Impact of Return to Work Programs Presented by: Landry, Harris & Co.

Agenda  Statistics  Essential Components  Benefits to the Employee  Benefits to the Employer  Potential Abuses  Medical Providers  Hidden Costs  Financial Impact

Statistics Why is a Return to Work program important? According to the 2009 National Return to Work Week press release: ◦ 4.1 million employees experience work-related injuries or illnesses in America each year. ◦ 1.1 million have lost work days as a result of their injury or illness.  According to the Bureau of Labor Statistics (BLS), the average time away from work per injury was nine days. ◦ Employees who are off work for more than 16 consecutive weeks rarely return to work at all.

ATTITUDE – ATTITUDE – ATTITUDE A recent poll found: ◦ 70% of quick returners do not let their condition consume their thinking ◦ 76% of quick returners refuse to feel victimized by their injury ◦ 90% of quick returners report having a good relationship with their supervisor ◦ The longer an employee is out of work, the less likely he/she is to return to gainful employment Statistics

Identify a coordinator ◦ Develop modified duties / transitional work assignments ◦ Facilitate entire process Develop a formal company policy ◦ Ensure it is communicated to and understood by employees Designate medical providers ◦ Develop a relationship and make sure they understand your business and its physical demands on employees Be consistent! Essential Components of a Return to Work Program

Essential Components: Identify a Coordinator Appoint one central coordinator of the program Empower the coordinator to: ◦ Enforce the written policy ◦ Make changes to policy when necessary Coordinator should oversee entire program ◦ Implementation ◦ Monitoring ◦ Coordination/communication between supervisor, employee and physician

Essential Components: Coordinator’s Role Should take a proactive approach ◦ Maintain a modified duty job bank ◦ Establish primary contact with medical providers ◦ Clarify work restrictions ◦ Facilitate the return to work process ◦ Ensure all parties understand their roles ◦ Monitor experience and progress ◦ Ensure recovery is progressing towards full duty work ◦ Keep top management informed of successes and problems

Essential Components: Develop a Formal Plan Develop a written policy ◦ Policy should be approved/supported by management Ensure employee understanding of policy Explain thoroughly during new employee orientation program ◦ Also, review periodically with current employees Obtain employee sign off – their agreement to follow program in event of an injury

Essential Components: Designate Medical Providers Identify qualified occupational medicine facilities Invite physicians to tour your facilities and view the physical components of your employees’ work Provide physicians with modified duty job descriptions Establish expectations of accommodating restrictions Establish main contacts at facilities

Essential Components: Designate Medical Providers Prevent lack of cooperation when injury occurs: Develop a relationship with medical providers and explain your RTW program Produce functional capacity form and job description for modified work If there are problems, have your carrier’s nurse case manager provide “standards for practice” for the particular injury ◦ Compare it to the treating physician diagnosis and treatment ◦ Initiate dialogue regarding inconsistency of treatment

Essential Components: Designate Medical Providers Prevent lack of cooperation (continued): Send written notice to treating physician indicating modified duty is available ◦ Physicians may tell employee to stay home until they can return to full duty, not realizing modified work is available ◦ Generally, restrictions short of complete bed rest can be accommodated as employee recovers ◦ Send copies to the president of your company, the director of the doctor’s clinic or hospital, the insurance carrier claim adjuster and the insurance carrier nurse case manager Emphasize your concern of employee well-being, so doctor understands that you want what’s best for his/her patient

Essential Components: Be Consistent Enforce equally from: ◦ Location to location ◦ Supervisor to supervisor ◦ Employee to employee Set employee expectations, and always follow through on them Build sense of pride with goal of zero days off

Benefits to Employee Maintains full earning capacity Maintains productive mindset Keeps them on the “biological work clock” Prevents them from becoming dependent on a disability system Provides sense of security and stability Reinforces management’s commitment to employee’s well-being

Demonstrates a consistent procedure Establishes solid communication all around Improves ability to manage the claim/restrictions Places experienced employees back on your premises (less time/money spent on recruiting and hiring) Enhances employee’s self-worth Discourages abuse Reduces financial impact Benefits to Employer

Potential Scenarios for Abuse Employee anticipates layoff or downsizing Attempting to use “injury” off time as supplemented vacation Employee already demonstrates poor work ethic Employee struggles with day care, transportation and other expenses Depression, drug problems, alcoholism or other personal problems

Financial Impact Manage experience mod factor ◦ Medical-only claims = less impact ◦ In states that use the NCCI to calculate mod factor, medical-only claims are reduced by 70% Lost wages substantially higher than medical costs Return to work program can help: ◦ Control hidden costs ◦ Address indirect costs ◦ Mitigate via loss prevention ◦ Improve loss ratios

“HIDDEN” COST “REAL” COST Financial Impact: Hidden Cost

Financial Impact: Hidden Cost of Employee Injuries Costs not covered by insurance: ◦ Lost efficiency of injured employees ◦ Impact on other employees at the accident site ◦ Cost of hiring and/or training replacements ◦ Investigation time ◦ Overtime of other employees to make up for lost production ◦ Extra supervisory time ◦ Clerical time for paperwork, etc.

Financial Impact: Hidden Cost of Employee Injuries Costs not covered by insurance, cont’d ◦ Wages not compensated ◦ Downtime ◦ Legal fees ◦ Negative public image ◦ Building damage ◦ Tool and equipment damage ◦ Product and material damage

Financial Impact: Indirect Costs Indirect Costs Affect Profitability ◦ Per OSHA Statistics: One $2,300 claim costs your company $12,650 Assume a 10% profit margin ◦ Additional sales required to offset one $2,300 claim: $126,500

Financial Impact: Indirect Costs Another Example: Assume Company A has annual sales of $10 million with an 8 percent pre-tax profit margin. The cost of a single injury due to an amputation (a very possible injury found in facilities using any type of power press machine) is estimated to be: ◦ Average Direct Cost: $21,718 ◦ Average Indirect Cost: $23,890 ◦ Estimated Total Cost: $45,608 The additional sales necessary to cover: ◦ Indirect Costs: $298,625 ◦ Total Costs: $570,100 In this example, the next 6 percent of sales growth will go solely to pay for the total cost of the accident. If business is slow or your pre-tax margins are less, the sales impact is even greater!

A Return to Work program… Boosts morale Keeps injured employees productive Discourages abuse Can anticipate and control hidden costs Reduces financial impact Provides a proactive approach to Cost Containment

Working Together to Achieve Success: Landry, Harris & Co. and © Zywave, Inc. All rights reserved.