What's the ROI on RTW?

It’s no surprise that claims-people like to use acronyms and abbreviations.  It’s as if we’ve got our own language…TTD, IME, PPD, IRE, RTW, ABC…just kidding with that last one, but it’s plausible.

The knee-jerk response of any business owner when asked to bring someone back to modified duty is typically, what’s this going to cost me?  It is important that employers understand what their potential return on investment is with a return to wellness (or, as others call it, return to work) program, but that is only part of the picture.  Examining the opportunity costs associated with modified duty will help an employer/business owner make the best decision, for their business and their employees.

What’s the return on RTW programs?
A 1993 study conducted by Crawford & Company estimated returns ranging from $8-10 for every $1 invested in a RTW program.  This same study noted an overall reduction in WC costs of 54%.

Roto Rooter Services Co. experienced a reduction in incurred WC losses from $1.4 million to $356,000 in one year, which was largely attributed to their RTW program¹. 

Gibson Greetings’ RTW program reportedly reduced their incurred WC losses from $400,000 to less than $50,000 the following year¹.

The RAND Institute (2010) published a working paper which examines the effectiveness of RTW programs.  The study suggests that for large employers, RTW programs are highly effective at reducing duration of absences due to work injuries, resulting in about a 3.6 week reduction in the median number of weeks away from work for an injured worker.²

Obviously, individual companies will experience varying results.  These statistics represent case studies that are likely not applicable to every industry nor every employer. 

What is the cost of doing nothing?
Without going into the nitty-gritty of calculating experience modification factors (if you’re a glutton for punishment, you can learn more on this by going visiting your state’s compensation rating bureau), the higher your experience mod is, the higher your premium calculation will be.  A credit score is used to assess a creditor’s risk when lending you money.  Similarly, an experience modification factor is used, among many other factors, to determine an insurer’s risk of insuring your company for workers’ compensation insurance.

The impact of a RTW program, or not having one, will depend on what type of policy you have.  If you’re an employer with a large deductible, you will see more “immediate” savings than someone on a guaranteed cost policy.  If you’re an employer who has a retrospective rating plan, then you have an incentive to lower your claims – a dividend! 

These are the direct costs associated with insurance premiums.  Consider your profit margin.  Think about how much more you would have to sell to offset a WC premium increase of $10,000.  Now, reconsider the cost of offering a few hours of modified work per day for 6 weeks.  There’s an opportunity for even greater savings in some states when a claim remains medical only as opposed to becoming a lost-time claim in regards to your experience modification factor.

We haven’t even discussed the indirect costs associated with having an injured worker out of work…lost productivity, decreased employee morale, increased potential of illegitimate claims, increased turnover, increased injury rates, increased costs of overtime, increased health insurance costs…  We’ll save that for another post.     

References:
1.   Friedman, S. (May 8, 1995).  Back-to-work WC programs pay big dividends.  National Underwriter, 99(19), 3;26.
2.   McLaren, C., Reville, & Seabury, S. A. (March, 2010). How effective are employer return to work programs? (Working Paper No. WC-745-CHSWC).  Retrieved from RAND http://www.rand.org/content/dam/rand/pubs/working_papers/2010/RAND_WR745.pdf.

Meet JAN, your new best friend

Who is JAN?

The Job Accommodation Network (JAN) is the leading source of free, expert, and confidential guidance on workplace accommodations and disability employment issues.  Working toward practical solutions that benefit both employer and employee, JAN helps people with disabilities enhance their employability, and shows employers how to capitalize on the value and talent that people with disabilities add to the workplace.

JAN’s Workplace Accommodations:  Low Cost, High Impact  reports  the results of a recent survey of 723 employers who utilized JAN’s services.  We’ve provided some of the most relevant findings below.

An astounding 57% of accommodations didn’t cost anything.  Zilch.  They were free.  The average cost of a one-time expenditure was $500 for employers.   Do the accommodations work?  76% of employers reported they found the accommodations to be “very effective” or “extremely effective.”

What benefits have employers utilizing JAN received?

Direct Benefits
 

39% reported a savings on workers’ compensation or other insurance costs

90% reported the retention of a valued employee

71% reported increased the employee’s productivity

60% reported the elimination of costs associated with training a new employee.

Indirect Benefits

66% of employers reported improved interactions with coworkers

61% cited an increased overall company morale level

45% reported increased workplace safety

57% reported increased overall company productivity

99% of employers stated they would use JAN again.

There’s a Searchable Online Accommodation Resource (SOAR) database which provides information, suggestions, examples and resources for employers interested in implementing a job accommodation.  These suggestions are sorted by impairment or by industry.

 

References:

Job Accommodation Network (Original 2005, Updated 2007, Updated 2009, Updated 2010, Updated 2011, Updated 2012). Workplace accommodations: Low cost, high impact. Retrieved August 12, 2013, from http://AskJAN.org/media/lowcosthighimpact.html

 

Have a RTW program? Think your employees know about it? Think again!

Why put all of the time, energy, effort and resources into developing a RTW program, if no one knows about it?  If your injured workers don't know about it, it probably means no one is telling them about it, let alone utilizing it.

In a study of over 4,000 disability insurance recipients, only 20% of them (or, 800) knew that they had access to a work trial program. Why is this a big deal?  The 800 or so people who knew about the program were 2 times more likely to return to work.¹

If you offer RTW, make sure EVERYONE knows about it.  Make it ridiculously clear.  From the top to the bottom and anyone who is responsible for treating your injured workers, regardless if they are on a physician panel or not, be sure that they know you have modified duty.  As you may have read, one of the number one reasons physicians don't release injured workers is because the injured worker tells their doctor that their employer doesn't have modified duty. 

This brings me to another point -- Doctors should be commenting on ability to RTW regardless of whether work is available or not -- if the injured worker shouldn't lift more than 20 lbs., they shouldn't be hoisting a 30 lbs. toddler or a 30 lbs. bucket of cement.  Restrictions aren't just for work!

Communicate your RTW policy to employees at hire, at time of injury, and at the time of annual benefit renewals. 

Why is this so important?
Having a modified duty program sends the message to employees that their employer is going to help them recover – physically, financially, and vocationally if they sustain a work-related injury.  It also sends a message to an employee that getting injured does not mean that they are going to be out of work.  While the overwhelming majority of work injuries are legitimate, having a modified duty program will take any motivation to file an illegitimate claim off the table.

How can I communicate our RTW program?
As previously mentioned, explain it in conjunction with your company’s annual benefit renewal process, include it in the company newsletter, send out a company-wide email or flyer, post it along with your other mandatory postings, discuss it at employee meetings. 

Make sure that you are using it!
Unless a RTW program is consistently used, it will be worth little more than the paper it is written on.  Some of the best RTW programs we’ve seen aren’t formal, shiny programs, they are a strong commitment from the employer to do whatever it takes to bring someone back to modified duty when medically appropriate.  It’s like a gym membership, you can say you have one, but it’s usually fairly obvious those who utilize it and those who fail to take advantage of the opportunity.

References:

1.       Krause, N., Dasinger, L. K., & Neuhauser, F. (1998). Modified work and return to work:  a review of the literature. Journal of Occupational Rehabilitation, 8(2), 113-139.