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Workers' Comp Initiatives
Measurable Benefits in Health and Safety
The integration of workplace health initiatives and safety culture makes sense as a method to boost overall employee productivity, reduce accidents and shorten recovery time, but few employers really recognize the business value that integration offers and the leverage it gives them with investors.
“From both an individual’s and an organization’s perspective, health impacts work and safety, and work and safety impacts health,” said Dr. Ron Leoppke, past president of the American College of Occupational and Environmental Medicine (ACOEM).
Dr. Ron Leoppke, past president, American College of Occupational and Environmental Medicine
Loeppke and Todd Hohn, global director of workplace health and safety with Underwriters Laboratories (UL), recently authored a guidance paper detailing a multi-phase implementation program to help companies of any size, in any industry, meld their health and safety measures into one unified program.
A key component of the resulting Integrated Health and Safety Model is the inclusion of a new index to measure the initiative’s effectiveness by standard metrics, following the format of the Dow Jones Sustainability Index (DJSI). The creation of the index is a response to a call among workplace health experts for standardized, metrics-based method for reporting of health and safety data. The index “would translate the impact of employer health and safety programs into business value for the investment community, measuring the effectiveness of employers’ health and safety programming.”
Since its launch in 1999, the Dow Jones index “is globally recognized by investors as the leading standard for corporate sustainability, tracking the performance of the world’s leading companies,” according to the guidance paper, titled “Integrating Health and Safety in the Workplace: How Closely Aligning Health and Safety Strategies Can Yield Measurable Benefits.”
By aligning with the Dow Jones format — measuring economic, environmental and social impacts — ACOEM and UL hope to place health and safety on the same level as other sustainable business practices and attract an equal amount of corporate attention.
Measures of economic impacts include number of workers comp claims filed annually, prevalence of absenteeism and presenteeism, and employee turnover rate. Environmental measures include accident/incident rate and past OSHA inspection data. Social impact measures include wellness program participation, prevalence of chronic health conditions, and workplace demographics.
The index “incorporates forward-looking indicators, which are more objective in nature and can be used by a variety of organizations,” Hohn said. He added that the model as a whole is built on five cornerstones: organizational structure alignment, involvement across an organization, analysis, transparency and metrics. The index categories aim to include top tier leadership and management all the way down to those with specific roles in disability management and health and productivity programming.
Return on Investment
“Cost of accidents are going up due to an increase in medical costs and indemnity,” Hohn said. “The driver is health and well-being in the workplace, because accidents are already low in the U.S. Obesity and other co-morbidities are making recovery longer and costs higher.”
Todd Hohn, global director of workplace health and safety, Underwriters Laboratories
According to the paper, “Since 1970, workplace fatalities have been reduced by more than 65 percent and injury and illness rates have declined by 67 percent, according to the Occupational Safety and Health Administration (OSHA). Worker deaths have been reduced from approximately 38 per day in 1970 to 12 per day in 2012.”
A person with a pre-existing chronic condition, however, is twice as likely to develop an on-the-job injury or illness, and the growing prevalence of obesity, diabetes, hypertension, and other related issues is complicating the workplace health landscape.
“Every $1 in medical/pharmaceutical costs is equal to $2.30 in productivity costs,” Hohn said. The connection between workplace health and safety and overall business performance has received increased recognition “because of converging financial, political and cultural trends,” said Leoppke.
Loeppke pointed to several recipients of ACOEM’s Corporate Health Achievement Award — who have documented success with health, safety and environmental programs — as examples of how those efforts translate into business value.
ACOEM tracked the stock market performance of these companies through various market simulations. In one scenario that excluded outliers, the study found that a theoretical $10,000 investment made in mid-1999 would grow, on average, to $19,404.12 by mid-2012, a 94 percent return on investment. The rest of the S&P 500 saw a decrease in ROI by .77 percent over the same period.
According to Hohn, it can take anywhere from six to 18 months for employers to see success from an integrated health and safety system, but the payoff is real.
ACOEM and UL’s guidance paper defines integrated health and safety as “the strategic and systematic integration of distinct health and safety programs and policies into a continuum of organizational, personal, occupational, community, and environmental activities that are replicable, measurable, and integrated across institutional silos, enhancing the overall health and well-being of workers and their families.”
If more employers adopt an integrated model based on the holistic viewpoint ACOEM and UL present, the U.S could be looking at not just a healthier workforce, but a healthier economic environment as well.
