DorlandHealth

The cost of absence, disability and lost productivity

Employers lose significant revenue every moment they operate a business with ineffective absence-management business processes and program management. Such processes include leave of absence identification; administration; medical management; return to work coordination; regulatory compliance associated with leave administration; fitness for duty; and organizational accommodation of qualified individuals with disabilities.

Employers may spend up to 20 percent of their operating payroll on the direct and indirect costs of disability, according to recent research. The costs include overtime payments for other employees, temporary workers, backfill, lower productivity, and inefficiency. According to research from the Integrated Benefits Insitute, almost 74 cents of every benefit dollar can be associated with lost productivity versus the direct costs of disability, workers’ compensation and medical payments.

Employers experience absences up to 25-30 percent of their workforce on any given day. These absences may be scheduled, such as vacation or jury duty, or unscheduled, such as being absent due to disability.

Personal illness or calling in sick ranks as the number one reason (34 percent) of missed work, followed by an assortment of personal and family reasons, according to the 2007 Commerce Clearinghouse (CCH) Annual Absence Survey. This means that only one out of three employees is truly absent due to a personal illness or injury.

Reasons for Unscheduled Absences 2007

34% - Illness

66% - Other

How does this one out of three ratio break down? Personal illness accounts for 34 percent of unscheduled absences, while 66 percent of absences are due to other reasons, including family issues (22 percent), personal needs (18 percent), entitlement mentality (13 percent), and stress (13 percent). (See Figure 1.)

In the 2007 CCH survey, employers report that the most effective way of addressing absence issues is to offer worklife programs. The following, measured on a scale of one to five, with five being most effective, have been rated highest for reducing unscheduled absences:

• Alternative work arrangements (3.6).
• Telecommuting (3.5).
• Compressed work week (3.3).
• Leave for school functions (3.2).
• Flu shot programs (3.2).

While the above list represents the most effective ways CCH employers report they manage absence, the top five work-life programs offered by employers, as reported in the 2007 survey are:

• Employee assistance plans (72 percent).
• Flu shot programs (66 percent).
• Wellness programs (60 percent).
• Leave for school functions (54 percent).
• Alternative work arrangements (54 percent).

Unscheduled worker absence, whether incidental sick leave, disability, occupational injury or illness or nonoccupational disability, reduces an employer’s productivity, profits, return-oninvestment (ROI), organizational competitiveness and impacts employee satisfaction.

The Benefits of a Formal Program

The Bureau of Labor Statistics reports that if an employee is off work for six months due to occupational injury/illness, there is only a 50 percent chance they will ever return to work. If the employee is off for one year, there is less than a 25 percent chance of returning to work. Should the employee be off from work for two years, there is virtually no chance of the employee returning to work.

Studies have shown that providing early intervention, medical case management, the use of evidence-based disability duration guidelines, transitional or modified work arrangements, and information management to document program attributes have an ROI of 20-25 percent.

In today’s economically tumultuous environment, we have a tremendous opportunity as case management professionals to facilitate return-to-health, productivity, and maximal medical improvement while navigating the worker’s successful return to work or appropriate alternative.

For example, employers participating in a survey by Hewitt Associates (www.hewitt.com) reported that, on average, eight in every 100 of their employees experienced an LOA in a given year, with the average absence lasting about 42 days. For an employer with 20,000 employees, that added up to a total of 67,200 days lost to LOAs each year — the equivalent of 260 fulltime employees not working for an entire year or almost $13 million lost annually in productivity. Nevertheless, Hewitt’s survey showed that a large number of employers— 69 percent — have never attempted to calculate the costs generated by employee absences.

The Integrated Benefits Institute’s survey, Both Sides Now, identified the most common practices in managing return-to-work both occupational and nonoccupational RTW programs. The most common RTW program components reported by the survey respondents included:

• The availability of modified work within the employee’s own job title.
• The availability of alternate work.
• Communication of the RTW program.
• Identification of essential job functions for each job.
• Use of the essential functions for potential job modification.
• The availability of an RTW coordinator.
• Mandatory participation in the RTW program.
• Supervisory and management training about the RTW program.
• The use of incentives to facilitate RTW participation.

The IBI survey further identified that most common advantages to having a formal RTW program included the control of lost time and benefit dollars, controlling aggregate disability costs for both occupational and nonoccupational disabilities, decreasing the frequency and duration of disability, avoiding litigation, assuring workers are available for work when able, compliance with workers’ compensation laws and the Americans with Disabilities Act (ADA), and the added benefit of having RTW programs in place for nonoccupational disability.

Employers that institute formal return-to-work policies and programs increase workforce productivity, reduce the cost of lost work days, minimize employee wage loss, reduce disability claims and litigation, accelerate physical and emotional recovery, improve communication and employee relations, and demonstrate the worker’s value to the company. Companies managing absence on an integrated basis, that is, managing both occupational and nonoccupational absence consistently, using a combination of the line supervisor, clinical case managers (i.e., occupational health nurses and disability case managers), and/or the designation of an internal absence manager, reported much lower absence rates (1.4 percent) versus those companies who did not manage absence (5.3 percent).

Popular surveys, such as the Staying@Work survey by the human resources consulting firm Watson Wyatt over the past several years (www.watsonwyatt.com), have documented employers’ use of return-to-work programs, case management, behavioral health interventions, safety/injury prevention programs, and the use of independent medical exams, among others ways to manage both occupational and nonoccupational disability.

What is interesting to note in this survey is that the use of RTW programs and case management “moved up” the scale in frequency of use as surveyed employers documented their program solutions for integrated disability management.

