decrease if Managers Reduce Work Stress

Joel Goh and colleagues estimate that workplace stress is responsible for up to 8 percent of national spending on health care and contributes to 120,000 deaths a year. Is better management the fix?
by Michael Blanding

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 not placed a lot of emphasis on the role of workplace stress in the high cost of health care”

"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 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.

Work stress in the United States may contribute to 120,000 deaths
annually, according to recent research. ©

But those programs can only work 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.

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 30,000 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 forward to address these concerns."

About the Author

Michael Blanding is a writer based in Brookline, Massachusetts

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    • Tulie
    • gov analyst
    So managers should be evaluated in part on their ability to create less stress for employees. I like it!
    • Tamara Johnson
    • Training Specialist, Insurance Industry
    I agree that studying the correlation between workplace stress and healthcare costs is a value to employers. Though it's not examined as much, it's surely something that most managers are aware of but most do not know how to combat the influence. In many industries, stress is a factor that comes with the demands of the business. Stress is not always a bad thing. Without it, our fight or flight instinct would be flawed. What is truly needed is more programs to help employers and employees combat stress. The messages that are sent have to consistent from the top down. Forums for communicating, exercise programs, mediation and meditation practices, and introducing the idea that at the end of the day, being stressed at times can actually be a choice that each party can control are alternatives to overcoming and eliminating stress altogether.
    • Keith Williams
    • Retired, Bradford University School of Management
    This appears a little over simplified but a good computer programming exercise no doubt.
    With stress related illness the difficulty is not the availability or cost of healthcare but the nature of stress discourages the sufferer from admitting the problem and seeking help.
    The UK with a similar work ethic and attitude probably has the same rates of stress. In the UK healthcare is free at the point of need (in theory every worker contributes not less than 12% of income for the national insurance.) Those of us who have suffered severe stress related illness can assure you that the minute we admitted we were ill we were half way to being cured because we sought treatment.
    • Pat Drew
    • President, Pat Drew & Co., LLC, Pat Drew & Co., LLC
    Thanks to the authors you for sorting out important workplace stress factors. In my work overseeing stress management programs at major global companies, we can see a two-way street. If managers begin to relate to the whole person and not just the "worker bee," they will create less stress and interestingly enough, benefit from greater productivity. (See "Gallup 12" Questions predicting higher productivity.) If employees participate by pushing back on counter-productive demands, they can also be part of the solution. Pat Drew, Career Management. Executive Personal and Professional Effectiveness.
    • Dan
    • Retired Consultant, Cruising in Mexico
    I am familiar with some research that suggest two-thirds
    of negative stress comes from unproductive behavior. My
    observation is that many employees are resigned because
    the organizational issues are not addressed that impact
    the gains they can make on their own, and together.
    There is one large organization I know where many are almost afraid of retiring, as so many die two years afterwards. Such a loss to themselves, their families,
    and our society.
    I had a friend go to a clinic here in Mexico yesterday.
    The doctor charges, blood test, shot, etc were $100,
    so the prescriptions seemed high at $200.
    • Ann MacNaughton
    • Ann MacNaughton
    I applaud the author for stimulating a discussion on how to better reduce stress in employees while simultaneously decreasing healthcare costs, increasing employee wellness and also increasing productivity in the workplace. Presenting the discussion as a win, win solution for both management and employees may bring more attention to this matter that has been lacking in the past. The stress employees face is in part due to trying to create employee schedules for people in the same manner in which we create schedules for machines. We should fear not that machines becomes more human but that humans become more like machines. Our workforce polices in this country need to be changed to accommodate family values by incorporating more flexibility in peoples work schedules and time and access to physical fitness, to name a few, only then will stress be reduced and healthcare costs decline.
    • Principal Director of Audit, Eastern Railway, (CAG of India)
    This is very interesting finding. Stress in workplace is a wide and complex phenomena in the buzzing cities in many countries. On the other hand, better healthcare facilities in the big cities can lead to long life expectancy with multiple sufferings from workplace stresses. In fact this is a very complex scenario. As for example, pollution in rich cities/countries can also add with stress. Another example is the better medical facilities in rich cities/countries makes the employees more tendencies to go to hospitals even for small health problems. To tackle such health related problems due to stresses in workplace, certain measures can be taken by means of "prevention is better than cures". Therefore, many offices under my supervision wherever I was, I initiated simple yogic sessions for my employees in the evening hours. This was wonderful as some of my employees volunteered to lead the yogic sessions. This basically helped t
    o relieve all stresses of the day and helped them to be better mentally. Some amount of mental counselling also help a lot to make them free at the end of the days.
    Such measures can reduce a lot of health complications which are a direct contribution of the workplace stress.
    • Kapil Kumar Sopory
    • Company Secretary, SMEC(India) Private Limited
    The research draws our attention to a stark reality. In my opinion, stress is directly proportional to our lifestyle and our attitudes. It is common to develop negative thoughts out of fear of the future outcomes over which, however, man has little control though he seems to nurture a feeling that he has. The parents and others create this impression even when one is very young that success alone is what matters and one must score over others. This leads to a mindset where tolerance for failures vanishes so that once there arise any such outcomes - in official as well as in family life - one succumbs to mental (and physical) stress leading to all sort of the enumerated problems.
    Moderation in every activity needs to be taught right from the youngest stage and, if followed, it will lay at rest many problems later on. The other is to have tolerance for bearing what befalls us via a solid faith that ' I'm not the doer; He is. And, if so, what is the worry?' Live fully in the present happily, do your best and leave the results to the higher Power. Don't create feelings of ill-will towards anyone and shun revengeful attitude. In short, being good and doing good leads to holistc worry-free living.

    Alas, we have been leading a life which makes us create stress for ourselves. Only when we take complete responsibility for all our actions and shed the attituude of blaming other factors would we lead a healthy life.
    That way the quantum of medical expenses will also shrink.
    There must be a strong resolve to imbibe these positive qualities right from start so that the future generations lead a much better life. This needs proper planning and implementation by one and all.
    • Entrepreneur, Lotinggi Dampian Books & Stationery, Sabah, Malaysian Borneo
    Looking after employees' health was in my list of job responsibilities in my last job. Health care is not cheap. Thus, cost has to be managed effectively.

    Yes, excessive work causes stress and affects health. But too little work can also cause stress.