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Risk Manager
Beaverton School District
Beaverton, Ore.

Dan Thomas indoctrinates risk management into the academic and social culture.

The Beaverton School District has the safest table saws in the world, according to Dan Thomas, the risk manager for the Beaverton, Ore., school district. As the second largest school district in the state, Beaverton has 50 school campuses serving 37,000 students. That is a lot of kids to keep safe and is also a big challenge if you want to create uniform polices.

According to Dave Eiser, senior vice president and western regional manager of public entities of MunichRe, the district's excess carrier, before Thomas took over as risk manager, the shop students used various wood-working tools in classrooms where strict safety procedures were already in place, while the drama students were in the habit of using the very same tools with the very same sharp edges to construct scenery with little supervision.

No students had gotten hurt building theater sets, thankfully, but Thomas' philosophy is complete loss control. "We keep kids safer. If they see the schools as safe places to be (the schools) are better learning environments," Thomas said. That's why it made perfect sense for Thomas to purchase state of the art table saws, costing about $850 each. "They have sensors to detect human body moisture, so they put the brake on in a fraction of a second so they (the students) don't lose fingers," Eiser explained.

That's Thomas' attitude toward all risk management issues. When he arrived at the school district in 1989 as the safety manager, the risk program was more reactive, he said. But when he became risk manager 1.5 years later, he used his creativity, charm and witty personality to turn it all around into a proactive approach.

He started by assessing the risk at every school. By 1993, he had a risk program operation in every school. For example, at the elementary schools, the kids were getting hurt on the playground equipment. So he replaced the equipment with safer equipment and improved supervision. Prior to 1995, the schools had $60,000 in claims but in 1995 through 1997, once his loss control program was taking hold, they had no claims and paid out a total of just $800 for one fractured wrist.

"The whole model he introduced enhanced and really cultivated and developed the exposure reduction model," said Eisner. "It was built out of mitigating risk and avoiding claims." Thomas calls it a "pre-loss" model.

That's why his self-insured program works so well for him. He has a $500,000 cap per occurrence and in 19 years only filed one claim with his excess carrier. He has a full-time loss control employee who conducts loss control inspections at all schools annually. His full-time safety director, who's also a trained, licensed police officer, oversees and implements school district emergency procedures.

In fact, Thomas has teamed up with the community police, fire departments and additional county authorities so the district can run regular safety and emergency drills and teach the students and administration how to react in a crisis situation.

"He's been proactive in establishing risk management and loss control programs that are geared towards risk identification and prevention that benefit the entire Beaverton community," said Eiser.

"You can't self-insure unless you know what you're insuring," Thomas said. Thomas' goal is to make risk management part of the culture of the organization.

"The more risk management is embraced, it can be woven into the fabric," he said. So he tries to avoid using insurance jargon. "You can get people excited about risk management in terms they would value, like keep children safer," he said.

His only major claim happened on Easter Sunday in April 2000--an arson at Beaver Acres Elementary School. The damage was significant, including the loss of six classrooms. The entire administration pitched in and came up with a cost-saving plan. First, they put up a big sign--saying "Welcome to Camp Beaver Acres"--because they decided to adopt a more fun approach to living with the burned school while it was repaired, instead of "woe is me."

Instead of renting six portable classrooms, which would have cost more than $100,000 including permits, plumbing, utilities and such, the district decided to just divide the gym into six classrooms.

They found old cubicle dividers in a warehouse to set up the classrooms and 1,000 tennis balls to cut in half and put on the bottoms of the dividers and chairs so they wouldn't scratch the gym floor. That saved them another $100,000.

Because it didn't have to install or purchase another HVAC system, the district saved an additional $100,000. So when the insurance carrier asked who was handling the loss, "We said, 'We will,' and saved more than $300,000 over the cost of the claim, Thomas said. While the claim could have cost $1.2 million, instead it cost $907,000 and the insurance company cut the district a check for $407,000.

"I still have a copy of the check on my wall," said Thomas. The reconstruction of the school was completed by the first of June and Camp Beaver Acres closed its doors.

"We try to be original thinkers and problem-solvers," Thomas said.

--By Susan Gurevitz

To Dan Thomas, the idea of risk management extends into nearly every nook and cranny of the entire Beaverton Oregon School District. But it just doesn't stop there. He has set up partnership breakfasts with key community constituencies--police, fire, emergency management, and parks and recreation personnel. The objective is to help the entire community address safety issues before a catastrophe happens.

For his communitywide effort to create a culture of safety in Beaverton, Dan Thomas is also recognized as a Responsibility Leader. And he's been innovative and creative trying to be successful in his mission. For example, he's brought together more than 100 people at a single community session to role-play live crisis scenarios.

