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2017 Teddy Awards: Honorable Mention

Triage, Transparency and Teamwork

When the City of Surprise, Ariz. got proactive about reining in its claims, it also took steps to get employees engaged in making things better for everyone.
By: | November 1, 2017 • 5 min read

Facing the painful medical cost increases that bedevil so many administrators, the City of Surprise, Arizona, significantly cut its medical expenditures and lost work days by implementing new programs and moving to a self-insured model.

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Historically, Surprise was a member of a municipal risk pool that offered a guaranteed-cost program for workers’ compensation. The program served its purpose for the 15 years Surprise was a member, limiting potential exposure by capping aggregate losses. However, costs and premiums were rising.

When Brian Carmichael assumed the role of risk manager in May 2015, he identified a growing interest in the possibility of self-insurance. In the process, the city conducted a thorough analysis of workers’ compensation and found there was “money being left on the table” in premiums and medical costs. Carmichael’s team began prioritizing changes that needed to be made.

Taking Control With Triage

Carmichael noted that Surprise’s workers’ comp medical expenses, at around $800,000, were far more than they should have been for a city of its size. But the best path for a solution wasn’t immediately clear. The risk management team chose to approach the problem at a grass roots level, enlisting the help of employees to talk about their injury experiences.

Through those conversations, the team noted that the city was relying solely on supervisors to triage or direct care to various medical providers in the event of an injury. With no medical training, supervisors often erred on the side of caution and sent injured workers to the emergency room, sometimes for things as minor as a small cut or sprained ankle.

This resulted in frustratingly long wait times for employees and also high costs for the city.

Brian Carmichael, risk manager, City of Surprise, Ariz.

Carmichael’s team recognized the need for skilled medical triage and decided to search for an appropriate partner. It selected a local company to contract with.

A detailed, in-person training session was given to each department on the new procedure and how it would impact the injury and recovery process. Carmichael said the program evolved over the first few months.

The new procedures allowed the city to gain more control over its claims, including protocols for sending reports and email notifications to all stakeholders during an injury.

The risk management department, including senior adjuster Bretton Jeziorski and adjuster and safety analyst Michelle Boyer, immediately reach out to each injured worker to start investigating and expediting medical care.

“We are all notified within 15 minutes of [an injury], which allows us to reach out directly to them. I think that has been the biggest win for us to have that immediate intervention with our employees,” Carmichael said.

The ability to begin the investigation process sooner is also helping the city to eliminate repeat injuries, driving claims frequency down.

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An increase in transparency about claims costs allows risk management to engage everyone in its push to prevent injuries and improve claims outcomes.

“Being able to show what we are paying and going to departments — from city leadership down to line-level employees — created a culture in which everyone was interested,” he said.

Carmichael said the city saw an “immediate shift” in the entity’s ability to contain costs, dramatically reducing the number of hospital bills that formerly might linger for months before risk management even knew about them.

Between 2015 and 2016, visits to the ER fell by half. Yearly average claim costs fell from $6,584 to $4,220, and workers were receiving better care.

The city also significantly reduced lost workdays by expanding opportunities for return to work. Many employees appreciate having the ability to return to light duty roles at full compensation.

“Oftentimes these employees would go to the ER, never do a follow-up, take a month off from work and just disappear. There were holes in the program,” Carmichael said.

While the City of Surprise lost 572 workdays in 2015, the risk management department was able to reduce that number to only 211 days in 2016.

Inspiring Engagement

Carmichael said that using its new transparency about costs has allowed employees to really see how their participation matters, and to take an active interest in continued improvement. “Their cooperation hasn’t been about compliance but about commitment,” he said.

Numerous suggestions offered by employees in regards to process improvement and tool and equipment modifications have been put into place throughout the City in the past year. To keep that momentum alive, Carmichael said the department speaks to all 1,200 full- and part-time city workers at least every other month.

“Oftentimes employees would go to the ER, never do a follow-up, take a month off from work and just disappear. There were holes in the program.” — Brian Carmichael, risk manager, City of Surprise, Ariz.

The program became so successful the city made the leap to becoming self-insured on July 1, 2017. Whereas most similar programs are administered through a TPA, the City of Surprise has opted to self administer. Carmichael said the team wanted to further contain medical costs by going directly to providers and cutting out any markups in the middle.

