Latest survey shows 'opportunities exist' for productivity improvements

Employers seeking to constrain costs and improve productivity may want to take a careful look at the latest Employer Measure of Productivity, Absence and Quality. The annual survey from the National Business Group on Health offers employers a chance to benchmark their efforts against others within their industries and the nation as a whole in several key areas.

The picture shows an overall slight decrease in disability costs to employers from 2008 to 2009. However, the amount is still significant and indicates there are areas where employers can focus on disability management to improve their bottom lines.

"When you step back and look at it as a whole, I think there have been some wins and some losses," said Karen O. Marlo, director of benchmarking and analysis for NBGH. "It shows there have been some improvements in terms of management of these programs and return to work, but there are still a lot of areas for improvement."

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The survey of nearly 700 large and midsized employers includes a total absence metric calculated by taking the combined costs of short- and long-term disability and workers' comp and representing those total costs as a percent of payroll. While the median wage replacement cost decreased to 0.7 percent in 2009 from 0.99 percent in 2008, it still equates to $7 million for a company with a payroll of $1 billion going directly to employees "who are absent from work and not contributing to the productivity and profitability of the company," according to the report.

The survey shows claims incidence for workers' comp decreased in 2009 with the median annual claim incidence per 100 full-time equivalents at 2.6, compared to 3.7 in 2008 and 4.2 in 2007. That contrasts with some recent reports from other organizations that have indicated frequency may be starting to stabilize.

"At this point we're not seeing any trending difference," Marlo said. "Some of that, I'd argue, is attributable to employers focusing on safety and implementing programs that allow them to ensure their employees are following processes and protocols to avoid injury."

Other workers' comp statistics from the survey showed:

The median cost per full-time equivalent -- $287 -- was essentially the same after going up the previous year.
The cost per closed claim in 2009 was $9,301, an increase over 2008's $7,223. It includes wage replacement and medical costs incurred over the lifetime of the claims.
The cost per active claim, which measures wage replacement and medical costs for claims that were active at any time during the year, was essentially unchanged from the previous year, at just over $6,000.
The percentage of claims that were indemnity increased in 2009 to 27 percent from 24.9 percent after remaining almost constant for 2007 and 2008. The actual increase for 2009 was 2.8 percentage points.

In other areas of disability, the report showed there were fewer short-term disability and long-term disability claims and lower short-term disability costs per claim. However, long-term disability claims costs increased by more than 25 percent.

One of the top cost drivers in short-term disability was mental diseases and disorders. However, that was not a cost trigger in group health.

"There's a disconnect," Marlo said. "People aren't getting care on the job and then it becomes them needing to go out on short-term disability."

She said it's an example of an area where employers can improve productivity. "There are opportunities for employers to become more integrated in the productivity and health of their employees to ensure if people put in a claim for short-term disability that we can get them back to work in a timely fashion."

Read more at the WorkersComp Forum homepage.

February 10, 2011

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