Curtis Smith
Innovative ways to lower workers’ compensation costs with strategic sourcing.
There's a clear need for keeping workers' compensation costs down, but simply reducing benefits is not a practical answer. Human resources, safety and risk managers in the convenience store industry need to consider innovative approaches to improving employee health and safety while containing workers' compensation costs for the employer. The industry needs healthy employees in order to be productive, and people without effective health care cost employers and society more in the long run.
One viable option is "strategic sourcing." Workplace health care is a strong candidate for outsourcing because of rapidly rising costs, an increasingly complex regulatory environment and the growing need for sophisticated clinical and technical capabilities. Companies partner with providers of specialized occupational healthcare services because of their specific expertise, experience and results in delivering health care onsite and online in the workplace. Innovative, new approaches to containing workers' compensation costs are emerging from outsourced partners.
Why C-Stores Outsource Health Care
There are several reasons why convenience stores outsource health care:
* COST SAVINGS. Reducing workers' compensation costs through improved health services is a key focus. The amount of savings can vary, principally on what the costs are before the strategic outsourcer is brought in. In a hard insurance market where most companies work to limit the annual increase in their health costs, some stores actually see total incurred workers' compensation costs decrease.
* IMPROVED SYSTEMS. Outsourcing firms often achieve better results because they are focused on their core competency: delivering health care in the workplace. They have developed the proprietary systems necessary to be successful, including recruiting and training nurses and doctors who are best suited to workplace health care. These resources cost millions of dollars and take many years to develop. Outsourcing businesses can deliver them economically because the cost is spread over a vast client base.
* SHARPER FOCUS. Freeing key managers' time and efforts to focus on core competencies is a real advantage of outsourcing. For example, companies typically want HR managers hiring, training and supporting the people that are mission-critical to their business, not hiring nurses and overseeing a medical department. The same is true for safety departments, which are often also tasked with other regulatory responsibilities.
* PRODUCTIVITY. Better medical results raise stores' productivity because treating more employees onsite keeps them on the job. Taking preventive measures that support safety helps prevent injuries that could present a drain to workers' compensation costs. Should an injury or illness occur, improving case management and accommodating restrictions also helps employees return to work sooner.
While health care delivery in the convenience store industry is not new, the way it is delivered has recently taken a novel turn. Outsourcing providers have made great strides in offering a variety of innovative services, including patented software, specially trained staff and proprietary systems to deliver injury triage, drug and alcohol testing and background screening services. There are several health care outsourcing services that contribute to cost savings and improved worker safety, some of which have helped many convenience stores reduce injury claims by up to 50%.
Field Notes: UDF Turns to 24/7 Injury Reporting and Triage
When an employee is hurt at work, convenience store managers have few good options for responding. Typically, there is no one on staff at the store with medical training to provide adequate care or even to make a reliable decision about the seriousness of the injury. Sending employees to acute care clinics can incur costs that, in hindsight, were not needed. On the other hand, not sending employees may incur unacceptable risks. After hours and on weekends, emergency departments may be the only available provider—the most expensive choice. Too often owners or insurance managers do not even find out about claims until after the fact.
United Dairy Farmers (UDF) is a good example of a convenience chain using an innovative way to reduce the number of injury claims on the job. Cincinnati-based UDF operates nearly 200 stores throughout Ohio, Kentucky and Indiana. The chain combines the nostalgia of an old-fashioned ice cream parlor with all the benefits of a modern convenience store, and, in many cases, UDF stores are linked alongside full-service gas stations.
When Donna Hadley, UDF's manager of payroll and benefits, was looking for a better way to reduce on-the-job-injury costs, she turned to Medcor's 24/7 injury reporting and triage service. In this type of service, specially trained nurses are available to clients 24 hours a day. Whenever an injury occurs, employees can call a toll-free number and speak directly to a registered nurse. Using proprietary software and physician-designed algorithms, nurses determine the severity of the injury and the best course of action. Unnecessary medical care is avoided. Many cases can be resolved with simple first aid. Store managers can be rest assured that potentially serious cases are referred and never minimized. If the employer's insurance includes a preferred network, the system automatically directs employees to those providers. Translators are also available for employees who are not comfortable speaking English.
"Prior to the triage service, we had an employee injury report hotline: me. A lot of times, messages would be incomplete and I'd spend hours or even days tracking down the right details. Now, I get faxed a comprehensive report almost immediately after an injury occurs."Donna Hadley, UDF's manager of payroll and benefits.
All calls are digitally recorded, providing both deterrence and defense against fraudulent claims. Confidential reports about all incidents are sent to the employer's designated managers within minutes of the call. "Prior to the telephone triage service, many workers were using the emergency room because they didn't have a primary medical care provider, and visits to the ER for a minor injury cost as much as $800 per visit," Hadley said. "Now, the hotline nurse can direct employees to an occupational medical clinic if necessary, where a bill for treating the same injury might be closer to $80. In many cases, the self-care instruction provided by the triage nurse is sufficient, so costs can be avoided all together."
Many convenience stores find that, aside from telephone and online triage and reporting, outsourcing-more "traditional" approaches to a health care services firm can help further control costs and improve employee safety. Two such examples are drug and alcohol testing and background screening.
Drug and Alcohol Testing
Nationwide, one in 10 employees has a drug problem, and alcohol abuse rates are even higher. Drug and alcohol abuse contributes to thousands of workplace injuries and millions of dollars of related costs every year. Customer service, attendance and productivity are also affected. Drug testing is difficult to implement, especially for small worksites like convenience stores. Franchisees are challenged by complex drug laws that can vary by state, privacy regulations and concerns about the speed, cost, accuracy and liabilities of testing.
Solving these problems is worth the effort. Recent studies have shown employers that implement drug testing have reduced workplace injury rates by 51% within two years. These same employers saw an average reduction of 11% in their workers' compensation experience rating when they renew their insurance. When deciding whether to outsource drug and alcohol testing services, there are several important factors to consider. The health care outsourcing firm should offer policy review and development to fit each client; collection sites and 24/7 service anywhere in the country; all necessary forms and supplies; certified labs with GC/MC confirmation; physician medical review; new-hire, random, post-accident, and other tests; rapid and confidential results and reports over a secure Web-based system; and fast and friendly customer service representatives. Finally, the provider's legal staff should ensure all services are in compliance with the laws in each state.
Background Screening
Recruiting good employees is critical to every convenience store operation, and background checks and other new-hire screenings are vital components of this process. Effective screening also reduces turnover, prevents unnecessary training costs and improves retention and morale—all contributing to a great culture. Background screening services should include criminal history, education verification, prior employment confirmation, reference checking, motor vehicle records and credit reports. Health care outsourcing firms should also provide program review and development to ensure each franchisee has the right policy and only uses the screening services they really need and from which they can really benefit. Purchasing screening services that are not required is an unnecessary expenditure that counteracts cost-containing occupational health strategies.
Conclusion
Workplace injury management is one area where improved quality costs less, as is the case with UDF. It is in every convenience store's interest— and every employee's interest—to have a safe workplace, to use best practices in treating injuries when they do occur and to manage cases and regulatory health services effectively. While employee testing, screening and injury prevention is critical, the highest safety provisions do not always guarantee the inevitable. Using on-site and online outsourcing services through a knowledgeable and experienced health care outsource provider puts you in greater control, keeps your occupational health team focused on important issues and significantly reduces workers' compensation costs.
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