Carmichael said this decision has enabled them to negotiate some “unbelievable” rates.

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The city is still protected against catastrophic injuries with a self-insured retention of $500,000 for the general population and $1 million for public safety employees. Surprise also established appropriate reserves that would be three times those limits.

“We’re going to build that and invest the money over the years to reduce the program cost to the employees while still keeping those dollars low,” he said.

Through all these measures, Carmichael said Surprise has been able to reduce workers’ compensation medical expenditures from an average of $800,000 to only $300,000 in two years. And from July to October 2017, there was not a single lost workday.

“We have the buy-in from the employees that it’s in their best interest. They’re being paid. It’s a benefit. If they can be here in some way, they come,” he said. &

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More coverage of the 2017 Teddy Award Winners and Honorable Mentions:

Advocacy Takes Off: At Delta Air Lines, putting employees first is the right thing to do, for employees and employer alike.

 

Proactive Approach to Employee SafetyThe Valley Health System shifted its philosophy on workers’ compensation, putting employee and patient safety at the forefront.

 

Getting It Right: Better coordination of workers’ compensation risk management spelled success for the Massachusetts Port Authority.

 

Carrots: Not SticksAt Rochester Regional Health, the workers’ comp and safety team champion employee engagement and positive reinforcement.

 

Fit for Duty: Recognizing parallels between athletes and public safety officials, the city of Denver made tailored fitness training part of its safety plan.

 

Triage, Transparency and TeamworkWhen the City of Surprise, Ariz. got proactive about reining in its claims, it also took steps to get employees engaged in making things better for everyone.

A Lesson in Leadership: Shared responsibility, data analysis and a commitment to employees are the hallmarks of Benco Dental’s workers’ comp program.

 

Craig Guillot is a writer and photographer, based in New Orleans. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Report: Manufacturing

More Robots Enter Into Manufacturing Industry

With more jobs utilizing technology advancements, manufacturing turns to cobots to help ease talent gaps.
By: | May 1, 2018 • 6 min read

The U.S. manufacturing industry is at a crossroads.

Faced with a shortfall of as many as two million workers between now and 2025, the sector needs to either reinvent itself by making it a more attractive career choice for college and high school graduates or face extinction. It also needs to shed its image as a dull, unfashionable place to work, where employees are stuck in dead-end repetitive jobs.

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Added to that are the multiple risks caused by the increasing use of automation, sensors and collaborative robots (cobots) in the manufacturing process, including product defects and worker injuries. That’s not to mention the increased exposure to cyber attacks as manufacturers and their facilities become more globally interconnected through the use of smart technology.

If the industry wishes to continue to move forward at its current rapid pace, then manufacturers need to work with schools, governments and the community to provide educational outreach and apprenticeship programs. They must change the perception of the industry and attract new talent. They also need to understand and to mitigate the risks presented by the increased use of technology in the manufacturing process.

“Loss of knowledge due to movement of experienced workers, negative perception of the manufacturing industry and shortages of STEM (science, technology, engineering and math) and skilled production workers are driving the talent gap,” said Ben Dollar, principal, Deloitte Consulting.

“The risks associated with this are broad and span the entire value chain — [including]  limitations to innovation, product development, meeting production goals, developing suppliers, meeting customer demand and quality.”

The Talent Gap

Manufacturing companies are rapidly expanding. With too few skilled workers coming in to fill newly created positions, the talent gap is widening. That has been exacerbated by the gradual drain of knowledge and expertise as baby boomers retire and a decline in technical education programs in public high schools.

Ben Dollar, principal, Deloitte Consulting

“Most of the millennials want to work for an Amazon, Google or Yahoo, because they seem like fun places to work and there’s a real sense of community involvement,” said Dan Holden, manager of corporate risk and insurance, Daimler Trucks North America. “In contrast, the manufacturing industry represents the ‘old school’ where your father and grandfather used to work.

“But nothing could be further from the truth: We offer almost limitless opportunities in engineering and IT, working in fields such as electric cars and autonomous driving.”

To dispel this myth, Holden said Daimler’s Educational Outreach Program assists qualified organizations that support public high school educational programs in STEM, CTE (career technical education) and skilled trades’ career development.

