Managing Off-the-Job Injuries

By Patterson, David K. | Risk Management, September 1995 | Go to article overview

Managing Off-the-Job Injuries


Patterson, David K., Risk Management


POTENTIAL SAVINGS FROM, OCCUPATIONAL INJURY DISABILITY MANAGEMENT, WHICH IS A VARIANT OF 24-HOUR MANAGED CARE, GIVE RISK MANAGERS A COMPELLING REASON TO CONSIDER THIS APPROACH FOR NON-OCCUPATIONAL INJURIES'.

Senior managers of many corporations are utilizing reengineering, restructuring and continuous improvement programs in an effort to increase productivity and reduce the cost of doing business. Whether or not these programs achieve these goals, one thing is for sure: Corporate restructurings have resulted in leaner, highly leveraged work force teams that depend on the productivity of their members more than ever before. Since companies today have fewer workers who are expected to be more productive than in the past, organizations are increasingly vulnerable to staff injury and disability, whether or not the injuries are job-related.

When it comes to losing employees to on-the-job injuries, most risk managers today are accustomed to using managed care techniques to return injured employees to health and then back to work. But what about non-work related injuries and disabilities? The direct cost of short-term and long-term disability and sick pay is estimated at $80 billion annually. This figure doesn't include indirect or hidden costs--those related to the use of temporary or replacement workers, late project or product completion and below-standard work quality. Each of these costs either adds expense or results in lost business. Some estimates put these direct and-indirect costs at 8 percent to 10 percent of a typical employer's payroll. Therefore, organizations that do not have a strategy in place to proactively manage non-occupational disabilities may be missing out on an important competitive advantage.

Fortunately, the methods and strategies risk managers have developed over the years for managing the care and controlling the costs of occupational injuries can also be used for non-occupational injuries. The potential savings from occupational injury disability management, which is a variant of 24-hour managed care, give compelling reasons to risk managers for considering this approach for non-occupational injuries. One large clothing manufacturer saw its average total incurred loss payments fall nearly 50 percent in the first year of its disability management program for workers' compensation.

The demand for integrating the treatment of occupational and non-occupational injuries is becoming an increasingly popular option. A recent survey in California found that 91 percent of large employers are interested in having a single case manager handle their occupational and non-occupational injuries and 85 percent would like a common claims administrator for both types of injuries.

When managing the care of non-occupational injuries, it is important to realize that although the goal of managed care is to reduce medical costs, there are situations in which more extensive treatment is necessary. For example, in workers' compensation programs, risk managers focus on rehabilitating injured workers and getting them back to work as quickly as possible, a goal that often requires more intensive--and expensive--treatment than traditional health insurers might employ. The payoff occurs when workers make fuller and faster recoveries and return to work sooner than they would have under a standard treatment program. Since wage replacement averages about half of a typical disability claim's total costs, there is a clear benefit to getting the ever-more-valuable employee back to work, whether the injury happened on or off the job.

REAPING COST SAVINGS

Consider the example of one of the nation's largest retailers. This company had a strong workers' compensation program in place for containing claim costs but had never developed a formal program to manage non-occupational disabilities. …

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