Running the Numbers. How We Lost and Won Back a Corporate Client With Math.

I had a call come in this week from a large local law firm we have been providing on-site flu vaccinations to for the past three years. It was the Human Resources Manager on the line who ruefully explained that management was looking to save money this year and had decided to eliminate their employer-sponsored flu program.

Wow. So after three years we were going to lose a client that spends about $6,000 each year with us.

Well, we know that what we do (especially when combined with health screenings and a wellness program) is the most effective way to reduce health-related expenses, and improve employee productivity and morale. But I am also sympathetic to how difficult it can be to weigh the cost of such programs against the benefit.

Wellness is a relatively new product and quantifying it's ROI requires what can be called "uncommon" information.

Management’s line of logic, as explained by the law firms HR Manager, was bereft of facts and statistics essential to fairly measuring whether the services we provide should ultimately be considered an expense, and therefore perfectly flawed.

Now, I respect that these are lawyers trained to develop strong arguments, but none among them would have a chance against a fact-based, logically conceived presentation of why flu vaccinations are an effective way of reducing the costs associated with employee absenteeism.

So I asked some questions before letting my HR Manager friend off the line;

Were they happy with our service? "Yes"! Extremely happy, she said. It's just the money...

Had they considered the repercussions should just 5% of their workforce get sick? "Oh, well that would be just a few employees," she said. "And the flu shots cost like $6,000". So surely I could "see why management was willing to take the risk..."

Actually what I could see was that no one had done the math. And that's understandable.

Money's tight and a review was done to see where cuts could be made. The audit found a $6,000 expenditure that could be eliminated by cancelling a "non-essential" service. Seems to make sense and no one is likely to complain about a cancelled benefit that is seen as a convenience rather than a necessity.

I asked if she wouldn't mind giving me just a few minutes more of her time to talk about math. Out of kindness -or pity- she allowed me to go on. And this is what I explained:

• Five percent absenteeism would mean about 15 of their 300+ employees being sickened with the flu.
• Most flu episodes result in at least three lost work days, so that's 45 days lost that otherwise may have been prevented with a flu vaccination. 
• An associate attorney at this particular firm earns upwards of $1,500 per day on average.
• The firm bills a client an average $2,450 per day for the hours worked by that same associate attorney.
• Multiply that number by the three days they are likely to miss while recovering from the flu and we can see that each sick attorney will cost the firm $7,350 worth of billable hours.
• If just 5% are sick those 15 absent attorneys will cost the firm $110,250.00 in billable hours.
• Even if none of the ailing attorneys were paid sick time wages (though this would be highly unlikely) the net cost to the firm would be around $49,612.00 in lost income.

Not much more needed to be said, though I did delve into the likelyhood of there being some attorneys that will miss more than three days, the difficulty of recovering fully and performing to a high standard after being out with the flu, not to mention the problems an absent attorney may cause their clients who are pressing to meet deadlines and get a deal done...

So I got a call this morning from the HR Manager at the firm. We scheduled her on-site flu event for mid-October...

http://pacificamedical.com/workforce-health.html
http://www.facebook.com/pacificamedical#!/pacificamedical