With our fifth annual National Underwriter “Awards For Excellence In Workers’ Compensation Risk Management,” sponsored by the National Council on Compensation Insurance, we again highlight examples of outstanding loss control, safety and return-to-work programs.
This year’s awards were presented to three innovative organizations:
- The City of Knoxville, Tenn. (this year’s Champion and our first-ever public-sector award winner)
- Kennametal Inc. (Honorable Mention)
- Community Health Systems (CHS) Professional Service Corp. (Honorable Mention)
In addition to the company profiles featured in the Aug. 22/29 issue of National Underwriter, the risk managers from these award-winning companies participated in a roundtable discussion at the Workers’ Compensation Educational Conference in Orlando on Aug. 23.
The panel was part of the “National Trends Program” put together by NU in conjunction with the conference organizer, the Florida Workers’ Compensation Institute. Caroline McDonald, NU’s assistant managing editor, moderated.
Following is an edited transcript of the winning risk managers’ takes on their programs and challenges.
Please summarize what your respective organizations do.
Risk and Benefits Manager,
the City of Knoxville, Tenn.
We are a municipality, so we do police, fire, public works, recreation and the other basic [services] that most middle-to-large size municipalities do. About 1,550 employees are regular full time. With seasonal and temporary employees we can run up to around 3,000.
Insurance Director in charge of Employee Safety and Workers’ Compensation,
Community Health Systems (CHS) Professional Service Corp.
We are an acute-care, for-profit hospital corporation. We have 133 locations across the country and about 95,000 employees.
Michael P. Murphy
Manager of Global
Property and Casualty Insurance,
Kennametal manufactures a wide range of industrial cutting tools and wear parts for demanding environments. We provide productivity solutions serving the aerospace and defense, transportation, energy, mining, and construction and general-engineering industries.
We have about 11,000 employees globally; about 4,800 in the U.S.; and about 65 manufacturing locations, over half of them outside the United States.
What unique exposures do you face in your respective industries, and what keeps you up at night?
Eastes: Orthopedic injuries are a major issue for us. We have police officers who aren’t necessarily in great shape, who suddenly burst out and chase someone or get in a scuffle. Firefighters also don’t necessarily stay in the greatest health and they go running into burning buildings. But more often firefighters are actually doing first response on emergencies and pulling bodies out of wrecked cars. Our public works, of course, are out in the field working in all types of different conditions. So orthopedic injuries and exposure to the public are our greatest nightmares.
Murphy: Repetitive motion is probably the biggest concern. We automate many processes but still have a number of processes that require a lot of manual hand movements. Our management-based safety processes help to eliminate hand injuries and exposure to this risk.
Jones: We’re open 24/7, 365 days a year. Each day is an adventure coming in to work. You never know what’s happened over the weekend or overnight. We’re at risk for both infectious and noninfectious adverse events. The type of business we’re in, it’s almost like different companies. You have the hotel business, dietary professionals, physicians and nurses. And we have plant operations, so there is a lot going on.
What are your and your organizations’ basic philosophies about workers’ comp risk management?
Murphy: Our philosophy is that Kennametal has an obligation to return our employees home in the same condition that they came to work. We strive to create a culture of accountability from the top to the bottom with our providers and everybody that touches the program. We have metrics designed to elicit the desired behaviors, which serve to hold everybody accountable, whether it’s through the allocation process of what it costs [various divisions]—to whether we will actually continue using a provider.
Eastes: If your number-one goal is just to cut costs, I don’t think you’re going to accomplish that. It really comes down to looking out for the welfare of your employees—trying to keep them from getting injured and taking care of them when they are injured. And then looking out for the welfare of our citizens, the taxpayers, and making sure we’re efficient and effective.
That can be particularly difficult with government, particularly local government, because there’s not the same bottom line as in the private sector. I tell our managers that losses are not a cost of doing business. A cost of doing business is something that contributes to the product; it contributes to what you’re trying to produce, and losses do not contribute to anything.
Jones: I try to focus on education for everyone in the organization. When I first started [at CHS], workers’ comp was viewed as just insurance: You have to have it, it goes through HR, and the reason HR has it is because they’re the ones with Social Security numbers.
I started an education program three years ago. We place a lot of data and education on our intranet for our employees in management, to give them a snapshot of what’s going on. Often they know about a claim that happened 30 days ago, but they don’t know the end result of claims that happened years ago.
