Broward County is the second-most-populous county in Florida, the 18th in the U.S. and home to 31 municipalities including Fort Lauderdale.
Among its myriad responsibilities are an extensive transportation system, with more than 300 transit buses; Broward County's Port Everglades (the world's second-busiest cruise port and South Florida's primary bulk cargo depot); and Broward's Fort Lauderdale-Hollywood International Airport. Like many sizable public-sector entities, its spectrum of exposures is vast and its risk considerations broad. If not managed effectively, its workers’ compensation costs for personnel ranging from bus operators to electricians, plumbers, street cleaners, gardeners and a host of other blue-collar—and white-collar—professionals could easily balloon out of control.
Related: Winner's circle: Serious fun
So when John Burkholder, director of Broward's Risk Management Division, took over in June 2012 and brought Workers’ Compensation Claims Manager Jeff O’Connor on board three months later, they had their work cut out for them. Although the county's risk management division would no longer be responsible for its police department (the largest fully accredited sheriff's office in the country) effective that October, it was still looking at 668 open workers’ comp claims.
What do you do, when an entire county's workers’ comp program needs to be reined in and redefined? Broward County's answer was to establish appropriate metrics to discover the greatest areas of cost, prioritize them and approach them strategically.
“You have to know where you are, to know where you want to go,” says Burkholder. “Once you start looking at these numbers, you know what the right thing is to do.”
Broward's risk management squad began to aggressively address its costs and efficiencies. The workers’ compensation staff would be placed into teams and held to higher standards according to best practices. One revelation was that the county was spending a fixed monthly cost of about $37,000 to vendors for such services as nurse case management, vocational rehabilitation, recorded interviews and initial investigations.
These functions were brought in-house; by having its own staff perform these tasks, the county's adjusters also achieved greater control over its claims as well as increased efficiency and improved savings. Since this change was implemented, the county estimates that it has saved taxpayers $812,400.
Medical costs cut
As with many organizations, Broward County also experienced high medical costs on its claims. Florida permits doctors to dispense prescriptions from their office, which—as workers’ comp professionals will tell you with a groan—can lead to pharmacy billing companies charging top dollar.
An outside company was brought in to review treatment on each open case, and less expensive alternative drugs were found for most of the medications being prescribed. Next, a nurse was enlisted to briefly meet with the treating doctors to discuss treatment protocols. The vast majority of those reviews went very well, says O’Connor, and the doctors agreed to proceed with new regimens.
The county self-insures, and self-administers its claims with a medical management vendor performing the initial intake, routing claimants to its network of medical providers as well as performing the county's medical bill reviews. Prescriptions are handled by a pharmacy benefit manager, a preferred provider under the medical management vendor contract. Medications billed through the pharmacy benefit manager provide additional savings.
Related: Winner's circle: Aces high
Broward County was able to achieve a cumulative pharmacy savings of $4,519,115 (fiscal year 2013, 2014, and thus far in 2015) by controlling its medical providers and the medicines they prescribed. The average monthly medical cost dropped from $802,999 in Q1of fiscal year 2012 to $160,068 in Q1 2015; the county's goal is to further reduce that figure to $100K per month in the next six months.
Settled cases equals savings
Pharmacy costs were just one piece of the pie; O’Connor and Burkholder had inherited many cases that needed settling in the short term in order to get a handle on long-term expenditures. The county aggressively sought to close and settle as many of the 668 open claims as possible. This was accomplished by working with county administration and county commissioners to approve these settlements.
Some claims were able to be closed administratively, but of those that required a formal settlement the county has saved $7,576,391 (fiscal years 2013, 2014 and 2015, as of May 31) based on the difference between the settlement amount and the expected lifetime costs of those claims. As of June 30, 2015, 226 claims that came in between Oct. 1, 2014, through June 30, 2015 have been closed. The average cost per claim was $1,663.13. The previous year, 423 claims were closed at an average cost of $2,552.
Today, its inventory is down to about 250 claims, the majority of which are new cases. “An enormous amount of our savings came with the settlement of our cases,” says O’Connor.
Broward County currently resolves 95% of its incoming claims without the need for a formal settlement.
As important as it is to resolve claims quickly, says O’Connor, it's even more important to prevent new ones. Numerous divisions are involved when an employee is injured at work. Communications have vastly improved among county divisions to ensure the prompt delivery of employee benefits and protections.
