Workers’ compensation is not just a cost of doing business as many CEOs, CFO’s and Business Owners think. It is an expense within your control.
There are two reasons workers compensation costs are high. First, there are too many claims lasting too long. Second, the employer is not taking charge of the workers compensation process.
Don’t make the mistakes many other employers have made. Take charge of your workers compensation costs today!
The 7 Biggest Workers’ Comp Mistakes Companies Make!
- Companies hire unqualified employees: There is a lack of “job-matching.” If a warm body walks through the door, you must make sure they are qualified to SAFELY perform the job they are hired to do before placing them in that position.
- There is a disproportionate length of disability: If an employee is injured January 1, and healed January 15, they should be back to work January 15 – not June 15 or July 15. You must bring the time out of work back down so it is proportionate to the length of time of the actual medical disability.
- There are too many employees out of work too long: You should have 90% or more of the lost day claims back to work within 4 days. In most states, workers’ comp pays lost wage (indemnity) payments after a waiting period, so if you bring 90% or more back to work in the first few days after the accident – in the waiting period, your workers’ comp costs will be much lower. Employees stay out of work because there are no post injury procedures to bring them back to work quickly.
- Too few resources are dedicated to the problem: There are many helpful books, newsletters, seminars and organizations. For example, there are injury duration guidelines that indicate how long an injury should last under normal conditions. You should use these guidelines and if an injury is estimated to be longer than those guidelines find out the reason. Or, companies hoping to save several hundred dollars will not authorize those responsible for workers’ compensation to attend conferences and seminars where they could learn how to reduce workers’ comp costs and save millions of dollars. They are “penny wise and pound foolish” looking for short term savings. Or, they look for the least expensive claims administrator rather than the one that will provide the best quality claims handling – ultimately being more cost-effective.
- There is a lack of understanding by all parties:
- Lack of Understanding by Management: Management may not understand the real cost of workers’ comp. For a $15,000 claim, if your profit margin is 8% it takes $187,500 to replace the $15,000 on the bottom line. Try this calculator to see how much it takes to replace your total incurred losses on the bottom line: Sales to Pay for Accidents Calculator. Or, management may not know they can direct medical care in those states where it is permissible. Or, they may think they cannot speak with any employee who receives workers’ comp. And, often the workers’ comp manager has not visited the TPA’s offices and has no idea how claims are handled. And, many other things …
- Lack of Understanding by Adjusters: Adjusters may not interpret medical reports correctly, do not know when medical information is missing and sometimes settle large claims based on an incomplete understanding of medical terminology. They do not understand “medicalese. “For example, an axial compression test is a test used to determine whether an employee is “magnifying” their symptoms. A positive axial compression test means that an employee may be exaggerating their symptoms. However, some adjusters think a positive test is corroboration of a serious injury and may accept a claim that is not compensable. Or, adjusters have not been to your facility and are not familiar with possible transitional duty jobs. And, adjusters often do not have the tools or time to convince a resistant employer to implement a transitional duty program.
- Lack of Understanding by Employees: Employees may think an insurance company is paying the claim. They may not know the company has a large deductible, it is the company’s money and the claim costs are affecting the profitability of the company. Usually the employees DO know how to take advantage of any loopholes. Therefore, while management does not know how to design a complete program, employees DO understand the rules of engagement. There is often a huge imbalance in knowledge between employers and workers.
- There is too little communication with injured employees: SOMEONE will communicate with your employees – so make sure it is YOU! Attorneys, friends, and other injured employees will be communicating with injured employees. They will also receive messages from TV, billboards, radio and the Internet. Make sure they get YOUR message first. Give them an Employee Brochure, require Weekly Meetings, make a First Day Phone Call, and send a Get Well Card. Communication is the name of the game!
- Medical Care is not well monitored or coordinated: No one is making sure a reasonable treatment plan is in place. For example, as long as any doctor says an employee cannot work, there are no proactive steps taken to refute that position. Coordinating and monitoring medical care is much more important than reducing medical costs. When employees return to work quickly, medical costs go down also. Sometimes that means paying more now for long-term cost reduction.
Do not make the same mistakes other companies make- implement a successful cost reduction program today!
This is just three examples of the many types of companies we’ve worked with:
- The average results are 20-50% reduction in loss costs if you follow all steps of the process
- However, we have seen several situations where the loss costs have been reduced by as much as 60%
- These results have remained consistent for over 20 years with every company with which we have worked