Determining ROI in Early RTW Programs
Saturday, February 26, 2005 | 0
In my first article in this series on Early RTW programs some key program elements of Early RTW programs were discussed. This article will outline some measures for determining "Value" or Return on Investment (ROI) in Early RTW programs.
To reinforce some of the points from my prior article, successful Early RTW programs typically have the following basic characteristics:
* open lines of communication between employee, co-workers, supervisor, and healthcare and benefit providers;
* provide multiple levels of potential work reintegration: part-time work, modified or restructures duties, and reassignment;
* flexibility in the work schedule and the pace of work reintegration;
* adequate support for the employee, both before and after they return to work.
Overall, employer responses to these trends are increasingly comprehensive and coordinated. A new set of human resource and benefit delivery solutions for employers and their business partners are being developed. According to Watson Wyatt ( Staying @ Work - Watson Wyatts Fifth Annual Survey Report 2000/2001. Bethesda, Md.), efforts that focus on RTW programs, case management, and behavioral health are the most prevalent programs. The most effective absence and disability management programs include:
* Return to Work - 87%
* Case Management - 81%
* Safety Prevention - 81%
* Absence trend data - 80%
* RTW Training for Supervisors - 77%
* Integration of Programs Under Single Manager - 71%
* Integrated Information System - 70%
* Line Supervisor Involvement - 66%
According to the results of several studies the use of a sound RTW program can save up to 20-50% of the employer costs associated with absence and disability (Developing a RTW Program - Texas Workers Compensation Commission, Medical Review Division http://www.twcc.state.tx.us/commission/divisions/rtw/employer/rtwguide03-04.pdf ), ( Staying @ Work - Watson Wyatts Fifth Annual Survey Report 2000/2001. Bethesda, Md.). . The potential ROI from Early RTW can be significant indeed when the full costs of employee benefits are considered. According to the Integrated Benefits Institute (IBI) an investment in reducing absence that produces an ROI of 2:1 in wage replacement cost savings alone represents an ROI of 16:1 when the full cost implications of reducing absence are considered (The Business Case for Managing Health and Productivity: Results from IBIs Full-Cost Benchmarking Program (2004). Integrated Benefits Institute: San Francisco, CA.). As shown below, the largest cost drive is lost productivity, representing over 70% of the cost of work absence.
The Benefits of Early Return to Work Programs
Historically, the ascribed benefits of return-to-work for injured and ill employees are varied. The primary benefits most often cited can be summarized as follows:
Benefits to Employees
* Recovery time is shortened;
* Injured workers remain active and productive;
* Permanent disability associated with injury is reduced;
* Concerns about continued employment are resolved;
* Full or partial wages are earned bringing the injured worker's income closer to pre-injury wages;
* Stress, boredom, and depression from the injury or illness and from being unproductive are reduced or eliminated;
* Injured workers and their families experience less disruption to their lives;
* Loss of physical fitness and muscle tone due to inactivity is prevented;
* Injured workers maintain company benefits and seniority;
* Injured workers maintain contact with and support from co-workers and friends;
* Injured worker maintains job skills;
* Feelings of dependency and lack of control are alleviated;
* Pain and suffering are minimized and overall wellness is promoted;
* Family and social lifestyles are maintained; and
* Reduced accident and injury related costs may help preserve benefits and jobs as well as contribute to an improved work environment.
Benefits to the Employer: Direct Savings
* Workers' compensation costs are reduced when Temporary Income Benefits (TIBs) cease or are adjusted when an injured worker returns to work;
* Medical and disability costs are reduced and recovery time shortened;
* Decreased loss ratios and experience modifiers help control premium costs;
* Productivity is maintained and human resources are used to the maximum extent; and
* Wage costs for substitute employees are saved.
Benefits to the Employer: Indirect Savings
* Company retains the production of skilled and experienced workers;
* Injured workers continue to contribute to the company;
* No expenses are incurred for recruiting, hiring, training, or salary of replacement workers;
* No overtime is required to make up for lost production;
* Work delays and business interruptions are eliminated when an experienced employee returns to work;
* Communications and relationships between employees and management are enhanced based on the commitment by all parties;
* Co-workers are not required to perform additional duties to compensate for an absent injured worker; and
* The company's interest and concern for employees are reinforced.
Key Trends
Key trends in workers' compensation on the national level are partially captured in the following metrics:
| Annual Total National Cost of Workers' Compensation | $131.2 billion ( ) |
| Increase in Indemnity Severity since 1997 | 26% ( ) |
| Increase in Medical Severity since 1997 | 22% |
| Decrease in Frequency of Lost Time Cases since 1997 | 13% ( ) |
In 2002, (the year of the most recent data available) in the U.S. there were over 1.6 million injuries and illnesses that involved "days away from work". This constitutes an incidence rate of 1.5 injuries and illnesses per 100 employees. Of these occupational injuries and illnesses, 73% involved days of job transfer or restricted duty (an incidence rate of 1.1 per 100 employees). The following characteristics describe occupational work injury and illness population ( U.S. Department of Labor, Bureau of Labor Statistics (2003):
* Ten occupations accounted for one-third of the cases requiring recuperation away from work. Truck drivers experienced the most injuries and illnesses with 112,200 requiring days away from work followed by nursing aides, orderlies, and attendants with 79,000 and non-construction laborers with 76,600.
* Considering all occupational injury and illness cases (over 1.4 million cases in 2002), the breakdown on lost days away from work is as follows:
* 1 day = 15%
* 2 days = 11.2%
* 3-5 days = 18.6%
* 6-10 days = 12.4%
* 11-20 days = 11.0%
* 21-30 days = 6.7%
* 31 days or more = 25.1%
Total = 100%
* Sprains and strains, most involving the back, accounted for 43 percent of injuries and illnesses resulting in days away from work in 2002. When sprains and strains, bruises and contusions, cuts and lacerations, and fractures are combined, they accounted for nearly two-thirds of the cases with days away from work.
* Men accounted for 65 percent of the total cases (1.4 million), which is higher than their share of the hours worked, 59 percent. Of the 372,200 cases reported in the services industry, women made up 64 percent of these cases, compared with their employment share of 60 percent.
* Injuries and illnesses to workers aged 20 to 44 accounted for 64 percent of all injured workers, about the same as their share of hours worked in 2002, 62 percent. Although workers aged 65 and over accounted for only a small portion (1.7 percent) of total injuries and illnesses, 61 percent of these cases occurred in the services and retail trade industries.
* Operators, fabricators, and laborers experienced more injuries and illnesses than any other major occupational group (552,900) in 2002. Within this occupation group, 36 percent of these cases occurred in the manufacturing industry.
* Employees with one to five years of service with their employer accounted for 37 percent of all injuries and illnesses sustained, while workers with more experience (more than 5 years of service) made up 29 percent of total cases in 2002.
Days off work is an important predictor of which injured or ill workers return to work. According to the Bureau of Labor Statistics the longer an injured or ill worker is off work, the lower the probability that worker will return to work. Statistics indicate that only 25% of workers off work for 12 months will return to work.
The next article in this series will review how to measure your return on investment in return to work programs using key metrics.
Article series by Robert Hall, Ph.D., CRC, CDMSRobert Hall, Ph.D., CRC, CDMS. For more information, please contact AtWork Resources at 1-866-463-0562 or visit http://www.atworkresources.com.
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FOOTNOTES
. http://www.wcb.state.ny.us/content/main/Small_Business/sifrtw.htm
2. Supra note 26.
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The views and opinions expressed by the author are not necessarily those of workcompcentral.com, its editors or management.
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