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Fortune 50 retailer saves 19.6% in health care costs by addressing employee mental health

New data provides further evidence that investing in evidenced-based mental health care is highly beneficial for employees and a company's bottom line.

The COVID-19 pandemic has brought mental health to the forefront of the individual experience. According to recent research, 37.6% of people worldwide are experiencing symptoms of insomnia and roughly 40% are struggling with symptoms of anxiety or depressive disorder. US companies — who are often relied upon to sponsor health benefits — have taken notice and are making employee mental health a top priority.

To meet this growing need, US companies spend an estimated $225.8 billion each year on employee mental health benefits. Despite such a large price tag, few companies understand whether these benefits improve employee mental health and thus generate value through reductions in health care costs. If we’re serious about tackling the mounting mental health crisis, it’s imperative we understand the full impact of the solutions offered to employees.

A health care cost evaluation in a Fortune 50 retail workforce

Offering an effective mental health benefit should lead to an improvement in employee health, which in turn, may reduce health care costs more broadly. Alongside a Fortune 50 retail company, we set out to evaluate whether offering employees Sleepio — a science-backed digital therapeutic for insomnia* — would do just that.

The study looked at medical claims data from 8,000+ employees over two years — from April 2018 to March 2020 — and compared healthcare claims for those who used Sleepio with a matched control group of employees who did not use Sleepio. The study focused on employees who were consistently employed at the retail companies headquarters during this entire period.

In addition to health care information, the study included data that captured employee’s demographic and socioeconomic characteristics. Starting in April 2019 employees had the option to enroll in the digital therapeutic. To adjust for differences between employees who enrolled in Sleepio from those who did not, we used a weighting scheme to closely match Sleepio users to controls across health care claims, demographic, and socioeconomic characteristics.

To identify the impact of Sleepio on health care costs, we used a differences-in-differences (DiD) research design that’s commonly used in health economics. This approach allowed us to calculate the expected difference in health care spend per month for the employees who used Sleepio compared to the matched controls.

Addressing sleep leads to significantly lower health care costs

Results showed that 12 months after Sleepio was introduced, employees who used Sleepio had 19.6% overall lower health care costs than matched controls that did not use Sleepio (this result was statistically significant; p=0.041). But even more promising is the finding that health care cost savings for those who used Sleepio increased over time. When only looking at health care data from the last four-month period of the year after Sleepio was introduced, total health care costs were 31% lower for Sleepio users compared to matched controls. This result suggests that lower health care costs were driven by longer-term reductions in inpatient and outpatient spend in employees who improved their sleep.

Results showed that 12 months after Sleepio was introduced, employees who used Sleepio had 19.6% overall lower health care costs than matched controls that did not use Sleepio (this result was statistically significant; p=0.041).

Finally, during that same time period — the last four-month period of the year after Sleepio was introduced — employees with greater sleep difficulty had even more to gain in terms of health improvements and thus larger cost savings. Employees that engaged with Sleepio and had signs of insomnia had 38.4% lower health care costs. These results demonstrate the long-term value of sleep and mental health investments in a real-world setting — especially for those with more troubled sleep.

Demanding more of mental health partners

This analysis shows that there can be clear financial benefits for companies who work to improve the sleep and mental health of their employees. Importantly, this study reports conservative estimates of cost savings, given that the analysis did not consider how Sleepio affected other workplace-related outcomes such as absenteeism, presenteeism, turnover, and on-the-job accidents. Moreover, these findings are consistent with previous health economic research in real-world settings. Within another Fortune 500 company, research showed that employees who engaged with Sleepio had 28% lower health care costs compared to matched controls. This finding was larger because health care costs were evaluated over a longer period of time (i.e., 18 months instead of 12). Together these results show that better sleep over time saves more money.  

Digital therapeutics are uniquely equipped to do so because they can be delivered at scale, provide consistent care, and track clinical outcomes.

Overall, these findings highlight the role digital therapeutics can play in helping companies understand the cost impact of their mental health programs. Digital therapeutics are uniquely equipped to do so because they can be delivered at scale, provide consistent care, and track clinical outcomes. However, we must demand that all mental health providers take steps towards demonstrating mental health outcomes along with the cost-benefit of the services they provide. By making accurate and transparent data the standard in mental health care we can illuminate a path towards improving employee mental health effectively and sustainably.

Download the entire white paper — Sleepio in a large Fortune 50 workforce: a health care cost evaluation — to learn more about the study design, results, and future implications.

*Disclaimer: In accordance with FDA’s Current Enforcement Discretion Policy for Digital Health Devices for Psychiatric Disorders, for patients aged 18 years and older, who are followed by and diagnosed with insomnia disorder by a medical provider, Sleepio is available as an adjunct to their usual medical care for insomnia disorder. Sleepio does not replace the care of a medical provider or the patient’s medication. Sleepio has not been cleared by the U.S. Food and Drug Administration (FDA) for this indication.

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During the COVID-19 public health emergency, Sleepio and Daylight are being made available as treatments for insomnia disorder and generalized anxiety disorder (GAD), respectively, without a prescription. Sleepio and Daylight have not been cleared by the U.S. Food and Drug Administration (FDA) for the treatment of insomnia disorder and GAD, respectively.

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