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Prevention key to lower workers’ comp costs
In tight economic times, injury prevention is an economic necessity. Consider this: Medical costs for workers’ compensation claims involving lost time from work rose by 12% in 2002. Payment for lost wages rose by 7%, according to the Insurance Information Institute.
So if your injury record stays the same, your workers’ compensation costs will climb. The only choice is to spend money and resources to reduce injuries, asserts Donald Maynes, a risk analyst consultant who spent years investigating claims and later became involved in helping companies settle their claims. Maynes now works as a consultant with Ergologix Consulting, a Portland, OR-based firm that specializes in injury reduction for hospitals.
While the potential for cost savings from injury prevention may seem obvious, it’s not always clear how to get there. In fact, employee health services often are viewed as a revenue drain without regard for the potential to boost the bottom line. Based on his experience, Maynes offers some advice for employee health professionals:
1. Build the financial case with senior leadership.
Hospital leaders need to understand that saving money through claims management is miniscule compared to reduction in claims from injury prevention, Maynes says. Claims can be reduced as much as 70% to 80% by focusing on preventing injuries, he says. Suppose, for example, that you set aside a reserve of $100,000 to handle a claim, but the actual cost ends up being $98,000. You didn’t save $2,000, Maynes adds. You spent $98,000. "Savings on the claims side is a fictitious thing. It can’t happen," he says. "Claims can only result in expense, they can never result in savings."
You also have to combat the belief that injuries are inevitable and you’re going to pay for them no matter what. "There’s a lack of knowledge about some of the things you can try to do to prevent injuries over all," Maynes says. "There’s sort of a mindset that exists, particularly among financial people, that claims have occurred historically at that level, [and] therefore, they’re going to occur at that level this year."
2. Partner with risk management allies.
Workers’ compensation insurers often provide consultation or incentives for injury prevention. They also may be able to provide valuable data about claims trends that you can use to target your injury prevention. Internally, risk managers and the safety committee can offer support and information. Injury prevention also has a broader impact in a time of nursing shortages, and managers may be increasingly receptive to implementing change. "You have to begin to revise the environment for the benefit of your existing employees, to hang on to them and reduce your recruitment costs," he says.
3. Engage employees in decision making.
"It becomes a matter of trying to get the employees to become a part of the solution. If you’re ineffective at doing that, you’re not going to be able to solve the problem," he says. Once you’ve identified your major sources of injury, create a dialogue with employees about the possible solutions. For example, if you have high claims related to slips and falls, discuss possible changes in work practices that could reduce the risk. Keep employees informed about the interventions you’ve made and the results.
4. Respond quickly when injuries occur.
Despite your best efforts, some injuries still will occur. Getting swift care for the injured employee is not only a sign of good will; it is good business. "The most critical part of any claim occurs within the first 15 minutes of an incident happening," Maynes says. "It’s critical that knowledgeable people be available to assist the injured employee getting the right medical care, to make sure that the employee will start off in a system of maximum medical improvement," he points out. Conversely, if the employee’s care is disjointed and the employee feels it’s a struggle to get help, you will be set up for a battle. Litigated claims are the most expensive ones.
5. Leverage your savings for more injury prevention resources.
You may start with a pilot project, such as targeting a high-risk unit with ergonomics intervention. Document your savings, and use that to gain an investment in equipment for other units. Your greatest savings will come from a program to reduce injuries related to patient lift and transfer, Maynes says. In fact, Ergologix identified a possible $1.2 million savings in one calendar year at a hospital by addressing lift and transfer issues. "Senior hospital administration at this point has not made savings of workers’ compensation dollars a priority because there’s a lack of understanding of how you get there," Maynes explains. "Through the leadership and guidance of employee health personnel, we can enlighten them as to what they are [able to accomplish]," he adds.
Need more information?
Don Maynes, Risk Analyst Consultant, Ergologix Consulting. Telephone: (877) 312-7002. E-mail: firstname.lastname@example.org.