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Standing guard over workers' compensation.

THE SOARING INCREASE IN workers' compensation costs is an equal opportunity plight that pervades the bottom line of government as well as private industry. The Massachusetts National Guard would at first glance seem an unlikely victim of workers' compensation difficulties. However, with over 2,000 full-time federal personnel, the majority of whom are significantly exposed to the risk of on-the-job injuries in the areas of aircraft and heavy equipment maintenance and material handling, the possibility becomes much more real. The Guard responded to its own workers' compensation cost spiral as they would to any other natural or man-made disaster: by meeting it head-on with a carefully planned three-pronged approach aimed at reducing costs.

In 1988, the Massachusetts National Guard initiated an aggressive program to control and reduce its escalating workers' compensation costs based on intensive case management, an institutionalized accident prevention program and a carefully managed return-to-work program. In turn, this program had the full commitment of a management and labor team devoted to cost reduction, accident avoidance and back-to-work goals.

To control medical care costs the Guard contracted the intensive case management of some workers' compensation cases to occupational health nurses at a hospital in Eastern Massachusetts. These particular cases required specialized knowledge and communication skills in dealing with the attending physicians and the injured workers. The cost of employing the nurses was small compared to the savings associated with assisting the injured workers in the recovery process and in their return to work.

The Guard's accident prevention program resulted in more than a 36 percent reduction in lost-time injuries over the four-year period from fiscal years 1988 through 1991. The main components of this program were setting safety standards and holding line managers and supervisors responsible for accidents or unsafe conditions in their managerial areas. Management and bargaining unit personnel were apprised that nearly 80 percent of workplace accidents are the result of human error, and that in nearly 70 percent of industrial accidents one of the contributing causes is a supervisory deficiency. This awareness rapidly changed the mind-set of both employees and supervisors who were in a position to reduce accidents.

The program also relied on the use of written safety standards, accident and performance appraisals, and quarterly safety council meetings in which accidents and unsafe practices were reviewed and corrective action taken. In addition, safety and occupational health training was promoted to assist in accident prevention.

To ensure compliance with safety standards, the Guard incorporated job safety elements in the performance evaluation and appraisal standards used to evaluate both supervisory and non-supervisory personnel. The required duties for Guard workers include support of the safety and occupational health programs and observation and compliance with all safety rules and regulations established for the facility. Responsibility and accountability were the key factors leading to the success of the accident prevention program.

A safety council, made up of personnel involved in workers' compensation issues, reviewed National Guard claims and attempted to determine causes and remedial action for each accident. In a recent analysis, the council found that workers' compensation costs stemming from back strain were three times higher than costs associated with any other injury. Consequently, the Guard purchased commercial videos and brochures on back injury prevention and instituted safe lifting programs to be used in curbing the occurrence of disabling injuries.

The return-to-work program was based on the idea that the injured employee should return to work as soon as he or she is capable of performing any position in the workplace. Getting employees back to work as soon as possible takes them off the Guard's workers' compensation rolls and saves them the cost of recruiting, hiring and training new Guardsmen and women. The concept of job hardening was applied whereby the hours, duties or expectations required of the employee are gradually resumed as physical capabilities improve. The Guard created positions that could accommodate the injured employee, even if only for a portion of the day and at a reduced task level. Aircraft and automotive mechanics, for example, were returned to sedentary positions such as parts clerks or production controllers for four hours per day to accommodate their disability. In addition, internal transfers were used if job modification or job hardening opportunities were not possible in the employee's former area.

The ability of an injured employee to return to work was based on a continuous evaluation of the disability. Letters to the workers and their attending physicians determined the current status of their disabilities. Most injured employees were anxious to return to work as soon as possible and the return-to-work program had the added effect of increasing employee goodwill, morale and loyalty.

The success of the Massachusetts National Guard programs can be measured by observing and comparing workers' compensation costs. For the Army National Guard nationwide, costs rose by over 24 percent between fiscal years 1988 and 1991. During this same period, The Massachusetts Army National Guard costs fell from $711,000 in fiscal year 1988 to $543,000 in fiscal year 1991, a decrease of nearly 24 percent. This significant reduction is even more remarkable when compard to the rapid rise in workers' compensation costs in both the private and public sectors of Massachusetts, which far exceeds the national average. Indeed, Massachusetts has the third highest average workers' compensation cost per case among the 50 states. Total workers' compensation costs in the state have increased more than 200 percent from $800 million in 1985 to $2.5 billion in 1990. During this same period, the cost of workers' compensation for the National Guard nationwide rose by more than 100 percent from $10.5 million to over $21 million.

A large portion of the overall increase in workers' compensation costs was directly due to escalating medical costs. During the 1980s, the medical portion of workers' compensation benefits rose by 240 percent compared to an 83 percent increase in the Medical Price Index. As a result, since 1980 medical payments have increased from approximately 30 percent of total workers' compensation claims to 40 percent in 1990 and are still climbing. Increases in the amounts of lost wages and legal expenses are also contributing to the escalation of workers' compensation costs.

In addition to lowering costs, the Guard programs have been successful in reducing the number of employee injuries, improving job satisfaction and quality of life of the injured workers, and developing a sense of awareness and responsibility for job accidents and safety. The programs that were initially applied in the Army National Guard have since been extended to the Air National Guard, where they have met with similar success. In addition, the workers' compensation programs are the model for other National Guard organizations across the nation.

[Colonel William Gormley III is the personnel manager for the Massachusetts Army National Guard, and Daniel Shimshak is the acting dean of the College of Management at the University of Massachusetts in Boston.]
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Title Annotation:Massachusetts National Guard program reduces costs
Author:Gormley, William; Shimshak, Daniel
Publication:Risk Management
Date:Jun 1, 1992
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