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Barbara Pelletreau's secret to a successful worker's comp program can be summed up in three small words: Keep it simple.

Simple, but stunningly effective, is a fitting way to describe the workers' comp program that Pelletreau helms as director of risk services and systems for the San Francisco-based Catholic Healthcare West, the largest not-for-profit hospital provider in California. In the past four years, CHW--in conjunction with its third-party administrator, Octagon Risk Services, and software provider, Valley Oak Systems--has reduced its total lost days by 27 percent and the frequency of lost-time injuries by 41 percent.

It's even more remarkable considering that only five years ago, the entire hospital system was near financial collapse. A new president and a new philosophy helped steer things back in the right direction. But just when the new administration thought it was nearly out of the red, the actuaries delivered shocking news: CHW was $70 million short in workers' comp. The administration brought in Pelletreau to stop the bleeding.

FROM THE TOP DOWN

Facing a high-risk environment plagued by out-of-control costs, where do you start? At the top, says Pelletreau, who formerly managed the workers' comp program for the University of California. Pelletreau's risk-services team boiled down the workers' comp goals to three key points: Reduce injury frequency; reduce indemnity injuries and lost days; and reduce medical costs. Then they passed off the baton to all 43 hospital presidents.

"I figured out it was divide and conquer," she says, "so I got the hospital president and senior management focused on three things, and I did the rest, meaning manage claims, manage the TPAs, manage the medical--all of the things they can't control."

At the same time, CHW made one profound organizational change that impacted the workers' comp program and its ultimate results. At each facility, the hospital president was asked to designate one member of senior management to serve as "Workers' Comp Champion." In the new reporting structure, the hospital president was directly above the Champion, the workers' comp coordinator directly below--creating a logical and effective bridge between day-to-day workers' comp operations and the hospital's top brass.

The Workers' Comp Champions were chosen from the ranks of various departments, be it human resources, nursing, operations, even information technology. Piling more responsibility onto the plates of busy senior managers, however, didn't exactly make them all jump up and cheer at first. "It was tough because they had other things to take care of that they thought were (more important)," says Rachel Gonzalez, manager of workers' comp for CHW, "and they felt that someone else with a specialty should be taking care of workers' comp."

So CHW sweetened the deal by designing an incentive program awarding senior managers financial bonuses if they met certain targets related to the three key goals. Incentive programs can be dicey, though, and some have even been known to backfire. So Pelletreau built some safeguards into the program. "Nothing is ever easy when it comes to incentives and workers' comp," she says, sighing. "You do not want (a situation where) they can control or have influence over the dollars or the reporting--the total incurred, the amount of reserves and all of that, because we're going to end up with bigger problems."

Some of those problems surfaced early on, when a few people called claims personnel to question the amount of reserves on particular claims and asked to have the reserves lowered. Pelletreau nipped the problem in the bud.

"The rules were, if anybody calls from CHW and asks a claims person why there's money on the claim, the claims person has to let me know immediately," she explains. "Then I'd get on the phone, we'd talk about the cases, and I would say, 'If you want them to lower these reserves, I will personally go through your files, and I will find five or six other cases for you that need another $10,000 or $20,000 on." They stopped asking.

GREEN MEANS GO

Another one of Pelletreau's requirements for the incentive program--and the workers' comp program as a whole--was that it had to be easy to understand. That's why the risk-services group devised scorecards color-coded with the universally understood colors green, yellow and red. Green: You're good to go. Yellow: Ask some questions before proceeding. Red: Whoa, Nelly, you've got some serious work to do!

The scorecards, generated every month for each of the 43 facilities, go to the hospital president, the Champion and the workers' comp coordinator to help them determine if a facility's targets are being met.

"If you want people to change," says Pelletreau, a former nurse and a mother of two, "you have to give them immediate feedback."

For each measurement, CHW uses a benchmarking system, comparing the current statistics to an average of the prior three years' data for key indicators. For instance, a target might be set to reduce indemnity injuries by 30 percent. On its scorecard, a facility with a 30 percent or better reduction would see that measurement in green, while a facility at 21 percent would see it in yellow. A facility at only 8 percent reduction would see red. Pelletreau notes that she also customizes the target figures in some cases, to account for improvement a facility might have already made during the years averaged into the benchmark.

