Recent studies show that a variety of risk factors can contribute to today's rising workers' compensation (WC) claims, including workplace stress and an employee's habits, behaviors and health status, including obesity, cardiovascular disease and diabetes. According to one Duke University Medical Center Study, the average medical claim cost per 100 employees came to $51,019 for obese workers who filed two times the number of claims and just $7,503 for the non-obese.
Additionally, the cost breakdown of WC has changed. Employers used to focus more on the indemnity side, which typically came in at about 60% of the total cost, while only 40% went to actual medical expenses. By contrast, today's WC cost split is 40% or less for indemnity and 60% or more for medical . Now more than ever it is critical for employers to create a healthy and safe work environment in order to minimize the frequency and cost of WC claims.
"Healthier people are more productive, happier and have lower stress levels, help cultivate the desired team environment and have lower turnover and absenteeism - all things that bring efficiency to a work environment," said Tom Heebner, CPS, ARM, ABCP, Vice President, Risk Services Division, HUB International.
What can businesses do?
While each industry and company faces its own unique risks, there are four major areas that impact WC claims in severity and frequency:
- The Physical Work Space - Start by eliminating, or at least minimizing, physical risk from the workplace. Ensure that physical conditions that could cause injury are engineered out of the operation and that safety is designed and planned as part of new projects. HUB TIP: Where employees are located in a plant, distribution center and the like, the employer should support a healthy environment by including healthy items in a cafeteria/eatery and vending machines; setting aside areas for stretching/other exercise; offering healthy food options at company meetings and functions; providing access to stairwells, indoor and/or outdoor walking trails, ergonomically correct workstations, etc.
- The Work Itself - Often times the type of work that is required can pose a risk. For example, nailing down plywood on a steep roof, or laying hot tar on a flat roof, can be dangerous. HUB TIP: Assess the required work, establish work rules, train employees to do it safely and provide the necessary tools and protective equipment to perform the job safely.
- Emotional Health of the Worker - Without the right balance between driving worker productivity and ensuring worker safety, emotional stress and anxiety can surface. Without a doubt, the work culture created by the employer affects worker engagement and stress levels. HUB TIP: Create a corporate culture that values health and well being by making sure leaders and supervisors aren't encouraging increased production while ignoring safety. When possible, utilize performance management strategies that engage workers in shared decision-making and also enable shared accountability and rewarding of achievement.
- Physical Health of the Worker - The physical health of a worker is a known indicator impacting the frequency and severity of workplace injury and illness. For example, a healthy worker isn't as likely to slip on a hazardous spill, but will also have an enhanced ability to rehabilitate from injury should they be affected. HUB TIP: Encourage everyday healthy behaviors at work through normal work policies and processes. Consider a formal wellness initiative to support employees in their quest for better health, provide financial incentives to get regular screenings and institute pre- and mid-shift stretching and energy breaks at meetings.
Most employers naturally focus on the first two areas, as required by OSHA (see HUB Connects article on new OSHA requirements), but fall short in the last two because they often feel these areas are the personal responsibility of the workers themselves.
Maintaining a healthy workforce
It is possible to meet the requirements of all four areas simultaneously in order to reduce WC risk and associated costs as well as improve the overall health of employees. This can be done by promoting a healthy work culture through the structural and/or operational integration of all corporate safety and human resources departments and initiatives aimed at promoting employee wellness. In fact, companies who have done this already have seen both a drop in workers' compensation and disability claims by as much as 30% and a decrease in short-time sick leave by as much as 32% .
"It seems so obvious why companies should integrate departments together to work on this holistically, but traditionally departments get busy and have their own individual goals to reach," said Ralph Colao, Health and Performance Officer, HUB International. "When it works, though, it's extremely powerful. However, it takes commitment, effort and a realignment of priorities for many companies."
This may also include tactics like rethinking hiring practices, since hiring the right workers can help meet the demands of the job and can put individuals and the organization as a whole in a better position to succeed. Oftentimes skills can be taught, but alignment with an organization's values and beliefs are more important over the longer term.
HUB risk consultants can help employers optimize their organization's health-related functions in order to maximize worker performance, while reducing costs associated with WC. Contact your local HUB risk consultant to find out more about how they can help your business create a holistic, healthy work culture.
 Buck Consulting survey.
 US Corporate Wellness study.