Health and Safety Success Requires Cultural Change
Dustin G. Richartz spends much of his time lately helping organizations develop the leadership necessary to drive health and safety within their companies.
The senior loss control consultant with Kansas City-based Lockton Companies, Richartz was recently awarded the 2015 Monsanto Queeny Safety Professional of the Year Award by the American Society of Safety Engineers for his work in developing safety and health programs.
Edgar Monsanto Queeny was president of Monsanto in 1947 when an explosion aboard a French freighter destroyed the company’s Texas City plant, killing 512 people, including 145 Monsanto employees. Queeny took the loss and devastation to heart and put greater emphasis on safety in the company’s operations. The company sponsors the Edgar Monsanto Queeny Safety Professional of the Year Award in his memory.
“It’s an extreme honor, as ASSE is one of the largest safety and health organizations with some 37,000 members globally,” he said. “To be recognized as safety professional of the year is a huge honor and one I definitely don’t take lightly.”
Richartz began his career in safety and health in the manufacturing industry and eventually joined the insurance side. He’s helped organizations create programs to keep their employees safe.
“A lot of time is spent on injury prevention programs, developing tools and techniques organizations can use to protect their workers,” he said. “Some are OSHA regulatory programs, and some are environmental programs; environmental evaluations to make sure organizations are adequately protecting their employees. It really is broad based. Safety and health is not just focused on one specific area. A lot of different things go into it.”
In the 15 years he’s been in the safety and health industry, Richartz has seen a change in focus. Keeping workers free of injury and illness now involves all aspects of an organization.
“One of the biggest changes I’ve seen with a lot of organizations, especially those more progressive, is a shifting away from safety and health being a regulatory entity and allowing it to be a component of the business operations and minimizing risk,” Richartz said. “For the first couple of years that was the way the profession was focused — on regulations and compliance rather than on risk mitigation.”
Part of the reason for the shift is because of what Richartz and other safety and health experts say are outdated regulations. Many of the OSHA mandates, for example, were developed in the 1970s and have not been updated to reflect changes in the workplace. Much more is necessary to fully develop an effective safety and health program.
“You’d start with the compliance. It really is a foundational piece,” he said. “Then you’d develop the cultural aspects, leadership that would really help drive the risk unit. So it’s not focused on just the foundation but building it up and integrating it in every aspect of the organization from the front line to your CEO.”
Changing the culture of an organization is not an easy or quick process. It requires the involvement and commitment of organizational leaders.
“Grassroots activities can help move the needle, but it really takes a senior executive to commit to hold their operations teams accountable to make the changes necessary,” Richartz said. “The middle managers influence the activities of the front line workers, but senior executives drive the overall culture.”
Where Richartz often sees companies making the necessary cultural change is in smaller businesses. “They are often more family run organizations,” he said. “Some businesses and industries may push back more than others. But as we see more and more attention placed on occupational safety and health, more organizations are understanding if they don’t do that it will impact their business in a negative way.”
Getting an organization to focus on safety and health requires strong leadership, Richartz explained. It’s an area that can be the key to preventing injuries and illnesses.
“It’s something I’m passionate about,” he said. “It really helps individuals and organizations move the needle, especially if they are stuck in the regulatory mindset. Focusing on developing middle and upper management to understand what it means to lead in safety and get more involvement and buy-in from their mid-level and front line employees. That’s where a lot of my time has been spent with clients and ASSE and other organizations.”
Leadership is one of the qualities that make for an effective safety and health professional, Richartz said. He mentors young people on developing that and other necessary skills.
“A big part is understanding that a lot of occupational safety and health is really based about people and developing soft skills necessary to influence change and influence individuals, not just try and direct but get them to buy into your ideas and thoughts,” Richartz said. “It takes time for you as a professional to develop those skills.”
With aging workers leaving the industry, safety and health professionals are focused on ways to attract new people. Richartz spends much of his time doing just that.
“One of the things I’ve done a lot of work with is partnering with [ASSE’s] Future Safety Leaders Conference Committee to really help develop leaders and invest in those educational programs that are out there to make sure students when they do come out understand the people side as well as the book side,” he said. “A lot of what we do is not just regulatory based … but focuses on the soft skill side.”
Among the changes he sees on the horizon is the trend to focus on the sustainability side of operations, especially for organizations in manufacturing processes and that have global suppliers.
Cyber Insurance Uptake Still Lagging
“It is chronic that organizations are not analyzing the total cost of risk on a relative, comparative basis between tangible and intangible assets,” said Kevin Kalinich, global practice leader of network risk and cyber insurance at Aon Risk Solutions, summarizing the main takeaway from the 2015 Global Cyber Impact report, conducted by the Ponemon Institute and sponsored by Aon Risk Services.
Ponemon surveyed over 2,000 professionals involved with their companies’ cyber risk management and enterprise risk management, working in finance, risk management, compliance or general management roles.
The results revealed a stark contrast between what these professionals say and do about their organizations’ cyber insurance programs.
More than half of survey respondents said they expected their companies’ cyber exposure to increase over the next two years, but fewer than one in five were carrying coverage with an average limit of $13 million.
For example, 52 percent of respondents said they expected their companies’ cyber exposure to increase over the next two years, and 72 percent feel their current cyber coverage is sufficient.
Despite this confidence, only 19 percent of respondents were carrying coverage with an average limit of $13 million; meanwhile, the Ponemon Institute estimated that the probable maximum loss (PML) from stolen or destroyed information assets could reach as high as $617 million.
