Workers Compensation in Assisted Living: It takes more than better lifting techniques to pull your costs into line

Saturday, October 11, 2008

Workers Compensation in Assisted Living:
It takes more than better lifting techniques
to pull your costs into line

By John Atkinson, Partner
Thilman Filippini

Timber-cutting, metal-working and over-the-road truck driving are jobs you wouldn't normally compare with a caregiver or certified nurse's aide in an assisted living community. But these professions do have something in common. Statistically, they are among the most "hazardous" lines of work.

According to the U. S. Labor Department, providing resident care is one of the nation's most injury-prone jobs. In recent years, certified nurse's aides actually ranked first – ahead of truck drivers and laborers – in musculoskeletal injuries resulting in workers compensation claims. Typically these are falls and back injuries. Perhaps more significant, studies show nursing aides and vocational nurses at or near the top in numbers of lost work-days due to claims-related injuries.

This data comes despite OSHA's ergonomic initiatives dating back to the '90's – specifically targeted to the seniors housing industry – countless seminars, millions in equipment expenditures and private management initiatives on worker safety.

Clearly, this is a tough issue. And a costly one. For many assisted living providers already faced with unpredictable insurance cycles, runaway workers comp costs can be a make-or-break line item.

And for national operators with locations across different states, where they must contend with widely-varying workers comp codes, gaining a measure of control over these costs is critical to sustained profitability and maintaining shareholder value.

In a handful of states, workers comp reforms have established medical fee ceilings and may ultimately help to cut the number of litigations. But these compromise fixes go only so far. With national claim trends continuing to outpace almost all other industries, most seniors housing executives want clear and specific solutions – now.

There is no "magic bullet" to slay spiraling workers comp costs. What's required is a comprehensive Managed Risk program based on proven guidelines and actionable steps, plus an unrelenting day-to-day commitment at all levels of management.

This is difficult, detailed work. But with a coordinated and fully-integrated program of Managed Risk, the results can be immediate and startling.

Case in point:

Consider one national provider with a network of mixed seniors housing communities in multiple states – a company that has reduced its workers compensation loss rate by 25% or more in successive years by implementing a system-wide workers comp and injury management program. These results are gauged on a generally accepted actuarial measure known as "pure loss rate."

(NOTE: "Pure loss rate" is calculated from reported losses over several years, then adjusted and trended to a common basis to allow for comparison between years – in this case, $100 of payroll. This is a somewhat arcane statistic usually of interest only to actuaries and risk officers. But everyone takes notice when you see dramatic loss reductions of 25% or more in successive years.)

In the benchmark year 2000, with no dedicated Managed Risk program in place, the company had a loss rate of $3.11 per $100 of payroll, slightly below the national average. The next two years' loss rates were virtually unchanged: $2.81 and $2.78.

But in 2003, the state of Florida enacted workers compensation reform to limit attorneys' fees and curb fraud. A risk management consulting firm and an accountability program was installed. The result was an expected 15% loss rate decrease to $2.34 per $100 of payroll.

These results only strengthened executives' belief in the achievability of further cost reductions. They were right.

In 2004, two signal events occurred. One was the passage of workers comp reform in California, where the firm operates a number of communities.

Although multi-faceted in execution, the philosophy is simple – an accident or injury usually is a chance occurence, but nothing else in the process should be.

The other was the company's decision to implement a tailored, system-wide Workers Compensation and Injury Management Program. The company distributed step-by-step handbooks to all supervisors, HR managers and regional risk officers; held Web conferences to introduce the program; and established proprietary relationships with local specialized medical networks.

Along with functional job analyses and safety initiatives, a cornerstone of this WCIMP program is intensive (even hour-by hour) liaison and management of the injury treatment and claims process – with a particular emphasis on return-to-work. Another critical element is daily and documented communications between the company's employees, supervisors, physicians, adjusters and consultants.

The result in 2004 was a 27% reduction in loss rate, down to $1.72. And in 2005 the WCIMP program was on track to pare another 25% from the loss rate. In October it stood at $1.29 – compared to the national average of $4.24*.

Of course, not every operator can expect results so dramatic and so soon. But the case has been made that you can gain a significant, sustained measure of control over your workers compensation costs with the right program – and the sheer corporate willpower to see it through.

*From the National Council on Compensation Insurance, the nation's largest database of workers compensation insurance information.

7 Steps to Effective Workers' Comp Management

Establish a solid working client-relationship with a nearby clinic or physicians' group. How important is this step? A study published in The Journal of Occupational and Environmental Medicine shows lost-days and claims' costs could be reduced by almost half when workers are seen by proprietary group doctors, using agreed-upon treatment protocols, rather than outside-of-network physicians.
Communicate early and often with an employee during the initial treatment and follow-up. Document what is said. Our experience has shown an expression of genuine concern, with a neutral but responsive attitude, goes a long way toward minimizing phone calls to lawyers.

NOTE: This step is usually the responsibility of the HR manager.
Don't wait for the adjuster – conduct a prompt, fair internal investigation based on established procedures. Take statements. Preserve appropriate evidence. Write a report. Use this and other reports for regular trend analyses.

NOTE: Investigate with an eye toward finding out what happened and fixing it … not affixing blame.
Never assume the best. Even if a worker attempts to shrug off an injury, see that it's checked out with a physician – and get a written report. A sizeable number of serious claims are reported the next day or next week.
Report to your carrier promptly and in detail. Be assertive. Work with your risk officer or consultant to stay informed and manage the claims process.
Train your front-line staff and community managers to own every workers comp claim. Develop an accountability program that keeps managers financially responsible.
Clearly outline the roles and responsibilities of each staff member and department involved in the injury management process . This begins with the injured employee and includes department supervisor, human resources department, risk management department, regional manager, adjuster and insurance broker.

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