Challenges to Facilitating Successful Return to Work

What follows is a briefing on the various factors that influence a return to the workplace. It is essential that case managers understand the diverse issues that can prevent — or facilitate — a healthy relationship surrounding disability measures.

Pre-existing or concurrent medical/ health issues. Among adults under age 65, musculoskeletal problems (including arthritis) and heart problems become increasingly important as people grow older. Mental illness is the second leading chronic condition mentioned as a cause of activity limitation for individuals aged 18 to 44 and is the fifth most frequently mentioned cause for individuals aged 55 to 64.

For some individuals within this age bracket (55-64), those who are aging with “primary” disabilities like cerebral palsy or spinal cord injury, their primary health condition is a risk factor for the development of secondary health conditions, which can have the potential to contribute to additional impairments, activity limitations, or participation restrictions. In general, survey questions have limited ability to distinguish such secondary disabling conditions from primary disabling conditions. In addition to musculoskeletal and heart problems, dementia is a major contributor to limitations.

Presenteeism. Employees feel increased pressure to be at work today (see Table 1). When they come to work sick or not feeling well and are unable to perform, they are considered to be “present on the job, but absent in the context of being productive.” They present a health risk to others by potentially spreading their illnesses and being a health or safety hazard to themselves or others.

A June 2008 poll by National Public Radio showed that almost 50 percent of those surveyed were concerned about staying home when ill due to the financial consequences, even though they had sick time. In this instance, RTW status must be reviewed. It should be appropriate, that is, when the person is medically fit and not a contagion risk to others. There must be personal responsibility from the individual and organizational support to ensure ill individuals are encouraged to stay home when sick. If their job permits, telecommuting should be encouraged vs. staying at the workplace and potentially infecting others.

Supervisor and/or employee conflict. Conflict between the employee, supervisor, management, or even fellow co-workers presents a barrier to effective communication, rapport and return-to-work expectations. Open lines of communications are essential. Issues of conflict must be addressed and directed to the appropriate member/department for intervention as necessary. Issues of discipline, performance, etc., should be directed to human resources, labor relations, and management as appropriate.

Entitlement mentality. As reported by the 2007 CCH Unscheduled Absence Survey, 13 percent of absences are related to entitlement mentality. Appropriate documentation is required for absences which extend into shortterm disability and FMLA, and/or workers’ compensation. Issues related to entitlement must be discussed and/or referred to management for follow-up/intervention as appropriate.

Lack of communication. Someone out on “disability” or “comp” can be compared to being in the Bermuda Triangle — meaning that no one has heard from them, nor has the company been in contact to validate the leave or determine the status of the individual’s medical condition after the first physician’s note. This is a common missed opportunity and one which can be easily corrected by maintaining contact with the worker from day one.

Medical/psychological issues. Coordination of medical information allows for the coordination of return-to-work and determination of fitness for duty from all medical sources for the individual. The case manager coordinates all medical information flows and identified medical and psychological issues which can potentially impact on safe return-towork in a timely manner.

Employers can’t provide transitional work. The employer does not have the ability to provide transitional work.

Poor management of the RTW process. The employer has not developed a formal RTW policy or program, nor have they assigned an RTW coordinator. If they have assigned an RTW coordinator, the organization has not empowered the person to accomplish the goals of the position.

Litigation, expectation of settlement dollars. The employee expects final gain from the claim or case process. This is a very challenging situation and attorneys may be involved. Open lines of communication are the best ways to handle these situations, along with following the advice of your local counsel.

There are many reasons to bring a person “back-to-work” as soon as medically safe and capable. Besides being “good for business and the individual,” there are key advantages to facilitating RTW as discussed earlier in this article on the value of RTW programs. Key components of the most successful RTW programs include:

• Commitment from management to bring ill and injured workers back to work in a timely and appropriate manner, regardless of the absence being occupational or nonoccupational in nature.
• Establishment and communication of a formal return-to-work program and policy. The program should have dedicated management support and clearly delineate roles and responsibilities.
• Medical case management which includes the use of evidence-based treatment (as mandated by state workers’ compensation statutes) or disability duration guidelines.
• Identification of essential functions for each job such as: lifting up to 20 pounds per day, standing two to three hours per day, climbing ladders to 15 feet above ground, operating a forklift to load and unload pallets, working outdoors in extremes of temperature.
• Use of the essential functions for potential job modification.
• Availability of temporary alternate or modified work within an employee’s own job title.
• Using a return-to-work coordinator or key stakeholder for managing the return-towork programs or processes.
• Mandatory participation in the return-towork program for both occupational and nonoccupational absences.
• Periodic review of all modified duty assignments.
• Supervisory and management training about the value of return-to-work programs, job accommodation process and the roles of the program facilitators and supervision.
• Participation incentives for both employees and managers.
• Coordination of the return-to-work program with key regulatory programs such as the Americans With Disabilities Act (ADA), Family Medical Leave Act (FMLA), and requirements of the Occupational Health and Safety Act (OSHA).

Role of the RTW coordinator. This person may be the occupational health nurse/ disability management specialist, case manager, or other person appointed by management to lead the RTW team and successfully manage the RTW program for the company. In some employment situations, the occupational health nurse case manager, or disability case manager may also function as the company’s RTW coordinator. Roles may vary within their specific work setting, but, in general, the RTW coordinator’s role might include:

• Timely notification and reporting of the injury/illness to both the employer’s designated agent or vendor.
• Communication and reinforcement of the company’s benefit, disability, medical management and RTW policy/programs.
• Employee and management training regarding RTW.
• Development of assistance with the development of transitional work or alternate work arrangements.
• Monitoring employee recovery and potential RTW.
• Communication and negotiation between key stakeholder groups to facilitate the employee’s successful RTW.
• Management and modification of the RTW program components based on company need.