The incentive program is tied to the targets in the same way. Those in the green receive up to an additional 15 percent of the full bonus they're eligible for. Those in the yellow get up to 10 percent. Those in the red are out of luck.

The color-coding system is key, says Pelletreau, because it eliminates the need for people to spend hours unscrambling piles of complex spreadsheets. The scorecards drill down to just the necessary information, and with color-coding, users know in an instant where they stand.

The simple green-yellow-red code has proved so effective, says Pelletreau, that it has since been adopted hospital-system-wide for other applications.

FROM DATA INTO ACTION

All data contained in the scorecards is available quickly and easily, and in further detail, via an internal application accessible to all relevant parties. Pelletreau says simplicity and ease of use are the keys to the success of the program and its scorecard system.

"These people, they don't have time to write reports or run reports," she says. "They need to just click here, click here, push this button and get all the answers."

That's important for workers' comp coordinators, who take the technology to the next level, breaking down the scorecard data department by department. Coordinators are able to generate monthly safety scorecards, outlining each department's injuries and lost days for the month and year-to-date, as well as the causes of each of those injuries.

In essence, the workers' comp coordinators can, in five minutes or less, generate for each department manager a monthly blueprint of where she needs to focus injury-prevention efforts.

Having that level of detail accessible has also fostered a healthy level of interdepartmental communication, Pelletreau adds. If a department manager reads her safety scorecard and sees that another department's procedure is causing injuries, a conversation will occur.

Case in point: It came to the attention of the laundry department manager that laundry workers were suffering overexertion injuries due to laundry bags stuffed too full by the nursing staff. The solution: Black lines were drawn on all the bags indicating the fill limit, and bags stuffed beyond that line would be passed over at pickup time--no exceptions. After a few unclaimed bags, the nursing staff got the picture, and the laundry department's overexertion injury rate began to come down.

The scorecard system is what keeps the entire hospital system focused on meeting workers' comp goals. But there are numerous other elements that contribute to the success of CHW's workers' comp program. Here are some other significant changes that have been put in place in the past four years:

-For specific safety equipment, be it patient-lifting devices or hover mats, each facility designates one or more champions, or "super users," staff members who are ahead of the learning curve and can be used as a resource for other staff members for instruction and encouragement on using the device.

-CHW instituted interfacility conference calls in order to share best practices and to recognize successes of individual facilities.

-Each facility was charged with finding one physician-partner who knew the workers' comp coordinator, the return-to-work policy and all the jobs in the hospital. The physician-partner could come from an affiliated occupational health center, urgent care center or the emergency room, and was tapped to provide initial treatment for workers' comp injuries.

-Workers' comp coordinators took on the job of educating each physician-partner about return-to-work protocols and the availability of transitional-duty or modified-duty assignments.

-Each modified-duty assignment triggers an entry into the claims management system, prompting the workers' comp coordinator to monitor compliance with the duty restrictions to prevent the aggravation of injuries.

-CHW enlisted the help of nurse case managers to work closely with the TPA, and gave them access to the claims system. The nurses did utilization review for every injury to ensure treatment guidelines were being followed.

-CHW made significant investments in training, committing itself to offering adequate training at all levels, from hospital presidents to shift workers.

A HIGHER PURPOSE

As complex and detailed a workers' comp program as CHW now has in place, it is, at its core, refreshingly simple. And that's exactly what Pelletreau had in mind.

"I like to run," Pelletreau, a marathon runner, says, "and the reason is I just have to put on a pair of shoes. I don't have to pump tires, get a water bottle or my bike shoes, put on a helmet. In the end, I'm a very simple person."

Both Pelletreau and Gonzalez say it has been distinctly satisfying to help get the workers' comp program turned around, and to allow the hospital to get back to focusing on its central mission: helping the community.

"It's just gratifying when I see people change their attitudes--it makes me so happy," says Gonzalez.

Adds Pelletreau, "I'm very value-driven and mission-driven, and I just love that they have a mission to give back to the community and serve those that are underprivileged. So if I can make a difference to a company and to free up money to do other things, to make a difference in the community for those that are less fortunate, I just think that is a natural calling--it's just a great company to work for."

MICHELLE KERR is an associate editor of Risk & Insurance®.

November 1, 2005

Copyright 2005© LRP Publications