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The Real Cost of Accidents

Contractors need to identify additional ways to maintain good profit margins during an economic downturn and slow recovery. In today’s low-margin environment, a return-to-work (RTW) process is no longer simply an option. Regardless of the company size, injury management needs to become an owner or boardroom issue. A RTW process should become part of a company’s business solution for enhanced profit margins.

The company and its employees may face risk when they step onto the jobsite. So what can a contractor do to help control injury costs? One practical solution is to expand the safety program by adopting a formalized RTW program.

As a business owner, here are steps to take to increase RTW success before a work-related injury occurs. When implemented, these simple steps could result in:

  • fewer lost days;
  • decreased wage loss for employees; and
  • greater employee morale.

It is important to consider how injuries will affect employees. Changes in lifestyle, income, overall family dynamics and individual self-esteem can be dramatic. Workers may feel they are healed and want to go back to their old jobs. If there are no jobs, then they may go to another employer, taking a second job to earn additional money.

The company may incur “indirect costs” that are five times more than the direct cost of medical and indemnity costs that an insurance company incurs. Even though those costs may be invisible, they can adversely affect profits. These accidents and their related costs are stifling growth and profitability in the construction business.

Indirect costs include:

  • lost production;
  • employee overtime;
  • accident investigation time;
  • training of replacement workers;
  • wages spent of reduced production;
  • repair or replacement of damaged material;
  • supervisor’s time attending to the accident; and
  • remedial and compliance costs for safeguards.

The calculation does not include many cost-saving factors that a company incurs, such as additional medical costs for unnecessary medical appointments. All of these variables have prompted businesses to identify alternative solutions that will assist the injured employee in returning to work.

A major alternative is the establishment of RTW program that encompasses:

  • initiating an early intervention when the injury occurs;
  • placing injured employees in jobs that  contribute to the profitability of the company andhelp make the worker productive;
  • securing management, employee, medical, and insurance company commitment and support for this effort, prior to implementation; and
  • creating a work environment that keeps employees committed.

Consider these average costs (courtesy of United Health Care) when an injured worker needs non-life-threatening medical care.

  • $1,300 to a hospital emergency room.
  • $175 to an urgent care center.
  • $150 to a doctor’s office.
  • $73 to a walk-in convenience care clinic.

A RTW process is a series of steps an employer can take. Not every step needs to be done or can be done; however, each step can return a cost savings. Start by adapting one, two or three steps to see the benefits of cost savings. If results are positive, then engage in additional steps.

To see how much money a company can save by returning injured employees to work sooner, visit CNA’s Transitional Work Savings Calculator. Users can select a specific type of injury and view the estimated cost savings of returning that employee back to work sooner. The calculator illustrates company potential savings through the implementation of a transitional work program. The calculator also shows the estimated amount of additional sales needed to cover the indirect costs of an injury.

Employees who take part in a transitional work program are likely to:

  • lose less income;
  • get back to their regular job sooner; and
  • stay connected with co-workers.

Reprinted with permission from CNA from Return-To-Work Process: A Practical Blueprint for Contractors. http://www.cna.com