“Organizations seem to have a different operating philosophy on assets they insure,” said Larry Ponemon, chairman and founder of the Ponemon Institute. “Both [tangible and information assets] are viewed as very valuable, but insurance for tangible assets was at 51 percent of replacement value, versus just 12 percent for information assets.”
Kalinich said the discrepancy comes from senior management’s lack of understanding of their information assets’ impact on financial statements.
Companies are investing more and more in technology to streamline their processes and improve the way they do business, which helps to reduce their PML for tangible assets.
But they fail to take into account the total value that the new technology offers and how that changes their cyber exposure.
“They aren’t comparing the relative value of the assets, the relative exposures, and relative insurance spend of tangible and intangible assets,” Kalinich said. “If they do that, I think they’ll come to the conclusion that they are under-insuring on a relative basis.”
Many respondents also do not disclose material losses to uninsured information assets in financial statements (32 percent) or do so only as a footnote disclosure (36 percent). Not viewing technology as a “balance sheet asset” could contribute to management’s tendency to overlook its value, Ponemon said.
According to the report, only 26 percent of respondents said their company had conducted a formal, third-party assessment of cyber risk. Most had either no assessment (20 percent), or a very informal one (39 percent).
However, part of the problem lies on the insurance provider side as well. Many respondents said they chose not to purchase cyber insurance because coverage was insufficient, came with too many exclusions or restrictions, or executive management did not see the value, among other reasons.
They have a point.
According to Kalinich, broad and comprehensive coverage with large limits does exist for PII exposure, but not for non-PII cyber exposures such as supply chain or manufacturing disruption, or “tangible damage resulting from an intangible peril.” Those solutions will continue to evolve as the industry gathers more actuarial benchmarking data, he said.
Specialty Drugs Show No Signs of Slowing Down
A decade ago, high-cost specialty drugs were commonly referred to as “injectable drugs” and were used to treat conditions not typically covered in workers’ compensation, such as cancer, rheumatoid arthritis and multiple sclerosis.
“Today, however, new specialty drugs are emerging that will be used to treat other chronic and inflammatory conditions,” said Joe Boures, president and CEO of Healthcare Solutions, an Optum company providing specialized pharmacy benefit management services to the workers’ compensation market.
“Payers in the workers’ comp market are just beginning to feel the cost impact of greater utilization of these drugs, which come with expensive price tags.”
Specialty drugs are often manufactured using biologic rather than chemical methods, and they are no longer just administered by injections. New specialty drugs can also be inhaled or taken orally, likely contributing to the rise in their utilization.
“There isn’t a standard definition of specialty drugs, but they are generally defined as being complex to manufacture, costly, require specialty handling and distribution, and they difficult for patients to take without ongoing clinical support or may require administration by a health care provider,” said Boures.
In 2014, more than a quarter of all new therapies that the FDA approved were through its biologics division. Biologics, and similar therapies, are representative of a future trend in prescription drug spend.
“As the fastest growing costs in health care today, specialty drugs have the potential to change the way prescription benefits are provided in the future,” said Jim Andrews, executive vice president of pharmacy for Healthcare Solutions.
Workers’ Compensation payers may not recognize how specialty drugs are affecting their drug spend.
Specialty drugs like Enbrel®, Humira® and Synvisc® can be processed in conjunction with other medical procedures and, therefore, not recognized by payers as a pharmacy expense.
This leaves payers with little visibility into the costs of these medications within their book of business and a lack of tools to control these costs.
Due to the high costs of specialty medications, special due diligence should be utilized when claimants receive these medications, up to and including utilization review, said Andrews.
“Healthcare Solutions recommends that claimants using specialty drugs are monitored for proper medication handling and that the medication is administered appropriately, as well as monitoring the claimant to determine whether the medication is having its desired results and if there are any side effects,” he said.
“At $1,000 per pill for some of these specialty medications, making sure a claimant can tolerate the side effects becomes vital to making sure the claimant achieves the desired outcomes.”
Hepatitis C drugs have made their way to the workers’ compensation market, largely through coverage of healthcare workers, who have exposure to the disease.
“Traditional drug treatments that began in the 1990’s had a success rate of 6% and costs ranging from $1,800 to over $88,000,” said Andrews.
“The new Hepatitis C specialty medications have a treatment success rate of 94-100%, but cost between $90,000 and $226,000.”
Although the new treatments include higher drug costs, the payer’s overall medical costs may actually decrease if the Hep C patient would have required a liver transplant as part of the course of treatment without the drugs.
While the release of new Hepatitis C medications in 2014 demonstrated the potential impact specialty medications can have on workers’ compensation payers, there are some specialty medications under development that target more common conditions in workers’ compensation.
Pfizer Inc. and Eli Lilly and Company are currently developing tanezumab, a new, non-narcotic medication to treat chronic pain, which is common in workers’ compensation claims.
Tanezumab has demonstrated benefits of reducing pain in clinical trials and may provide non-addictive pain relief to claimants in the future. This may change how pain management is treated in the future.
Healthcare Solutions has a specialty medication program that provides payers discounted rates and management oversight of claimants receiving specialty medications.
Through the paper bill process, Healthcare Solutions aids payers in identifying specialty drugs and works with adjusters and physicians to move claimants into the specialty network.
A central feature of the program is that claimants are assigned to a clinical pharmacist or a registered nurse with specialty pharmacy training for consistent care with one-on-one consultations and ongoing case management.
The program provides patients with education and counseling, guidance on symptoms related to their medical conditions and drug side effects, proactive intervention for medication non-adherence, and prospective refill reminder and follow-up calls.
“The goal is to improve patient outcomes and reduce total costs of care,” said Boures.