Over the past 30-plus years I've rarely met a business owner or company executive that considered occupational health and safety a cost of doing business. However, most of these same owners and executives consider the additional loss protection coverage required for failing to institute effective occupational health and safety programs (i.e. insurance for workers' compensation, liability, product, property, etc.) a necessary business expense. This perspective needs to be turned on its head, and it's time to look at how an effective occupational health and safety program can significantly reduce costs (especially loss protection coverage) and increase profits for companies of all sizes.
So how are we doing?
A 2011 workplace safety report published by the National Council on Compensation Insurance (NCCI) demonstrates a 34 percent decrease in the frequency of Nevada workers' compensation claims during the period of 2001 - 2008. Many Nevada business owners might look at these results and conclude their occupational health and safety programs had achieved the desired cost reduction objectives.
If we dig deeper, we discover there's still much work to be done.
According to a 2010 U.S. Department of Labor survey, Nevada companies have a higher occupational injury rate in 11 of 13 major industry sectors. The two sectors favorable to Nevada employers were Natural Resources and Mining, and Education and Healthcare Services.
The same NCCI report compares Nevada lost-time claim frequency to four other western region states, Arizona, Colorado, New Mexico and Utah. The report concludes that Nevada employers experience a 26 percent higher frequency rate than competitors in these states. This not only results in lost productivity, but higher claim and/or insurance premium costs.
How much higher? According to NCCI Nevada lost-time or indemnity claim costs are 37 percent higher than those of these competing labor markets. From an economic development perspective, these metrics are part of the calculations used by business owners and executives when deciding where to start, expand or relocate their operations.
Given these findings I suggest it's time to shift attention and resources from micro-managing claims to injury and illness prevention. This is not to say that all the claims management techniques developed over the years are not critical to a company's bottom line, quite the contrary, but business leaders must also invest in occupational health and safety strategies in order to achieve the ultimate cost reduction objective zero safety defects.
Think of occupational health and safety as a roadmap to improving a company's financial performance. Although the Department of Labor and NCCI data emphasized opportunities to reduce workers compensation costs, optimizing regulatory compliance expenses, reducing liability and property damage losses, and increasing workplace productivity are equal return on investment stakeholders.
Where can you start?
How about making sure prospective employees show-up for work in a condition that does not put other employees, customers or company assets at risk? Employees that use illicit drugs and consume heavy amounts of alcohol have a proven and negative impact on a company's bottom line. According to the U.S. Department of Health and Human Services and the National Institute on Drug Abuse, employees that fall into these categories; represent 8 percent of full-time and 10 percent of part-time workers; significantly increase company sponsored healthcare costs; arrive late to work three times more often; are four times more likely to have an accident at work; five times more likely to file a workers compensation claim; and use sick leave three times more often.
I'm always amazed at how much companies spend on the hiring process, including direct and indirect costs associated with recruiting; interviews; skill and personality testing; background checks; and education, employment, credit and DMV verifications; and then not conduct post-offer, reasonable suspicion and post-accident alcohol and drug testing?
In northern Nevada, certified vendors and occupational healthcare providers offer these screening services at very competitive rates. In addition, breath alcohol and certain drug screens provide "instant" results, enabling human resource professionals to hire the right prospects without delaying employment decisions.
Due to union bylaws or other considerations, some companies may not be able to implement an alcohol and drug testing program, so what else can they do?
Did you know that 80 percent of all physical workplace injuries involve the back, knees or shoulders? And, 60 percent of these injuries result from overexertion? How, as an employer, do you know if candidates are qualified or fit to complete the physical requirements of the prospective job?
Did you know that noise and chemical exposure cause more than 30 percent of all occupational illness claims? Occupational health and safety professionals can tailor Personal Protection Programs that cost effectively eliminate these employee safety risks.
Some companies obtain post-offer employment physicals because they provide an objective method for determining whether a candidate is physically qualified for a particular job, or to obtain baseline medical information that could be used to mitigate future claim costs. These physicals should be conducted by a provider trained and/or experienced in occupational medicine, and the employer should provide them with a functional job description to properly assess the candidate's ability to safely perform the physical requirements of the job. The physician should produce a report or clearance form clearly indicating whether or not the candidate is able to physically perform the essential functions of the job.
A "comprehensive physical" ($100) is a common post-offer service that includes a head-to-toe assessment of candidates working in a multi-exposure job (e.g. cardiovascular, hearing, moderate physical demands, pulmonary and/or vision). A "musculoskeletal physical" ($200) requires the skills of an occupational physician and therapist to assure candidates working in physically demanding jobs possess the necessary functional capacity. A "fit-for-duty" physical ($100) is an assessment of an employee prior to returning to work following a non-occupational disability. The goal is to make sure an occupational health physician clears the employee prior to resuming a physically demanding job and possibly incurring a work related injury.
Medical surveillance programs help employers remain in compliance with worker exposure regulations, and avoid costs associated with fines or occupational illness claims. Some of the most common and cost-effective personal protection programs include respiratory protection, hearing conservation, vision preservation and illness prevention.
Hepatitis, HIV and tuberculosis represent a significant risk to tens of thousands of Nevada employees across multiple industries. Like eye injury claims, these can be very expensive due to the lifetime nature of medical and indemnity benefits in Nevada. Most companies should obtain expert advice as it pertains to risk identification, exposure procedures, safety training and proper infection controls for at risk employees.
Flu season, meanwhile, is upon us, and all the literature strongly encourages employers and employees to get vaccinated. The 2011/2012 vaccine ($28) protects against the A-H1N1, A-H3N2 and B virus, and a flu shot is much less expensive than corresponding productivity losses, medical bills, and five days of sick time for every employee that comes into contact with an infected co-worker, customer or vendor.
Are occupational health and safety programs really cost effective? Ample anecdotal and case study data demonstrates that a systematic approach to occupational health and safety delivers a meaningful return on investment. Federal and state safety agencies are under tremendous pressure to cost-justify their existence, and regulatory penalty avoidance is just one factor in calculating your return on investment. Take the recent example of a Dallas manufacturer fined $949,800 for repeated toxic fumes and noise hazard complaints and violations.
Besides being Nevada's largest integrated healthcare system and one of northern Nevada's largest employers, Renown Health is a complex community of approximately 5,000 employees, volunteers and contractors. Our workers compensation third-party administrator, WorkersChoice, along with our human resource and risk management departments over the past three years have applied most, if not all, of these occupational health and safety principles to reduce workers compensation costs on a per employee basis over 27 percent, wages for light and restricted duty costs by 30 percent, and sick time per full time equivalent by 12 percent.
Northern Nevada employers have access to several local occupational health and safety educational resources including the American Society of Safety Engineers (ASSE); Emergency Management, Washoe County; Nevada Department of Health and Human Services; Nevada Safety Consultation and Training; Nevada Occupational Safety and Health Administration; Public Risk and Insurance Management Association; Reno Ergonomics; and the Northern Nevada Chapter, Risk and Insurance Management Society.
Kirk Gillis is the vice president of workers compensation for Renown Health and Hometown Health. Contact him at kgillis@renown.org or 982-6056.
