Grass roots cost-cutting.

• Author: Hennrich, William L.
• Position: Risk Management

When Hoffmann-La Roche discovered short-term workers' compensation injuries were driving up costs, the company asked employees, including a few skeptics, to devise a solution.

In 1992, workers' compensation costs at Hoffmann-La Roche Inc., a pharmaceutical company based in Nutley, N.J., were nearly $5 million. The Nutley site alone was responsible for $2 million of the total, with two-thirds coming from chemical operations, facility maintenance and pharmaceutical operations. On closer scrutiny, Roche discovered that most workers' compensation pay-outs stemmed from minor on-the-job accidents. Sprains and strains, not major accidents, were driving up costs.

But Roche's ability to contain the direct medical and insurance costs of short-term injuries was the tip of the workers' compensation iceberg. Indirect costs also had to be contained. There was the cost of sick day pay and compensation for replacements. Replacing workers with an occupational injury, even for a short time, required record-keeping, administration, and, in many instances, on-the-job training. Without a comprehensive system to manage these demands, productivity loss was inevitable. According to the National Council on Compensation Insurance, every direct dollar loss can add up to $2 to $4 in indirect costs.

Less measurable, but nevertheless an important concern, was employee morale. Roche employees who lost time because of short-term job injuries weren't a happy lot. Most had expectations that, at best, were met only occasionally. Employees wanted information. They wanted help, and for many, some sense of concern from their bosses. From the managers' perspective, the task of finding, training, and tracking replacements took time and sapped their energy.

Roche's immediate objective was to increase the percentage of injured employees in the pilot group who could resume work in one to four days. Before the company redesigned the system, 72 percent of injured employees in these three divisions returned to work within four days. Since establishing the system within this pilot group in 1994, that number hasn't fallen below 86.6 percent, and Roche has reduced its overall costs by 50 percent. In addition, because of increased safety awareness, the number of accidents decreased significantly. In 1994, there were 101 incidents that necessitated employee job restrictions. In 1995, that figure was only 30.

STAYING IN THE LOOP

Roche has reduced workers' compensation costs by establishing a return-to-work program as part of a new system for managing short-term cases of occupational injury. Originally a pilot program within three divisions, the system has now been rolled out to the entire Nutley site and is operating with great success. The system effectively links four key groups of people: the case manager; the employee; the supervisor and management; and the staff of Employee Health Services, the company's on-site medical facility.

The case manager's job is a new position with responsibility for coordinating the workers' compensation process, managing a job bank of alternative meaningful work for the employee within the company, and balancing the sometimes divergent needs of the company and its employees. In a sense, the case manager "owns" the return-to-work process; any breakdowns in the system demand her attention. She must also keep all parties - Employee...