Here’s a scenario given to me by a colleague recently: a retail worker stepped off a ladder when putting up a display at work. She obviously turned her ankle, as swelling developed almost immediately. The worker was taken to a local medical facility, where the clinic performed an examination, took seven series of x-rays, and found no fracture in the foot, ankle, or leg. The provider then issued a $350 set of crutches and wrote the worker off duty for eight weeks.
What about this visit cost the employer the most money? Was it the office visit? Probably not. Though given the number of x-rays, it would’ve been an extended visit, which, by itself, isn’t that costly. How about the x-rays? Again, probably not, though more than $1,000 in radiology costs isn’t cheap. What about the $350 crutches? While outrageously expensive, they still don’t have the greatest financial impact on the employer. Then it must be the time off work, right? Well, sort of.
You see, if that worker (whom we’ll say makes $8 an hour) is off work for eight weeks, it costs about $1,700 for the eight weeks in total temporary disability (TTD). Yet, this alone isn’t the greatest cost.
The greatest cost to this employer isn’t any of the direct costs mentioned. The greatest cost is the amount of money the eight weeks off of work increased the workers’ compensation premium. The direct medical costs incurred by the employer for this visit—whether $1,000 or $2,500—has little long-term impact on the employer’s premiums. Insurers discount direct medical costs 70 percent before they figure premiums. On the other hand, indemnity costs (lost wages and workdays) count against the employer’s workers’ compensation premium 100 percent—and it counts against the employer for three years. In this case, the employer’s worker’s compensation premium was hit about two percentage points by the effects of the one visit. In addition, the employer still has to pay to cover the worker’s shift for eight weeks.
Those who truly specialize in treating injured workers’ understand this concept. It costs a lot of money to keep workers away from the workplace. Full duty should always be the first option, modified (light) duty the second option, and off work completely should be a last resort. When a provider takes a worker off of work for relatively minor injuries, it costs the employer significantly more than just the cost of the visit. It costs them for years to come.
Most of our employer clients understand this concept. They provide limited duty to injured workers if possible. When in doubt, they call us for a conference. If your company is one that doesn’t offer modified duty for your workers or if your medical provider consistently keeps injured workers with limited abilities away from your workplace, it’s time to re-evaluate. Both circumstances, whether company or provider driven, are costing you significant money. IBI