Demonstrating the economic value of occupational health services

Many large companies operate some form of occupational health service (OHS). More companies now require specific evaluative information to justify the continued provision of an in-house OHS. This is in the face of increased pressure to control costs, combined with an awareness that the service itself can induce activity (supplier-induced demand) and could be substituted with health care provided or even funded outside the company. The lack of routinely collected data and the conceptual difficulty in defining and measuring the outcomes of an OHS provide challenges for economic evaluation. A purely human capital approach, where people are valued by their wage rates, is likely to be insufficient, since OHSs have multiple objectives. These objectives include fulfilling statutory obligations, contributing to the creation of a culture of partnership, reduction of potential costs to the company (sickness benefit, production loss, poor performance, litigation, insurance) and providing a suitable environment for the cost-effective reduction of the social and health service costs of illness at work. Evidence is needed to quantify some of these arguments and demonstrate to decision makers the value generated by OHSs. The aim of this paper is to consider the practicality of different economic evaluation methodologies, specifically cost models, contingent valuation (willingness-to-pay) and development of OHS-specific outcome measures. In considering different approaches, we present the results of our research in two UK companies.