Director of Parish Financial Services and Risk Management
Archdiocese of Indianapolis
Indianapolis

Mike Witka has created a place for Roman Catholic risk managers to share their concerns and methods.

When Mike Witka set up the Diocesan Risk Managers' Forum two years ago for Diocese risk managers and finance people to ask questions and share ideas, little did he know that one of the first questions would go something like this:

A risk manager wanted to know how to cover a church's risk when a funeral home leaves a body overnight in the church after the service. Apparently, it's becoming more common. The church then has the care, custody and control of the body and the exposure should someone steal the body. The solution was to ask funeral homes to indemnify churches by naming them as additional insureds under its professional liability coverage. Fortunately, to Witka's knowledge, no bodies have been stolen.

Not all topics are that esoteric. The Forum also features a more personal list-serve that meets monthly. "The subjects are what they want to talk about," said Witka. "It's the issues that are important to a particular diocese at that time." Topics have included proper limits, valuation of buildings, 15-passenger van safety and insurance archeology. That last category, sometimes known as reconstructive insurance, involves going through archives to find old policies, say from the 1970s, to see how different coverages were then. "The limits then were very low," Witka said.

"Depending on the subject, there could be 15 or 20 people on the phone (or) we could have a couple hundred if everyone is involved," said Witka. "In every diocese not everyone has someone in insurance, so we hear from them only during renewal time," he said.

"The catalyst (for setting up the network) was bringing risk managers together," said Peter Persuitti, managing director of the nonprofit and religious practice of Arthur J. Gallagher & Co. "There is no national professional organization for this emerging group, nor a network or list-serve for them to share ideas and communicate," said Persuitti. It made sense for Witka to take the lead because he's a former insurance broker so "he can appreciate that perspective and understands what our job is," said Persuitti.

Witka also "troubleshoots" for other parishes--chief financial officers might call on him to discuss financial or loss control issues. "He's just a genuine good person," Persuitti said.

Network sessions are held every month in either a teleconference or webinar format. Sometimes a third-party expert is brought in to discuss a specific topic.

There are 194 Roman Catholic dioceses around the country, yet only about 30 to 40 of them have risk managers, according to Persuitti. In many cases the finance person or whoever puts together the budget wears the risk management hat too.

That might mean someone with no risk management training might be managing more than $1 billion in property, Witka said. That's all the more reason why that person needs the network.

As the network continues to grow, Witka's next project--working in conjunction with Persuitti--is to develop a program called "Common Ground," which will deal with global insurance practices.

--By Susan Gurevitz

Director of Integrated Disability Management
Los Angeles Unified School District
Los Angeles

Dawn Watkins is saving money in Los Angeles for co-workers and to better educate kids.

For nearly a year, Dawn Watkins wore two risk management hats--interim chief risk officer and director of integrated disability management--the latter being her real job. By combining both positions until the Los Angeles Unified School District, the second largest school district in the country, hired a new chief risk officer, she handled health benefits, disability management, general liability, state and federal leave administration, absence management and workers' comp. "She had taken on this responsibility in a temporary capacity and showed tremendous leadership as an innovator within the education community," said Sherri Stevens, medical operations officer at Sedgwick Claims Management Service, LAUSD's TPA.

Watkins has spent most of her career in workers' comp, "not just to decrease the cost to LAUSD but to also decrease the cost to my co-workers," she said. LAUSD is 100 percent self-insured, with no excess carrier, which is possible due to California's workers' comp structure, Watkins explained. LAUSD has an operating budget of $7 billion and 100,000 employees. "That makes cost savings all the more important," she said. "We're in the business to educate the children, and every dollar we spend that is not supporting education is taking away from the children."

The pharmacy is one of their biggest cost drivers. So she partnered with her TPA and a prescription drug vendor (Medservco) to launch her cost-containment network and convince workers, doctors and pharmacies to all do their part to use the network and keep costs down. She attacked it from a couple of different angles. She got MSC to secure discounted drug prices, as long as the workers either filled their prescriptions through the mail-order system or at an approved pharmacy using their network card. Watkins is particularly fond of the mail-order service because it's cheaper and a patient can get two or three months of refills in one order.

"It's convenient, people are more likely to take their medication, so they could recover sooner and return to the schools," said Watkins.

Also, every year Watkins looks at a list of the most expensive of her 200 vendors. She found that pharmacies were paid more than $1 million per year. " 'Why?' was my first question," she said. "After the first fill, we want them in our cost-containment network."

So she set out to identify all employees who were taking medication for chronic conditions and for acute needs, called them and asked them if they knew how to use the cost-containment network.

