Learn how to manage workers’ comp costs
How you can keep them down
A recent study conducted by the consulting firm ManagedComp surveyed a group of occupational physicians and asked the doctors to estimate how many work-related injuries they treat actually require more than three days lost work time for purely medical reasons.
More than 90% of the responding physicians reported that fewer than 10% of the injuries should actually result in lost time, and more than 60% responded that less than one in 20, or 5%, should require lost time.
In reality, however, on average, nearly a quarter of all workplace injuries result in lost time. No small sum when employers consider that wage-replacement costs represent the single largest expense behind rising workers’ compensation costs.
The most obvious means of keeping workers’ compensation costs at bay include preventing workplace injuries entirely or keeping them to the very minimum. So even though you may be kept within a particular fee schedule based on the type of business you run and the jobs your employees perform, there are still a few more tricks to making rising workers’ comp costs subside.
Issues of control
There are three main factors that determine how much a particular company will pay in workers’ compensation costs, says David L. Goetsch, PhD. Goetsch is professor of safety and quality management and provost of the Joint Campus of West Florida and Okaloosa-Walton Community College in Niceville, FL, as well as the author of Occupational Safety and Health.
The first factor is the type work a company does, he explains. Based on that, the company is assigned a numerical factor that has been predetermined according to industry type by the Occupational Safety and Health Administration. "You can’t change that unless you change the business you’re in," he points out, explaining that without a successful lobbying effort on Capital Hill on behalf of a particular industry, that rate factor is there to stay.
Secondly, companies must look at their actual accident experience modification factor, he says. (See glossary, p. 90.) This is the only true place companies can make a difference in how much they pay in workers’ compensation premiums.
The third consideration is how that factor compares to the industrywide average in your category. "If a company can maintain a better-than- industry average experience record for three years, it can reduce its experience factor and thus its premiums."
There are no quick fixes although some businesses may be tempted by low-priced workers’ compensation insurance offers, says Mark Beatty, group loss control manager for the State Compensation Insurance Fund for California’s Sacramento-area program. "There are a number of attractive front-pricing options available. But the caveat is that the initial low-pricing advantage may not last well over the long term if insurers aren’t giving the company access to the resources, such as loss control and management services; they need to keep these prices down."
From the perspective of reducing the experience factor, Beatty says, the most important first step, beyond deciding with whom to insure, is in looking at selective hiring for the long term. "Turnover is such a big issue in home health, that after a while even the best agencies are numb to it and will take an LPN just because they’re an LPN," says Beatty. "It becomes a real bind, and if you’re not looking at it from a long-term hiring perspective, it shouldn’t be a surprise if injuries and workers’ comp costs escalate."
While it may be clear that reducing the incidence of accidents will lower your workers’ compensation costs, exactly how to go about doing that can be a bit murky, especially when dealing with employees such as home health nurses and aides who are off-premises more than on.
One method, advises Beatty, is to use pre-placement physicals. "They’re a good idea because you want to make sure the nature of the work won’t be too strenuous for the person." Although the questions on such screenings were once viewed as discriminatory, the rules have changed somewhat, he says. Employers may ask applicants whether they have any disabilities that would prevent them from performing the duties of the job — provided the employer has drawn up "a very detailed job description, including what kind of lifting there will be and the physical demands involved."
Once hired, home health agencies must continue to take the proactive tack in preventing on-the-job injuries. Experts such as Goetsch and Beatty advise home health agencies to follow these principles:
1.Give safety high visibility.
This is especially important with home health, Goetsch says, because it’s not something an employee will necessarily think about as often "as the guy on the plant floor who passes several safety signs on the way to his workstation."
Just how do you make your safety message visible to the home health care nurse? "It needs to be in the company charter and wherever it states your mission. It must be a guiding principle within that strategic plan and must plainly say that working safely is a high priority," says Goetsch.
He recommends making safety reviews a part of the job evaluation process and an actual criteria in the performance appraisal document. Moreover, for employees who meet their safety goals, such behavior must be rewarded and recognized. "If they work safely, there should be periodic recognition of that and it should count toward whether they get a promotion or raise. This gives it maximum visibility," Goetsch explains.
Beatty adds that employers can include safety reminders with employee paychecks. Pamphlets on driving and lifting safely, or on taking additional cautions with sharps are all pamphlets many insurance agencies will provide to their home care agency clients free of charge.
2.Conduct a hazard identification analysis at the residential setting.
"You need to know what the hazards in a particular home setting are and then extend it to one where the person is in a wheelchair or confined to bed," advises Goetsch. "Then, based on this analysis, develop an accident prevention procedure specific to that setting."
3.Make your nurses aware of hazards and train them in proper procedures.
Goetsch points out that safety training doesn’t have to come from a licensed program or in a formal classroom, but that insurance companies usually have someone who can come in and conduct safety seminars. "Whomever it is in your insurance company that handles workers’ comp claims is your best friend. They’ll tell you whatever you need to know about training," he says.
4.Develop a quick-response procedure.
"The problem in home care," Goetsch points out, "is that if I get hurt today in my office, 20 people will see it and come to my aid. But if you have a nurse out there alone treating an invalid patient, how does anyone know she’s been hurt?"
Quick-response procedures for people working alone must address the issues of how an agency will ensure immediate notification in the event that the employee is hurt and cannot reach a phone. Beepers and other electronic devices are common solutions, he says, as is checking in regularly with central location much like police officers do.
Securing immediate medical attention and determining how the injured employee will be cared for over the long haul are also issues that must be included as well as a procedure for "determining cause but not assessing blame," says Goetsch.
5.Institute a return-to-work program.
Such programs, Goetsch points out, have been instrumental in reducing litigation and fraudulent claims as well as cutting back on the associated expenses of training new employees. Moreover, studies have shown that getting employees back to work sooner reduces overall recovery time. Just make sure it’s not too soon or in too great a capacity, warns Beatty.
"You want that employee back and feeling like a part of the workplace. Ironically, home health agencies know this well through their rehab work but don’t always take that approach with themselves," he says. "I can’t stress enough the importance of looking long-term, staying in touch with the injured employee and then taking care to ensure that their health and safety is a product of the work relationship."
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