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Calculating the Hidden Cost of Workplace Mental Health Issues

Looking for Budget? What’s the cost if we don’t adopt a mental health solution?

There is a mental health crisis in Canadian healthcare organizations. HR and disability teams that take positive steps now to improve employee mental health can not only improve the wellbeing and performance of under-pressure employees, but also potentially save millions of dollars.

How are Canada’s Health Professionals Feeling?

Health professionals are thought to be naturally resilient. This can lead to an assumption that they can just “work through” any mental health issues. Research paints a different picture.

One in three Canadian physicians screen positive for depression¹, while 40% of physicians are in advanced stages of burnout². Forty percent of nurses fear making mistakes due to a high degree of burnout³, and 14% of nurses have tested positive for post-traumatic stress disorder4.

This makes prioritizing mental health care in the workplace more important than ever.

The benefits of good mental wellbeing are well-known, including better patient outcomes, less absenteeism, more “present” staff, and higher productivity and performance.

What about the additional cost savings from improving mental health in your workplace? Absenteeism alone costs Canadian healthcare organizations a total of $80m a year. What is your organization’s contribution to that total?

Or how about the cost of harder-to-measure presenteeism, when employees are in work but are unproductive, demotivated, and disengaged?

We’ve looked at the available research to give you an easy formula for calculating the hidden cost of absenteeism and presenteeism.

What Does Absenteeism Cost You?

According to a Circadian study, “Absenteeism: The Bottom-Line Killer,” unscheduled direct absenteeism costs around $3,402/year for each salaried employee—a total of $3.4m for an organization with 1,000 employees.

$3,402 x [# of employees] = Total Cost of Absenteeism

What Does Presenteeism Cost You?

Presenteeism occurs when employees are not fully functioning in the workplace due to an illness, injury, or other condition, but continue to perform their duties. Although presenteeism is harder to track, studies found that presenteeism costs organizations $5,750/year for each employee—a total of $5.75m for an organization with 1,000 employees.

$5,750 x [# of employees] = Total Cost of Presenteeism

How Much Can You Save By Acting Now?

By reducing absenteeism by just 10%, an organization with 1,000 employees can save $34,020/year. The same organization can save another $287,500/year by reducing presenteeism by 5%.

That’s total savings of $321,520/year—enough to hire seven new employees.

When you factor in the many other benefits of improving employee mental health, including better patient outcomes, there is a powerful business case for taking immediate proactive steps and putting proven mental health tools into the hands of your employees.

Infographic: How to Calculate Total Mental Health Cost

How One Health Authority Reduced Absenteeism by 10% in Six Months

There is an urgent need for Canadian healthcare organizations to prioritize employee mental health. When it comes to budgeting, investigating solutions to managing and reducing absenteeism and presenteeism can save money that could be put to good use elsewhere.

Here’s how one organization did it:

One of Canada’s largest regional health authorities found that 41% of their employees admitted to suffering from poor mental health, and 40% of their disability costs have a primary mental health diagnosis. Despite signs of burnout, PTSD, and depression, fewer than 50% of employees sought treatment due to stigma, costs, and other reasons. Even employees who did seek help found it difficult to get it in a timely manner, or were denied access altogether by the benefits provider.

As a result, disability costs were rising annually yearly.

By coupling a digital platform with their existing face-to-face therapy programs, the health authority gave employees immediate access to effective mental health support. Within six months, absenteeism had decreased by 10%, along with associated cost savings and productivity improvements.

Read the Full Case Study

While reducing absenteeism can take longer, presenteeism rates respond well to quick solutions. Studies show that when organizations take a human-centred approach to health, it can rapidly transform a workforce suffering from severe presenteeism.

Mobile digital solutions can empower employees to monitor and improve their own mental wellbeing on a daily basis. It’s just one of the ways HR and disability teams can combat the escalating mental health crisis in Canadian health care.

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Kigozi, J, Jowett, S, Lewis, M, Barton, P, Coast, J. The estimation and inclusion of presenteeism costs in applied economic evaluation: a systematic review. Value Heal 2017; 20(3): 496506.

Cooke, Caroline. Shift Work & Absenteeism: The Bottom Line Killer. Circadian | Shifting Work Perspectives. 2014

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