Simplifying the Return-to-Work Maze: Keeping an Employee at Work, the Company Can Realize Significant Cost Reductions in Workers' Compensation and Long- and Short-Term Disability
Shafer, Rebecca A., Graham, Elizabeth S., Risk Management
Many companies use transitional work programs to temporarily return injured employees to the workforce in a limited capacity until they are physically able to resume their original, full-time duties. While employers have traditionally used these programs only for work injuries, many companies are adopting them for nonoccupational injuries as well. These forward-thinking companies are taking a comprehensive approach to "absence management."
Transitional work programs have the advantage of allowing injured employees to regard themselves as "actively employed" and thus productive and valuable members of the work-force. These programs are also financially beneficial for the company because by keeping the employee at work, the employer can realize significant workers' compensation cost reductions. Transitional work programs also help decrease short- and long-term disability insurance or wage continuation costs for nonoccupational injuries. And although employees in a transitional work program assignment may be less than 100 percent productive, having an injured employee who can work part-time in a limited capacity is more cost-effective than having one who does not work at all.
Many companies, however, are reluctant to initiate transitional work programs. Some employers believe worker unions will not accept these programs, or that the programs themselves will not be time- or cost-effective. However, the evidence proves that transitional work programs can be very cost-effective. A well-managed transitional work program can result in a return-to-work rate of up to 90 percent for injured employees returning to the job within four days after the injury. These significantly shortened workers' compensation claims in turn result in lowered indemnity costs as the company's workers' compensation loss experience shows overall improvement.
These employer concerns suggest that the primary barriers to setting up transitional work programs are attitudinal in nature. Therefore, to successfully implement transitional work programs, risk managers must help convince their companies, company employees and treating physicians that transitional work programs are beneficial for all concerned.
To convince employers of the benefits of transitional work programs, risk managers should point out the key factors that support their use. First, the risk manager can demonstrate that the company will realize significant financial savings if a return-to-work program is established. An employer can expect an average of 30 percent in savings for workers' compensation costs for a well-managed return-to-work program that includes a transitional work program.
To illustrate, consider this example. Suppose for every day an employee is brought back to work in a transitional duty capacity, a company realizes savings of $100 per day. If the employer has 50 workers on lost-time status who return to work in a transitional job assignment capacity one day earlier, the employer would realize savings of $5,000 per day. At a 5 percent profit margin, the return-to-work program would save the company $100,000. In other words, it would "cost" the company $100,000 to replace the $5,000 on the company's bottom line if the firm has a 5 percent profit margin.
The risk manager can also point out that transitional work jobs can be as diverse and creative as the employer chooses. For example, employers can establish transitional work programs by gathering work "wish lists" from their managers. These lists could consist of those "to-do" tasks that managers would like to accomplish but cannot due to time constraints and other, more demanding work priorities. Perhaps one department needs inventory taken, or another department requires a card filing system or someone to answer telephones. Companies can have recuperating employees perform these tasks, thus helping to boost productivity. Companies should also attempt to make transitional work positions creative and productive. …