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OK. We here at Risk & Insurance®, along with your bosses in the corner office, have all heard the stories before, either in private or at trade shows.

The laments go something like this: "Come on, boss, how do you expect me to deliver lower numbers next year," says a workers' comp manager. "You're cutting my budget, workers' comp costs are going through the roof and the state legislature is adding five new laws we have to comply with. Life's just not fair."

So, for those workers' comp managers who want a few ideas on how their peers are coping in the face of an ultratough workers' comp environment, here are four programs, the first two in the private sector and the last two in the public sector, that might give you some ideas.

PROFITING FROM PRO FIT

There's no shortage of "heavy lifting" to be done at Cox Communications OCPV in Rancho Santa Margarita, Calif.

That's because dozens of the company's 800 workers spend most of their days climbing and crawling around Southern California. Their tasks include scaling 28-foot ladders, crawling through attics and lugging 30-pound tool packs--and this in a state where it's easier to have a workers' compensation claim accepted than it is for illegal immigrants to get permanent residency.

Getting the work done didn't come cheap for Cox and its workers. In 2000, it had a total of 38 workers' comp claims.

But with the help of several loss-prevention and safety programs, the company has seen its claims frequency decline to 28 claims in 2001, 12 claims in 2002, 12 claims in 2003 and 13 claims last year. The average cost per claim, however, has plummeted, from $37,283 in 2000, to $9,549 in 2001, to $8,746 in 2002, to $4,236 in 2003 and a stunning $2,088 last year.

Cox managers say the numbers have declined because of aggressive loss-prevention and safety programs. Those programs include PRO FIT, a physical-fitness program aimed at injury prevention and muscle strengthening. The program, which includes monetary incentives to join, is endorsed by the company's workers' comp attorney and clinic doctors, according to Elise A. Fischer, the company's risk manager.

Cox managers also say the company tests workers before they begin jobs to see if they are capable of performing the physical tasks required of them. Tests are given to all new hires in 23 different positions.

And finally, company managers say they've customized their vehicle fleet, paying attention to driving ergonomics. Fischer says the vehicles were redesigned with the help of field supervisors and drivers.

WINNING THE LAW OF LARGE NUMBERS

At Plano, Texas-based Frito-Lay Inc., compensation and disability managers don't fool around. Not when they're in charge of 45,000 employees and a fleet of 18,500 vehicles. Not when their workers' comp losses, five years ago, came in at $55.68 million. Not when their lost time days per 100 employees came to 127 days.

In "Perot Country"--Frito-Lay is down the street from Ross Perot's EDS on Legacy Drive--big numbers add up. They add up when they're on the way up, and they add up when they're on the way down.

With 5,198 injuries in 2000, the number of claims has declined since. In 2001, the company reported 4,742 claims. The number dropped to 4,581 claims in 2002. It dropped again to 4,024 in 2003, before dropping yet again to 3,512 last year.

Workers' comp losses, which came in at $55.68 million in 2000, rose slightly to $56.73 in 2001, and then began to decline. In 2002, losses were $50.64 million, and declined again in 2003 to $49.12 million and to $48.23 million last year.

Keith Reynolds, vice president of risk management, says the claims have dropped after peaking in 1999 at 5,477 because of a series of improvements in the company's workers' comp programs.

One new strategy to reduce the claims frequency was the introduction, several years ago, of the Voluntary Protection Program, which the company instituted with the help of the Occupational Safety and Health Administration.

The VPP Star Safety certification program, Reynolds says, includes site inspections, interviews with employees and measurements of safety practices using more than one variable. As of last June, 24 Frito-Lay factories were "VPP Star Certified," according to Reynolds.

It is the intention of the company, along with the implementation of mandatory job rotation and involving employees more regularly in peer-to-peer observations and coaching, to certify all of its 37 factories and warehouses.

The strategy, says Reynolds, is for the company to one day lay claim to becoming "the safest workplace in America."

BURNING PAST BENCHMARKS

Compared with leaders of other municipal workers' comp programs, Jim Bradshaw, the risk manager of the city of Little Rock, Ark., deals in relatively small numbers. That is, except when it comes to percentage differences relative to the benchmarks.

In the four-year period from 1999 to 2003, the city has exceeded its benchmarks by anywhere from 39 percent to 70 percent in each of the following categories: ultimate number of claims, claims per $1 million of payroll, average cost per claim, loss costs per $100 of payroll and total direct losses.

Bradshaw says the city's become "quite successful" in managing its exposures, and that millions of dollars not spent on claims have been redirected toward other municipal programs.

In the early 1990s, says Bradshaw, the average annual cost of the workers' comp program was more than $1.5 million. This year, the budget figure for the program is hovering around $968,000.

City leaders have several programs to thank for keeping their workers' comp program humming along. They include a "Beat the Heat" initiative to cut down on heat-related claims.

As part of the Beat the Heat program, for example, employees have been taught to recognize symptoms of heat-related illnesses. The average cost of heat-related incidents has evaporated, from an average cost per incident of $2,594 in 2000 and 2001, to $270 per incident last year. There were 12 heat-related incidents in 2000 and 2001. Last year there were only four.

In addition to standbys such as a drug and alcohol awareness program and modified-duty initiatives, the city's implemented faster reporting procedures thanks to a "Nurse on Call" program, an outsourced reporting service based in Scottsdale, Ariz.

"The most important aspect of this reporting mechanism is to ensure that the injured employee receives the best available treatment appropriate to the injury," he says.

THROWING IT INTO REVERSE

When it comes to workers' comp costs, reverse is the favorite gear of the California State Automobile Association.

Even as the total number of employees rose from 6,277 people in 2000 to 6,520 in 2004, the company's claims frequency dropped, from 510 incidents in 2000 to 293 last year.

Costs per claim over the same period also declined, from $17,721 in 2000 to $15,926 in 2004, according to company data, despite increases nationwide in medical costs.

Company managers say this is the result of new procedures designed to cut down on losses before the claim is filed. This strategy included CSAA revamping its employee-benefits program, investing more than $3.5 million on upgrading desktop ergonomics and office furniture, requiring workers using desktop computers to take an online ergonomic training program known as Cardinus Plus, instituting "road shows" among the company's other offices, incorporating a behavioral survey as part of its pre-employment requirement, pushing for a redesign of cabs of the company's trucks, and implementing a drug-screening policy designed to weed out employees with a higher propensity of filing a workers' comp claim

Moving to post-loss strategy changes, Sue Kelly, manager of risk control for CSAA, says that earlier this year, CSAA put together a written analysis of essential jobs at the company, and allowed doctors and ergonomic experts to watch workers perform tasks at their desk using video.

This helped doctors and ergonomics experts see how workers performed their tasks.

That may not sound like much of a breakthrough. But in California, where state-mandated compensation rules literally gave workers more incentive to stay at home than to return to work, every means to coax workers back into the office post-injury counts.

CYRIL TUOHY is managing editor of Risk & Insurance®.

November 1, 2005

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