Can you tell me what makes each of your programs unique?
Jones: Hospitals are different across the country. Anyone here who has a company with different venues countrywide can attest that it’s not one size fits all.
Especially with hospitals, we’ve got large ones; we’ve got small ones; we’ve got some with unions and some without unions. We have some huge indemnity exposures, given the high level of pay, because we employ professionals. We’re the second-largest employer of physicians across the country and of registered nurses—who are doing a lot of the heavy labor. What makes our program unique is dealing with all those different types of employees.
Eastes: In our case, all of our employees are located within the city limits. And our culture is very different. That’s one of the things that makes us unique, because we don’t have a culture; we have a lot of different cultures.
The cultures between a police department and a fire department and an engineering department and a public-works department are incredibly different. The communication lines, chains of command and work shifts are different. This makes it difficult to communicate with the different groups—when you have so few resources to do it with.
Integration makes our program unique. We have tried to integrate our health services with our occupational services.
We’ve also done a good job of managing what I think are the three most impactful tools to managing workers’ comp: directing care, returning to work and reporting claims quickly. We’ve made some real progress in all of those areas—and I think it adds up to the reason I’m sitting here [as an award winner].
Could you detail your loss-control and safety programs?
Jones: We use a prevention-cycle methodology, which is on our intranet.
The first level is examination—examining where the risks exist and drilling down in the data. We can pinpoint exactly what department, what shift and what location the claims are happening.
The second level is education. We think it is very important to train employees on how to investigate incidents and how to prevent them from occurring.
The third level is enforcement. We have upper-management’s support at every level throughout the organization. My CEO and CFO are very supportive of risk management and employee safety.
The final level is evaluation. Departmental managers and supervisors are held accountable for what occurs in their department.
Murphy: Our loss-prevention program falls under the global implementation of a management-based safety process—very simply, it manages safety like every other function. This model is based on the fundamental belief that every injury is preventable; an injury occurs either because management did not provide a safe work environment, or management did not properly influence an employee’s behavior.
This process provides tools to achieve the objectives. It’s modeled somewhat after the airline industry with the use of safety-flight checklists.
The implementation of safety-flight checklists at all levels has been extremely impactful. The number of claims at Kennametal, for 4,800 employees in the U.S., has dropped from 300 to 125 last year.
It’s a global implementation. Workers’ comp is unique in the United States, but other countries are held to the same standards and the same standard of conduct.
Eastes: Loss control is an area where, from looking at our claims, it’s obvious we’ve made a lot of progress over the last several years.
Data analysis is critical. You’ve got to know where your claims are coming from. You can think you know where they are coming from, but when you actually look at the data, you often find out you’re wrong.
For instance, we know that one of our major causes of accidents is getting in and out of vehicles, and it’s been hard for us to control.
Our departments are taking this more seriously, and we’re providing them with more resources. We have a vocational-rehab specialist and ergonomic specialist now on site that our departments work with.
Do you use incentive programs, and how effective are they?
Murphy: At the frontline supervisor level, it’s just in its infancy. The allocation and reimbursement program is in the June timeframe. I’m a very popular guy at that time of the year, so it’s working quite well.
Eastes: We have what we call the “My Health Program” where you have to do physical activity—you don’t have any choice if you want to stay in the program.
If you use tobacco, you can be in the program but you have to participate in health coaching. If you have a chronic disease, you have to participate in health coaching. Everyone has to attend quarterly education on health-related topics.
If you want to stay in the health plan, those are the things you have to do. Or you can choose the other plan which has higher premiums. It doesn’t have any incentives built into it, and some of the benefits are less.
The health program is now up to 78-percent participation. We also have a lot more police and firefighters concerned about staying in good health, just because over the few years that we’ve been doing this, they are more motivated than they used to be.
Jones: I’ll go ahead and tell you: money talks. We have a premium-incentive program called PIP that we kick off each year.
I try to recognize the locations doing a good job. I send out quarterly memos, and the locations that are doing an outstanding job I bring to everyone’s attention.
How do you work with upper management to keep them involved in your program?
Jones: We do quarterly memos on statistical data. I send them out to our CEO, CFO, all the division presidents and it goes down to all the location CEOs, CFOs and work coordinators.
