WC Loss Control Produces Healthier Bottom Line At Medical Care Centers

Frank Russo, senior director of risk management at Silverado Senior Living, which operates 19 communities in four states, with its headquarters in San Juan Capistrano, Calif., noted that Silverado had no risk management department when he came aboard.

"I was brought in primarily to get workers' comp costs under control, which were bordering on putting us out of business," he recalled.

"We're obviously looking at the bottom line more than ever and are under pressure to cut expenses," he said. "But with workers' comp risk management it's easy to document results with loss costs and productivity gains."

Mr. Russo added that "in a tough economy, we're cutting corners everywhere, but if we can show that if we spend $5 on safety and loss control, we get back $50 in reduced losses and increased productivity, and have the hard numbers to back that up, risk management is not a hard sell."

William Wandel, vice president of risk management at INTEGRIS Health, agreed that "with the cost pressures on health care systems, it's imperative that we contain workers' comp exposures."

INTEGRIS, based in Oklahoma City, provides acute, rehabilitative, mental health and general medical care to over 60,000 inpatients annually. It is the state's largest health care provider, operating 13 hospitals, 69 physician clinics and other facilities, staffed by over 9,000 full-time employees.

INTEGRIS–one of three winners of the 2009 National Underwriter Award For Excellence in Workers' Compensation Risk Management–made a major investment in equipment to help nurses and other health care workers lift and move patients, which paid off with a far lower incidence rate and claim costs, according to Mr. Wandel.

(For full details about the INTEGRIS approach, see NU's Aug. 17 edition, available online at www.property-casualty.com.)

Mr. Wandel urged risk managers to "know your audience" when trying to sell a workers' comp loss control initiative.

When pitching senior management, for example, "speak the CFO's language," he suggested. "Talk about return on investment. Put dollar values on loss-leading injuries. Create realistic [loss control] budgets and document the impact in dollars and cents."

However, a more personal approach is required with the rank and file, Mr. Wandel advised. "If you go into a roomful of nurses and tell them how you can save money for the facility on workers' comp, it'll soon sound like a roomful of crickets," he said. "But if you talk about how you can ease their back pain and keep them healthy on the job, you will get their attention."

He cited one initiative in which INTEGRIS "bought shoes for the kitchen workers" that had superior traction. "They are not paid much, so they were thrilled to get free shoes," he noted. "From our perspective, the drop in slip-and-fall claims in one facility more than paid for the cost of all the shoes in the program."

Indeed, in that one test facility, the total cost of slip-and-fall losses fell after the safer shoes were distributed from $58,000 to $39,000 the next year, and to only $2,500 the year after that, Mr. Wandel reported.

Mr. Russo also urged risk managers to make sure employees are involved directly in loss control efforts by serving on safety committees.

"You need the people on the ground floor, not just in the executive suite," he said. "You must empower front-line people and make them feel responsible. Serving on a safety committee really makes them feel like a key part of the company, which boosts morale and gets grass-root support in implementing your safety programs."

He added that "giving people who might make minimum wage–someone who washes dishes, or a receptionist, for example–a direct say in how their working lives and safety are managed, while allowing them to interact directly with management and have an impact on company policies, that can make all the difference between success and failure on a ground-up safety program."

Sweetening the pot with incentives helps generate enthusiasm for loss control efforts as well, the speakers suggested.

At INTEGRIS, for example, "we give out local 'currency' to those doing their jobs safely that they can use in the cafeteria and gift shops. They can even win free movie tickets. And just the recognition makes people aware of what you expect and makes them feel appreciated," according to Mr. Wandel.

At Silverado, a "Safety Star Program" is in place to award employees for loss control. Every associate receives 10 Safety Star stickers for every month they don't file a workers' comp claim, and additional stickers are given out for specific acts to improve workplace safety.

A custom-made award catalog is given out to all employees, with over 100 pages of merchandise–from luggage to jewelry, clothing, cookware, toys, electronics and other valuable prizes that can be earned by building up stickers.

There are also Safety Stars of the month at each of Silverado's communities, and awards given out for the Safety Community of the Month. This creates a competitive atmosphere where individual workers and their communities pay special attention to safety issues to win the awards, according to Mr. Russo.

"Such programs help create a safety culture," he said. "We do put a lot of money into this, but our investment is repaid in savings from fewer injuries and claims."

Indeed, Mr. Russo reported, since the incentive program was put into place a couple of years ago, claim frequency is down 32 percent, loss costs are 41 percent lower, and there have been 59 percent fewer missed days of work. All this translates into more than $1.5 million in annual direct cost savings, he noted.

On the other side of the equation–the stick, as opposed to the carrot of award programs–Mr. Wandel urged risk managers to "create fiscal accountability through allocation of losses back to department directors," calling this a "critical" element to the success of any risk management program.

"No pain, no gain," he said. "Get the key players' attention and get them engaged by charging them for their department's losses."

Another way to cut expenses is to reduce the amount of litigation over comp claims, Mr. Russo noted, pointing out that while it costs $674 on average for a medical-only claim and $7,173 for an indemnity claim, the figure for a litigated claim is a whopping $47,750 on average.

"For injured workers, be their advocates, not their adversaries," Mr. Russo advised. "A corporate culture that emphasizes safety and takes care of those who get hurt and gets them back on the job quickly have employees who are healthier and happier and therefore less likely to sue."

While union shops might require more negotiations before launching safety programs, "unions can be pretty responsive to such efforts because they want their members to be safe as well," according to Jack Aspen, assistant vice president of risk control at PMA Companies.

One major benefit of improved loss control is the attractiveness of the account in the eyes of workers' comp insurance carriers, according to Mr. Russo.

"When I started here, we were lucky to get one carrier to quote our business," he said. "But now, it's a free-for-all. Everyone wants to quote us."