In virtually every industry, there is inherent risk associated with injuries and illnesses in the workplace. With healthcare costs soaring to record highs in the U.S., employers are experiencing increases year over year related to Occupational Healthcare. While there has never been a better time to understand where your organization can reel in the expenses, it can be very difficult to isolate all of the components affecting your spend.
Occupational Health services can be divided into three categories:
Worker's Compensation
This category by far has the highest variability in regard to risk. Worker's compensation spending includes your direct spend (payments directly to external healthcare providers rendered through insurance), indemnity (costs associated with claim management or lost time), premiums (annual payments to your insurance broker that are affected by the level of risk and activity associated with your worker's compensation performance), and reserves (a set-aside fund for self insured companies that is based on previous worker's compensation activity and estimates of cost). These figures can be obtained directly from your insurance company and used to make informed decisions that drive continuous improvement.
Direct Services
Direct services include all occupational health programs that do not involve insurance payments. In other words, these are services that are purchased by an organization to maintain internal or external compliance. Types of services include post-offer, exit, and annual physicals, medical surveillance, fitness for duty evaluations and employee qualification. These services are almost always rendered utilizing a fee for service model, meaning that an organization pays for each individual component of testing each time it is performed. Rates are determined and set by the provider and there is often no negotiations regarding fees. These figures can be obtained by contacting the provider who renders the services and requesting invoices over a specific time frame.
Indirect Spend
Indirect expenses associated with occupational health are, on the surface, difficult to identify. These expenses include the cost of replacement labor (replacement for the injured worker), overtime sustained as a result of lost production, production loss due to loss of employee labor, supervision time (the time that the supervisor must commit to managing injuries, restrictions, accommodations, etc.), and the cost associated with recruiting and training replacement labor. These figures can be rendered by reviewing your lost time rates, production down time occurring near the time of injury, and the rate at which injured workers leave the organization.
Benefits of an on-site clinic
All of these different expenses can be wrapped up into what you may call your 'occupational health spend'. This spend is, quote often, much higher than one would anticipate due to the rising cost of healthcare and the hidden nature of some of the expense types. In establishing an on-site clinic, the organization take control and ownership of their occupational health activities, shifting from the community based fee for service model to a flat rate, all inclusive delivery model. Doing so provides instant savings on direct services, the direct worker's compensation spend, and indemnity. Furthermore, an organization can reduce their worker's compensation premiums in displaying to the insurance company that injury rates are lower and that the cost of caring for those injuries has decreased by utilizing internal resources.
Work-Comp Management Services understands industry. We have the knowledge and tools to help identify where your organization can improve the efficiency of occupational health. With a proven track record of mitigating TRIR rate, DART rate, and worker's compensation spending, we stand ready and willing to assist. We offer free consultations to help organizations pin point gaps and improvement opportunities. To take advantage of this free service, contact us at 877-449-7473.
Stay Safe, and Stay Well