For example, a process review revealed that the county was offering injured workers up to 320 hours (eight weeks) of disability leave for each injury. Adjusters were often unable to properly assign the correct “bucket” of those hours to the right injury when the employee had multiple claims. “That policy was discouraging employees to return to work,” says O’Connor. That changed, with the help of the eight unions that represent 84% of the county's employees. Union agreements were renegotiated.
The county eliminated that policy and put into place a better way to link injuries to time used, preventing an employee from receiving more hours than were appropriate. Additionally, employees can use accrued leave to supplement their existing workers’ comp time.
Currently, the county's Safety & Occupational Health (S&OH) and Claims sections analyze and review each claim as well as the overall frequency (incident rates), severity and types/causes of claims coming from every division and covered agency. S&OH performs inspections and audits, provides training based on its findings, and publishes a countywide safety manual that is continually updated based on claim experience and its ongoing findings.
As part of the onboarding process all employees are acquainted with the safety manual, which contains training specific to each unit and contains a full catalog of safety training for every employee in various agencies—from general practice procedures to specific policies on asbestos, blood-borne pathogens, aerial work, compressed gas management, respiratory protection and industrial hygiene.
Workers are expected and encouraged to return to work on modified duty whenever possible. An “Essential Functions Listing” document is sent to the worker's immediate supervisor, and must be returned in 24 hours. For example, if a carpenter who works in the county's parks division is injured, adjusters can ascertain that employee's essential functions. That document is immediately forwarded to the physician to see if the injured worker is able to go back full time. If not, an altered-duty situation is found, with restrictions.
O’Connor sees only advantages to the county self-administering and self-insuring its workers’ comp program. “We have Broward County employees servicing Broward County injured workers,” he says. “Knowing and having a heightened understanding of the various job descriptions and essential job functions allows our adjusters to accurately communicate with treating physicians and county agencies, which also promotes a quick return to work.”
Controlling the dollars spent on claims is another big advantage of self-funding/self-administering claims, he adds: “As with any organization, we have to operate within a budget. If something isn't working we can take another approach. We are properly staffed, and continually prove our value.”
In accepting the award, O'Connor offered the following remarks:
Broward County very much appreciates National Underwriter’s recognition of our risk management program.
We would like to congratulate the other winners, Kathy Hawkinson of Cedar Fair Entertainment and Patti Colwell of Southwest Airlines.
We are encouraged to see these large organizations proactively providing safety training during the onboarding process, educating their treating physicians on the essential job functions of their vast array of job descriptions and continuously communicating with the numerous players involved in the daily administration of their workers’ compensation claims, as we have done.
The Broward County risk management division along with its county partners, guided by its department, county administration, and the Board of County Commissioners remain focused on the goal of delivering cost effective and collaborative services to enhance and promote the quality of life for our residents, businesses, visitors and coworkers.
We have made great progress over the last three years. The annual dollars spent have been drastically reduced. Our injured workers are better educated on the mechanics of the program and even assist with keeping costs down. Communication between agencies has greatly improved expediting the injured workers return to both light- and full-duty work.
I would like to especially thank our adjuster and assistant teams for their persistent efforts to yield our current results. The entire Risk Management Division pitched in to assist us, as did our partners in Human Resources, the Office of Intergovernmental Affairs & Professional Standards, and the County Attorney’s Office. None of this would have been possible, however, without the support of our CFO, County Administration and our Commissioners who all encouraged and supported our efforts leading to these tremendous results. Our leadership understood and really stepped up to benefit the taxpayers and county employees.
Much work remains, but proven processes are now in place and the numerous contributors have become more educated with those processes. I enthusiastically look forward to assisting Broward County in its future by continuing our SUNsational Service while ensuring Broward County taxpayers receive the most cost-effective program possible.
O'Connor and fellow winners Patti Colwell and Kathy Hawkinson accept the National Underwriter Award for Excellence in Workers' Compensation Risk Management from Shawn Moynihan, editor-in-chief, and John Moore, publisher of NU-PC at the 70th annual Workers' Compensation Educational Conference in Orlando, Fla.
Editor’s Note: An earlier version of this story published on Aug. 12, 2015.