Featured Blogger – Margaret Spence on What Is the Annual Cost of Not Implementing a Return-to-Work Program?
President and CEO, Douglas Claims & Risk Consultants, Inc.
Recently, I met with a client who wanted to reduce the number of injuries at their job site. Instead of focusing on the number of injuries, I asked him to bring the company’s Occupational Safety and Health Administration OSHA 300 log to the meeting so we could calculate their Return to Work Ratios—the number of lost days, the number of restricted days, the number of injuries, and the number of employees who never returned after an injury.
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For calendar year 2007, this employer had 61 injuries that resulted in 1769 lost days, 255 restricted days. Yes, the frequency of injuries was huge, but it was staggering to look at the lost days—more than four years of productivity had been lost by employees who did not return to work after an accident.
We then randomly selected 5 of the employees who had been off work for more than 21 days. We reviewed the medical documentation associated with each claim to determine if these employees had a valid reason for being off work beyond the first seven days. The review showed that on average all five employees had been released by their treating physician to return to work—with limitations—within eight days after the injury. The review highlighted the fact that the employer had not entertained the idea of identifying a job that would accommodate these employees. These employees were allowed to remain off work until the physician released them to return to full-duty work.
This example highlights the fact that most employers seldom attempt to quantify the impact of allowing an employee who could return to work to stay at home. The key component that is often missing from a company’s Injury Management Program is a proactive Return-to-Work Program. Many injured employees have been released by their treating doctors to return to work but their employers are reluctant to allow them back into the work environment. In these instances, the insurance carrier has to pay benefits to an employee who has approval to work but is sitting at home with nowhere to go. The major factor that contributes to this reluctance is a lack of a clear policy with specific procedures that can be applied immediately after an accident that will result a positive return-to-work experience.
Let’s forget for one minute that we are in the middle of an economic crisis, according to the Bureau of Labor and Statistics there were 4.1 million employees injured in 2007 – the last year data is available, 1.1 million of those employees lost on average 7 days from work. The National Safety Council Accident Facts® for 2005 – 2006 indicated that the total cost of injuries was $160.4 billion - $80 billion in lost wages and productivity; $31.3 billion in medical cost; $34 billion in direct administrative expenses. Prior to the economic downturn employees lost approximately 80,000,000 – workdays directly related to their injury; on any given year we carry over 40,000,000 lost workdays from injuries that occurred in prior years. This number is staggering compared to our current unemployment rates and further bolsters my feeling that injuries are a significant contributor to unemployment and under employment.
And, there are the hidden indirect costs of injuries: Lost productivity; Decreased ability to complete jobs on time; Pulling existing employees from their duties and retraining them to replace the injured worker; hiring and training a replacement employee; Overtime; supervisory time to manage injury paperwork, and the list goes on. Indirect costs are hidden because they are not traditionally a noted line item on corporate financial statements.
I recently spoke at a trade association meeting, my topic was “Are Injuries the Inevitable Cost of Doing Business?” I highlighted that the hidden cost of injuries can create a situation in which even stable companies can go out of business. Solvency of any business is not only determined by the revenue that they generate, but by the steps they have in place that reduce or eliminate workplace injuries and the process they have in place to get injured employees back to work immediately.
So in this economic crisis, managing worker compensation cost is paramount.
Most companies focus their efforts on implementing safety procedures and they hope that their employees will follow directions and not have any injuries. In reality, employees are injured every day, so the key issue is how to eliminate or lower workplace injuries while simultaneously reducing the number of lost work days for injured employees. The solution is having a plan that addresses total injury management by reducing or eliminating injuries, reducing or eliminating lost work days and reducing or eliminating the off work cycle. It is a total package.
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