In hard times, employers are forced to look at their bottom line in an attempt to identify places within their company where they can reduce costs. Many times, employers look at benefits or staff first. One area employers should look to that can have significant impact is workers’ compensation costs.
A well-managed company will take the steps now to align itself with professional assistance. This can lead to desired results for properly managing workers’ compensation claims, says Dan Slezak, vice president with ECBM. For many companies, their workers find that the workplace is akin to an extended family. Employees need to know that you care about them by providing a safe workplace and having a comprehensive claims management program in place that will help them to get well and back to work. This is a win-win for companies because it increases productivity and reduces claims.
Smart Business spoke with Slezak about the effects workers’ compensation claims can have on businesses and how to manage these claims to reduce costs and claims while increasing productivity and morale.
How do workers’ compensation claims affect businesses?
When an employee is injured at work, workers’ compensation pays for necessary medical treatment and lost wages. There can be a substantial cost associated with these expenses. If an employee misses work, then productivity suffers. The morale of the employee group is also affected if an unsafe condition existed. Employees want to know that someone cares about them and that is especially true in the workplace.
The longer lingering effect is that these claims add to a company’s loss experience and will adversely affect the modification factor with the state rating system that will end up costing that company more money.
How do you recommend business owners manage workers’ compensation claims?
Business owners must recognize that claim management cannot be delegated to an insurance carrier or a third-party administrator without someone providing oversight. If the business does not possess that expertise, then it becomes critical that it has a broker who can provide that oversight for it. That broker must play an active role in managing the costs in workers’ compensation. If you can get the best people and best program oversight, then you will be leaving nothing to chance.
Provide a safe environment; fill it with the best people for the functions needed and a company’s return on that investment will be forthcoming. Make working in a safe environment an important part of your culture.
Each company can enjoy the benefits of reducing their workers’ compensation costs. But there is not a one-size-fits-all approach. The demographics of the work force and the jurisdictions of workers’ compensation law will play an important part in the program structure. Business leaders should meet with a broker to discuss options and plans that meet the individual needs of their company.
How can you achieve cost savings through management of such claims?
When claims are managed properly, employees receive proper and immediate medical treatment, which means the employee will return to work sooner, thereby minimizing lost workdays that significantly add to a claim cost. If you analyze the component costs of a workers’ compensation claim management program, you will find ways to reduce each cost without having an adverse impact on the claim results.
Companies have experienced as much as a 35 percent reduction in workers’ compensation costs with proper management. The first step is to have an experienced consultant/broker analyze current processes, then, with management’s commitment, establish guidelines that will positively affect the program going forward.
Does investing in prevention lead to cost savings for employers?
A safe work environment leads to fewer claims and shows your employees that you care about their well-being. Many processes and procedures can be addressed to positively affect the number of claims. Prevention creates a safe workplace with the proper training and instruction. Both areas can be addressed without major expenses. The key is to identify the past trends in a company’s losses and establish a cost/benefits analysis of areas to be addressed.
How important is record keeping in the successful reduction of claims?
Record keeping is important for a couple of reasons. First, you can identify trends and note where you need to expand your resources. Second, proper documentation from the onset of a claim would help to determine if it was an unsafe act or unsafe condition that led to the claim. In either case, the injured employee and all co-workers can learn from the incident. Third, some claims can go bad, which can lead to litigation. This becomes very costly. If you have the proper documentation from the onset, including the medical management files, this will ensure that the correct facts appear in court.
DAN SLEZAK is vice president with ECBM. Reach him at email@example.com or (610) 668-7100.