The direct and indirect costs of poor mental health

When employees suffer from poor mental health at work, companies pay for it through numerous direct and indirect costs. Direct costs refer to the “visible costs” associated with the diagnosis and treatment of a mental health condition, such as psychotherapy or psychiatric drug costs. Indirect costs refer to the “invisible costs” associated with the downstream impact of a mental health condition such as productivity, physical health care costs, and accidents.

Cost of care
The cost incurred to diagnose and treat mental health conditions. For example, direct medical expenditure for anxiety disorders alone has been estimated at $38 billion annually.

Disability claims
Research shows that mental health conditions account for 30-40% of all disability claims, and 70% of workplace disability costs.

Absenteeism
Loss of productivity due to work absences. Individuals suffering from insomnia, anxiety, or depression miss work more often. In fact, stress, anxiety and depression account for 13.8 million lost workdays.

Presenteeism
Impaired work productivity. Poor mental health is the main contributor to this cost burden. For example, insomnia among employees costs companies $1,942 per employee per year in lost productivity.

Health care costs
Research shows that insomnia, for example, is linked with increased inpatient care, including a higher number of days hospitalized and increased emergency visits. This increase in healthcare utilization is often the result of co-occurring health problems exacerbated by mental health difficulties.

Workplace accidents
On-the-job injuries and accidents are more likely to occur when employees experience
mental health difficulties like insomnia, anxiety, or depression. In fact, the average cost of an insomnia-related accident is $10,534 higher than other workplace accidents ($32,062 vs $21,914).

Regardless of the size of a company, one thing that remains true is that fostering connection and camaraderie remains key to a healthy and productive working environment This makes regular mental health check-ins more critical than ever before. When workers feel psychologically safe to express their emotions no matter where they are working, it will help to set a cultural foundation that will encourage and motivate them to perform to the best of their ability, as well as create a happier and more productive workplace culture.

The Locate Global solution is designed to support this, allowing employers to conduct check-ins to ensure user well-being and satisfy ‘duty of care’. Find out more here.