It also runs weeklong technology schools in its manufacturing facilities to encourage students to consider manufacturing as a vocation, he said.

“It’s all essentially a way of introducing ourselves to the younger generation and to present them with an alternative and rewarding career choice,” he said. “It also gives us the opportunity to get across the message that just because we make heavy duty equipment doesn’t mean we can’t be a fun and educational place to work.”

Rise of the Cobot

Automation undoubtedly helps manufacturers increase output and improve efficiency by streamlining production lines. But it’s fraught with its own set of risks, including technical failure, a compromised manufacturing process or worse — shutting down entire assembly lines.

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More technologically advanced machines also require more skilled workers to operate and maintain them. Their absence can in turn hinder the development of new manufacturing products and processes.

Christina Villena, vice president of risk solutions, The Hanover Insurance Group, said the main risk of using cobots is bodily injury to their human coworkers. These cobots are robots that share a physical workspace and interact with humans. To overcome the problem of potential injury, Villena said, cobots are placed in safety cages or use force-limited technology to prevent hazardous contact.

“With advancements in technology, such as the Cloud, there are going to be a host of cyber and other risks associated with them.” — David Carlson, U.S. manufacturing and automobile practice leader, Marsh

“Technology must be in place to prevent cobots from exerting excessive force against a human or exposing them to hazardous tools or chemicals,” she said. “Traditional robots operate within a safety cage to prevent dangerous contact. Failure or absence of these guards has led to injuries and even fatalities.”

The increasing use of interconnected devices and the Cloud to control and collect data from industrial control systems can also leave manufacturers exposed to hacking, said David Carlson, Marsh’s U.S. manufacturing and automobile practice leader. Given the relatively new nature of cyber as a risk, however, he said coverage is still a gray area that must be assessed further.

“With advancements in technology, such as the Cloud, there are going to be a host of cyber and other risks associated with them,” he said. “Therefore, companies need to think beyond the traditional risks, such as workers’ compensation and product liability.”

Another threat, said Bill Spiers, vice president, risk control consulting practice leader, Lockton Companies, is any malfunction of the software used to operate cobots. Then there is the machine not being able to cope with the increased workload when production is ramped up, he said.

“If your software goes wrong, it can stop the machine working or indeed the whole manufacturing process,” he said. “[Or] you might have a worker who is paid by how much they can produce in an hour who decides to turn up the dial, causing the machine to go into overdrive and malfunction.”

Potential Solutions

Spiers said risk managers need to produce a heatmap of their potential exposures in the workplace attached to the use of cobots in the manufacturing process, including safety and business interruption. This can also extend to cyber liability, he said.

“You need to understand the risk, if it’s controllable and, indeed, if it’s insurable,” he said. “By carrying out a full risk assessment, you can determine all of the relevant issues and prioritize them accordingly.”

By using collective learning to understand these issues, Joseph Mayo, president, JW Mayo Consulting, said companies can improve their safety and manufacturing processes.

“Companies need to work collaboratively as an industry to understand this new technology and the problems associated with it.” — Joseph Mayo, president, JW Mayo Consulting

“Companies need to work collaboratively as an industry to understand this new technology and the problems associated with it,” Mayo said. “They can also use detective controls to anticipate these issues and react accordingly by ensuring they have the appropriate controls and coverage in place to deal with them.”

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Manufacturing risks today extend beyond traditional coverage, like workers’ compensation, property, equipment breakdown, automobile, general liability and business interruption, to new risks, such as cyber liability.

It’s key to use a specialized broker and carrier with extensive knowledge and experience of the industry’s unique risks.

Stacie Graham, senior vice president and general manager, Liberty Mutual’s national insurance central division, said there are five key steps companies need to take to protect themselves and their employees against these risks. They include teaching them how to use the equipment properly, maintaining the same high quality of product and having a back-up location, as well as having the right contractual insurance policy language in place and plugging any potential coverage gaps.

“Risk managers need to work closely with their broker and carrier to make sure that they have the right contractual controls in place,” she said. “Secondly, they need to carry out on-site visits to make sure that they have the right safety practices and to identify the potential claims that they need to mitigate against.” &

Alex Wright is a U.K.-based business journalist, who previously was deputy business editor at The Royal Gazette in Bermuda. You can reach him at [email protected]