She had Sedgwick and MSC conduct the phone calls. "We've got to reach out to our employees," she said, "especially those with chronic conditions, by making it easy, and letting them know that I care about the employee."

She wants each employee to get comfortable with the cost-containment network, to the point that it becomes second nature. That's one of the reasons why it's so important to contact each employee.

"We'll provide them the information so they can make an informed decision," she said.

For example, they'll know to go to the approved pharmacies. If it's an acute injury the emphasis will be on getting drugs at the pharmacy, but the emphasis for chronic injuries will be on mail order.

"In order to maintain this, we have to get the claims examiners and physicians on board, on every case, a reminder to the injured worker and the doctor that we have a cost-containment network," Watkins said.

And it seems to be working quite well. From a baseline penetration rate of 53.7 percent in April 2007, the rate had ballooned to 90.8 percent by April 2008.

--By Susan Gurevitz

Safety Director
City of Little Rock
Little rock, Ark.

Revamping "old school" thinking by cutting waste and finding interim work for injured workers.

When Michael Knott arrived in Little Rock in 1993 to handle workers' comp safety and loss control duties, he was astonished at what he found. "Nobody was spearheading it," he said. Workers' comp costs hovered at $1.9 million annually due to the use of what he called "an antiquated third-party system."

He was also amazed at what he called the "abuse of the system." For example, the city was paying a $50,000 annual retainer to an attorney, and only one person had ever filed a lawsuit against the city (and even that lawsuit was later dropped). About 350 claims were filed each year, but the biggest single expense was lost time. Injured workers were using their personal doctors. "Everything was bad," he said.

Referring to Knott's dilemma, Paul Binsfeld, CEO of Company Nurse of Scottsdale, Ariz., a workers' comp medical triage service, said, "There's no reason why costs should be this high."

"You can lower the cost and provide workers with a good benefit and cut out the waste at the same time," he said.

So that's what Knott set out to do. He rolled up his sleeves and hired a new TPA to figure out what the injuries were really costing. Then he developed a modified-duty, or return-to-work, program, so he could spread the work over the city's 14 departments. He also had to tweak the existing policies.

"The 'old school' said they didn't want the workers back until they were 100 percent. Meanwhile, they brought in temporary employees making $8 or $9 per hour to file while the real worker is sitting at home making $20 per hour for a sore knee," said Knott. "Why can't the injured employee come in and do a job?" Indeed. That set the foundation for his modified-duty program, transferring people from one department to another where they could work despite their injuries. "I have an injured mechanic working with me now doing filing," he said.

Next, he straightened out the medical system by talking to doctors who were part of the city's PPO system (two clinics and a hospital) about listing worker's restrictions to help manage the modified-duty program. And injured workers now are required to use the city's hospital and clinics.

"They get the employees to the right medical care quickly as opposed to the disappointing care employees generally get," Binsfeld said. Because workers really don't know where to go for medical care, they typically go to the emergency room where they wait for hours, the ER doctors patch you up and tell you to go to your primary care physician. Then your doctor just asks you how long you want to be off work because chances are he's not part of the workers' comp network.

But Knott still had more to do. In 2001 he brought in an electronic triage system, Company Nurse, which manages a "Day of Injury" operation. When a worker gets hurt, they call the triage nurse who refers them to the right medical provider and follows a set protocol--sending a report on the worker, the injury, and the medical setting to the risk manager, the TPA, the RTW coordinator and the medical provider.

And that all happens before the worker even gets to the clinic. If it's a minor injury and based on the doctor's assessment, that worker can quickly be placed in a modified-duty job.

Since Knott has taken over, the average annual cost of the workers' comp program in Little Rock has dropped from $1.9 million in 1993 to $800,000 last year. He said the cost has run around $1 million over the past four or five years. The return-to-work program has saved $200,000 in lost time, Knott said. Binsfeld points out that the city has reduced its lost workdays by nearly 70 percent, while saving more than $15,000 per year by having the nurse triage line channel injured employees to the most appropriate medical treatment facility.

--By Susan Gurevitz

Loss Control Manager
Mayor's Office of Operations
Central Insurance Program
New York City

Weaving together strands of workers' comp claims management for New York City.

Anyone who has toiled in workers' comp knows what it's like to walk into a situation expecting a well-oiled machine and finding a rusty, antiquated boiler instead. "It was stagnant," said Ruben Robles, loss control manager at the New York City Mayor's Office of Operations Central Insurance Program. "They were receiving claims, processing them and seeing what was going to happen. There was some loss control, but it was after the fact."

His first mission was to suggest changes that would enhance the operation. He had to convince senior management of his findings and provide valid reasons why these changes were necessary.

