Growing Workers Compensation

Costs Challenge Public Sector

In the wake of shrinking revenues and growing shortfalls municipal andstate governments across the country are faced with growing commitments stemming fromworkers' compensation and second injury funds. Now, more than ever, safety training is taking on more and more importance in keeping government budgets in the black.

Kansas City, Missouri, is one such city facing the challenge.  Eric Hallerud, the city's new corporate safety manager, informed the city council that Kansas City was suffering losses that on average were $2 million more annually than other cities its size. The amount was especially sobering considering its expected $62 million shortfall. 

Some cities are taking drastic steps in the face of these budget scenarios. In what may be an extreme case, Lancaster, Pennsylvania's iapproach is to settle and let go of employees.  Although many cities, and states, have seen their risk programs take budget cuts, others, like Long Beach, California, have seen their program costs drop due in no small part to implementing simultaneous safety and workers' compensation program improvements. 

Even small cities, like Upper Arlington, Ohio, have found that they can still save money in their risk programs through self-insuring, a course many municipal governments have taken.

So what do public entities need to do in order to gain control of their workers' compensation costs?  The most important element for cost control is understanding costs.  There are four primary cost drivers to any workers' compensation program.  Those include: Injury Frequency,Average Medical Cost per Case, Return to Work Duration, and Closure of Claims.  These factors offer the first steps in understanding workers' compensation in the public setting. 

If you are a public agency and need a partner that understands these factors, it may be time to call OCCUTEC.  OCCU-TEC developed and implemented an individualized risk management process called ReClaimTM for the employees of the State of Missouri to reduce the losses in its self-insured workers' compensation program. 

This program helped the state reduce its injury incident rates to less than one-half of the national average.  Government budgets continue to shrink but the obligation to manage risk has not.  If you need help understanding what your agency can do to address risk, it may be time to call OCCU-TEC at 1-800-950-1953.