Every time I send that out the phone really rings, especially from the locations I point out. I’m very blunt: I’ll say there’s no excuse for this location. But it gets peoples’ attention and it works. I get little things written back from the CFO—what about this, what about that? They like seeing the information and what’s going on.
Eastes: It’s a lot of communication, education and time. Many of you, I’m sure, have experienced changes in your CEOs or changes in the people at the top, and you have to go through that. Everything can change on you overnight, but in local government, [change at the top] is mandatory.
We’re about to have a new mayor come in; I don’t even know who it is. I can look at the candidates and know that with some of them, I’m in trouble. With others, maybe I’ve got a chance of keeping [safety and workers’ comp issues] top [of mind].
It will take some time to educate them that injuries and workers’ comp are a part of productivity. But it’s also educating them to the human side. I had an employee seriously injured, just being moved from one level of care to the next. When I was going out to visit him one day, I asked the deputy mayor to go with me.
He went with me and saw the person in the bed with all of these things hooked up to him—he had a pretty significant brain injury, unfortunately. Seeing that made a difference. Three and four years later, I still see the difference in [the deputy mayor] when he talks about workers’ comp and safety.
Murphy: At Kennametal I meet with the CFO three or four times a year and try to keep the information in that meeting somewhat simple. One of the things I focus on is total cost of risk.
At the facility level we send out a number of reports on a monthly basis: workers’ comp experience year to date and their lag-time report. We send out a report of anybody who is off work, and also I send out detailed information on costs for any open claim they have.
What is your approach for return-to-work initiatives?
Eastes: I talked before about how we have very different cultures from one department to another. We also have very effective return-to-work programs, [but] in certain departments it’s much more challenging.
Our police department has plenty of places to put someone with limitations on a temporary basis. Some of those places employees don’t like being in. It really speeds up recovery when you put them at a desk answering complaints. Police officers heal a lot quicker. The same thing is true at the fire department.
It’s more challenging in our public-works department, where there are fewer light-duty jobs. Our vocation-rehab specialist is now getting more involved in helping to find places where those employees can work, identifying the correct jobs, because often the restrictions from a doctor aren’t specific enough.
The vocation-rehab specialist can look much more specifically at the jobs and identify exactly what is and is not good for that employee. It’s also an educational process to get the managers to understand that everything depends on return to work.
If you get people back on the job and being active, they recover quicker, but it would help the industry to have more statistics to back that up when we’re talking to our managers.
Jones: Being the type of business we’re in, we’ve been in acquisition mode for years. So when we buy a hospital I’ll talk to them on the front end. It’s always interesting to hear other people who think they have a good return-to-work program.
One time they said “yeah, we’ve got a good light-duty program. Take so-and-so, for instance, they’ve been on light duty for nine years.” I said oh, my gosh!
I think I read a statistic that there’s only a 2-percent chance of someone returning back to their job if they’ve been out of work six months or longer. I read that the longer they are off work, the less likely they are going to come back to work.
Modified or transitional duty—we don’t call it light duty—is a bridge toward gainful employment. I stress a time limit. Light duty is not permanent, so there will be a start date and an end date.
Murphy: Kennametal’s policy is that we accommodate almost any restriction. We communicate this to our providers and those communications include examples of transitional-duty jobs. We also have specialized instructions that notify me if a facility indicates they are not going to accommodate a restriction.
We really try to focus on ability and not disability. Sometimes it takes a little bit of creativity, but we can always get them back to work.
What is the biggest issue facing risk managers with regards to workers’ comp right now?
Murphy: Dealing with things that are degenerative in nature. Dealing with an aging workforce and repetitive-motion injuries.
Eastes: I agree with Mike: an aging workforce and the growing chronic-disease burden. As age goes up, the chronic-disease burden is going up. That hurts.
And I stay nervous about the pressure on the federal government to take over workers’ compensation. I don’t think it’s imminent or that it’s coming right away, but it makes me nervous that there are pressures out there that every year keep [building] that the federal government should take over workers’ comp. The only argument to do that is that states aren’t paying enough in benefits, and we need to increase at the federal level the benefits being paid out of workers’ comp.
Jones: My opinion is that Medicare sets out arrangements that we’re doing more and more now—and will be doing more of later. We’re probably going to be hit up as a country, and some actuarial data shows these costs are rising.