Elsevier

Health Policy

Volume 61, Issue 2, August 2002, Pages 173-187
Health Policy

Productivity costs before and after absence from work: as important as common?

https://doi.org/10.1016/S0168-8510(01)00233-0Get rights and content

Abstract

Traditionally, production losses are estimated using the human capital or friction cost method. These methods base estimations of productivity costs on data on absence from work. For some diseases, like migraine, productivity losses without absence are occasionally calculated by estimating the production losses from reduced productivity at work. However, diseases typically only associated with absence may also be expected to cause reduced productivity before and after absence. In a previous study, Brouwer et al. [4] concluded that productivity losses without absence are also very relevant in common diseases, like influenza, common cold or neck-problems. Studying a new sample of employees of a Dutch trade-firm (n=51), who completed the questionnaire ‘Ill and Recovered’ upon return to work after absence due to illness, it was revealed that about 25% of the respondents experienced production losses before absence and about 20% of the respondents experience production losses after absence. This leads to an increase in estimated production losses of about 16% compared with only considering absence data. Current productivity costs estimates based solely on absence data may, therefore, underestimate real productivity costs. Compensation mechanisms in firms may reduce the underestimation.

Introduction

Economic evaluations aim at aiding decision makers in deciding whether or not to implement or fund a new health care technology. In order to provide the decision maker with all relevant information, normally the societal perspective is advocated for economic evaluations (e.g. [7], [8]). This means that all relevant costs and effects need to be incorporated in the analysis, regardless of who bears these costs and who experiences the effects [8]. Therefore, all costs incurred within or outside the health care sector, directly or indirectly, should be part of the analysis and the consensus for taking this societal perspective is broad.

An important and controversial cost category that needs to be incorporated in an economic evaluation taking the societal perspective, are productivity costs (or indirect non-medical costs). Productivity costs can be defined as the costs associated with production loss and replacement due to illness, disability and death of productive persons, both paid and unpaid [3]. These productivity costs can be very substantial when illness and treatment influence the productivity of persons, especially in patients with paid work. Koopmanschap et al. [13] for instance show that productivity costs may constitute a large part of total costs for some diseases and interventions. However, even though the productivity costs may thus strongly influence the results of an economic evaluation, there are still many debates about how to assess the exact costs related to productivity losses. The different measurement methods used lead to substantially different estimations of productivity costs. Therefore, more research on finding and refining appropriate methods to use in economic evaluations is needed, as well as more consensus among analysts on which methods to use. This will enhance the comparability and acceptability of results of economic evaluations.

In this paper, we focus on productivity costs in the period before and after absence from paid work. It is argued that productivity losses may occur before and after absence, during the onset of disease and the recovery from disease when the individual is still at or already back at work. Normally these productivity costs before and after absence are not considered, which may lead to an underestimation of total productivity costs. Furthermore, we will pay attention to compensation mechanisms. Absence or reduced productivity may be compensated for by making up for lost work after return to work (in regular hours or overtime) or by colleagues taking over (some of the) work. This may influence the total costs related to productivity losses, but is normally not considered by analysts, a notable exception being Severens et al. [16].

The structure of this paper is as follows. In Section 2 we will discuss normal measurement methods of productivity costs related to paid work in economic evaluation both in case of absence and without absence. In Section 3 we will introduce the concept of productivity costs before and after absence, while Section 4 presents (limited) empirical evidence on this phenomenon from the questionnaire ‘Ill and Recovered’ and evidence of compensation mechanisms within the firm. Finally, in Section 5 we will conclude this paper.

Section snippets

Productivity costs related to paid work

Often productivity costs related to paid work are calculated on the basis of data on patients’ absence from paid work. However, productivity costs can also occur without absence, when ill workers continue to work. In this paragraph, we will discuss the normally used measurement methods for productivity costs related to absence and productivity costs related to reduced performance at work.

Productivity costs before and after absence: the model

The two types of production losses, those with and without absence, as discussed above, are mostly presented as two distinct types of production losses. The friction cost method and the human capital method are developed to calculate productivity costs related to absence. Costs related to reduced productivity without absence will not be captured by these methods and will have to be calculated separately. One may argue that the US Panel method for calculating productivity costs will pick up

Methods and results: the questionnaire ‘Ill and Recovered’

We investigated the productivity of employees in a Dutch trade-firm, in the period before and after absence. For that purpose, we developed the questionnaire ‘Ill and Recovered’, which asks respondents specifically about the performance before and after absence in terms of quantity and quality of work performed. The questionnaire was handed out to employees of the Dutch trade-firm over the period May 1997–January 1998 upon return to work after having been absent due to illness3

Conclusions

In this paper we have discussed productivity losses before and after absence as a possibly influential cost-item that has gained only little attention. As we have demonstrated, with a notably limited data-set, productivity losses before and after absence occur relatively frequently: 25% of absentees experienced production losses before absence and 20% after absence. Therefore, as hypothesised, direct absence is quite often not the first consequence of illness. In many instances, persons first

Acknowledgements

We are grateful to Ken Redekop and two anonymous reviewers for useful comments. Furthermore, we acknowledge the Dutch Council for Scientific Research (NWO) for funding this research.

References (17)

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