So instead of tearing his hair out, Robles set his sights on turning around the workers' comp program and educating the agencies and employees on the differences between workers' comp and simple health insurance. Robles' office insures more than 1,000 nonprofit agencies that have contracts with the city.

"The plan was to change the overall program, to try to change the culture, and it slowly has changed," said Phil Kagan, account executive, client services, with ACE ESIS, the operation's TPA and insurer that Robles brought in to help make the necessary changes. Shifting the culture was, and still is, no simple task. "He's a dynamic speaker, and each year he gets the agency heads together, like a Workers' Comp 101 class, and also discusses health insurance and makes the distinction between them," said Kagan. That was one of Robles' key problems.

Before Robles' intervention, when someone got hurt, nothing happened with the claim. "A year could go by, well beyond the required 30- to 40-day period."

But after Roble's intervention, 65 percent of all claims were handled within a three- to 15-day period.

Robles faces an unusual problem.

"The workforce needs their jobs, and they're very dedicated. This might be the only source of income for their families," he said.

Consequently, they won't file a claim for an injury and they go to work when they're still injured. But eventually the injury catches up with them and they may end up being out of work for many weeks. "We want to be there for the employee, so the earlier we get them into the claims process, the better effect we have," Robles said. One of Robles' tools has been to automate the system. "He streamlined the process by automating the reporting of an injury," said Kagan, which has not only made the reporting of claims faster and timelier, but has also cut down the use of paper by 50 percent.

His latest project is his return-to-work pilot program he's been operating with what he calls "the fantastic five"--five agencies involved with managed care. "In the past, if you were injured, you just didn't come back. It was part of the culture. With a bad back, you didn't have a RTW program," said Kagan. With the pilot program, if someone's out of work with restrictions, they try to find an agency where he can work.

With the pilot program, the injured employee, with or without limitations or assistance devices, talks one-on-one with a doctor or employer or a claims employee to try to develop a RTW assignment. "Sixty percent of cases get back to work within three months," said Robles. Now, RTW lost time claims average seven days, he said.

--By Susan Gurevitz

General Manager, Risk Assessment & Policy
YMCA of Greater Toronto
Toronto

Creating results in a Canadian YMCA program that counts the perils of rafting among its risks.

Remember when the total risk management program at your local YMCA consisted of a sign on the wall by the pool that said, "Walk, Don't Run?"

You probably won't find that sign at the YMCA of Greater Toronto. What you will find is one of the more sophisticated risk management programs around--an ERM system--that, for starters, dictates an annual risk assessment so management can consider how potential occurrences can affect the Y's achievement of its goals, according to Monica Merrifield, the general manager for risk assessment and policy at the YMCA of Greater Toronto.

"Our business is incredibly complex," said Janet Emmett, vice president, association services of the YMCA of Canada. "One of our biggest risks is the children. We have to think of them in our care," she said. The YMCA of Greater Toronto is the largest nonprofit childcare provider in Canada. It serves 9,400 children annually in 175 facilities across Toronto. The safety issues alone could keep a risk manager up at night.

Their latest policy covers outdoor adventure sports, said Emmett, which includes the summer camps and whitewater rafting and canoeing--"the parents want them to have an adventure," said Emmett. The policy covers staffing and supervision, and all the staff must be properly credentialed or certified, depending on the sport. They also must follow a certain ratio of staff to participant for some of the sports.

But none of this could have been possible if Merrifield hadn't introduced risk management to the Y back in 1993. "I have championed its evolution over the years from an insurance and operational focus to a more strategic, enterprisewide focus at our YMCA," she said.

While still operating the traditional risk management approach, the Y was going through a period of rapid growth, and it started to become clear that the risk strategy it was following just wouldn't do anymore. The charity didn't have the right risk assessment tools and resources, Merrifield said.

"We needed to know what we needed to concentrate our resources on," she said. That was when the Toronto Y started assessing its risks and developed action plans to address key risks. "Within the traditional risk management approach, we did take on policy development and contract review, but we were not getting into the strategic approach of how we were managing risk," she said.

So beginning at the end of 2000, Merrifield embarked on a broader approach to risk management, which put her organization on the road to enterprise risk management. The YMCA of Greater Toronto officially launched Phase I, "Assess the Current State," of its ERM program in 2004. The launch included an assessment of key risks and establishment of a list of top 20 risk profiles. Phase II, "Develop Framework," started in 2006. That program focuses on establishing those responsible for risks and policies and monitoring capacity gaps to manage risk. Phase III, "Integrate ERM," started in 2007 and will run through 2009.

--By Susan Gurevitz