Editor’s note: Russ Johnston, is president, Casualty Americas, AIG 

There is good news and bad news for employers of nearly 3.1 million Americans who will be hurt on the job this year: The number of worker injuries has steadily declined over the last few years, but the severity of injuries has increased and medical costs are rising. 

According to the National Council on Compensation Insurance, the cost of medical services, including office visits, emergency-room care, and prescription medication, now constitutes almost 60% of workers’ compensation claim costs, up from about 40% in the early 1980’s. So why do employers, insurers, and clinicians continue to treat worker injuries in isolation without treating the larger system of care?

Advances in medical technology, recent legislative changes and renewed focus on transparency and patient safety are incentivizing smarter care across the health-care system. More care doesn’t always equal better care. For example, according to the Centers for Disease Control and Prevention, opioids kill 46 people every day and cost insurers roughly $70 billion annually. This trend shows no signs of slowing down. 

A recent George Washington University School of Medicine and Health Sciences report found that between 2001 and 2010, the percentage of overall emergency department visits where an opioid analgesic was prescribed increased from 20.8% to 31%. Opioids bring with them a high risk of abuse when their use is not properly managed by qualified healthcare professionals. Pain specialists and clinical psychologists can help injured workers cope with chronic pain and disabilities to prevent overuse and abuse.

With wider use of electronic health records to capture patient data, smart use of big data is expected to improve care and reduce medical errors. Next-generation computers like IBM’s Watson are helping analyze and apply mountains of new data in an attempt to ensure better outcomes. Large-scale data analysis and predictive modeling can help the health-care system by assisting doctors in selecting less risky and more effective treatment options. 

While advances in medicine increase our lifespan, it means people will remain in the workforce longer. Older employees bring with them years of experience and a lower risk of getting injured at work. However, when they do get injured, the Bureau of Labor Statistics reports they will require a median of 14 days to recover compared to 9 days for their younger colleagues.

The pay-for-performance ethos embedded in the Affordable Care Act is changing the way patients, including injured workers, are treated. In part, it helps care givers focus on outcomes rather than outputs. 

For example, the Hawaii Medical Service Association, the state’s largest health plan, launched a pay-for-performance program that ties up to 15% of a health-care provider’s revenues to a quality health outcomes program. Evidence-based treatments save money and reduce the likelihood of complications by shining a light on unnecessary and potentially harmful medical procedures. Over-treatment can lead to anxiety, excess radiation or side-effects, without changing the course of a disease or a patient’s outcome. The Institute of Medicine (IOM) estimated that in 2009, $750 billion or about 30% of all health spending was wasted on unnecessary services and other issues, such as excessive administrative costs and fraud.

A renewed focus on transparency and patient safety can also help injured workers return to work and their families sooner. Fifteen years ago, the IOM launched an effort to assess and improve patient safety. This seminal report found that medical errors kill between 44,000 and 98,000 patients each year—although more recent studies like those in the Journal of Patient Safety, estimate that medical errors really account for over 440,000 deaths, making them the third most frequent cause of death in the country. 

Besides the cost in human lives, preventable medical errors generate unnecessary costs of between $17 billion and $29 billion per year. To counter this problem, the National Quality Forum developed a set of Serious Reportable Events(SREs),a compilation of serious, largely preventable, and harmful clinical events,to help healthcare professionals assess, measure, and report performance in providing safe care.

In certain states, treating injured workers in ambulatory-care centers can be cheaper than hospitals. The potential cost savings aren’t just limited to the treatment of work-related injuries. The lead investigator in a study published in the Journal of Urology stated that offloading 50% of the urology procedures from hospitals to ambulatory surgery centers would save the Medicare program nearly $66 million annually. Money aside, a study by researchers from the Universities of Notre Dame and Minnesota found that treatments in ambulatory care settings, even for high risk patients, led to better health outcomes than those performed in a hospital.

When ambulance lights start flashing, our first instinct is to treat the injury – as it should be. Worker safety is critical for employers, insurers, and care-givers alike. In addition to that, when we work to understand and ultimately improve healthcare outcomes at the patient-level across the system, it results in injured workers who: experience less pain, quicker recovery time, and fewer medical complications; may return to work and to their families sooner; and are prescribed the right amount of medication for the right amount of time. In short, when we work to treat the system, not just the injury, everybody wins.