From The Ergoweb® Learning Center

Study Shows Significant Cost Reductions in Medical, Indemnity, and Wokers Compensation Costs

An integrated, co-operative, employer-clinical program which included workplace accommodations led to a total savings of $990 per employee injury/illness condition from medical, general indemnity, and workers’ compensation expenditures in a two year, pre-post, treatment-control, observational study involving 73,885 subjects in the Twin Cities area of Minnesota.  The authors concluded that with the employer intervention alone (worksite modifications and case management), a savings of approximately $202 per employee per year could be seen.

There was a higher likelihood (2.3%) that a worker whose employer intervened would seek treatment.   But medical expenditure costs for those employees were $585 less than controls and yielded a net savings of $391. 

Employees who received general indemnity payments (short and long term disability income for non-industrial injury/illnesses) and worked for intervening employers had lower indemnity income ($814 lower) than controls.

The Bottom Line – How This Applies To Ergonomists
This study underscores the key “profit center” role an ergonomist can play in the industrial setting.  By assuming a position in the workplace-clinic program and responding to an employee’s clinical condition (either work-related or not work-related), worksite recommendations can be made that reduce the impact on the involved body tissues, resulting in sizable reductions in liability costs.

Viewing this from the workers’ perspective, the authors note that disability-related work absences cost the US workforce $81 billion (cited from a 1994 reference).  Wage protection programs, such as short term disability insurance policies, replaced only 61% of that lost income at that time – coverage that is likely worse at the present time.  Active participation in worksite modification to quickly get workers back on the job would assist employees in stabilizing their household income.  Given the current economic climate, ergonomic services provide a valuable and worker appreciated activity.

Other Key Study Points
Regarding general indemnity expenditures:

  • About 17% of all employees received general indemnity expenditures with a mean outlay of approximately $318
  • The likelihood of a general indemnity expenditure was increased by 3.9% when there was an employer intervention

Regarding medical expenditures:

  • For all employees, the mean medical expenditure was $4,270

Study Method
In 1996, a combination of employers, health plans, and health care provider organizations created the Minnesota Health Partnership for the purpose of applying an innovative health care deliver model that implemented a strategy which emphasized optimum physical activity in the clinic and work settings to contain injury/illness severity and associated disability.  A Partnership initiative called the Coordinated Health care and Disability Prevention (CHCDP) program was evaluated by this study through assessment of indemnity, medical and worker compensation expenditures.

CHCDP, the study intervention, was composed of:

  • Treatment of both industrial and general medical conditions
  • A hybrid design of 24 hour care and managed care concepts
  • Treatment that was cost-effective and evolved from best practices
  • Encouragement from the employer that the injured employee seek treatment from his/her (the employee’s) primary care physician
  • Physician emphasis on good patient communication with specific description of appropriate disorder-related activity at home and at work
  • Communication between the physician and employer regarding appropriate employee activity level
  • Case management by the employer of all conditions (both work-related and non work-related)
  • Worksite accommodation for both work-related and non work-related conditions

The study involved 12 employers (7 in the treatment group and 5 in the control group) in the Twin Cities area of Minnesota.  Care was delivered at seven treatment and eight control clinics for the investigation.  Employees were not randomly assigned to clinics but post study evaluation compared key employee characteristics to ensure similar populations existed in both the treatment and control cohorts.

There were 88,318 workers who were employed by a treatment employer while 11,974 workers were employed by a control employer.  Approximately 86% of all employees (from both treatment and control employers) received treatment during the study observational period.  The employees became stratified in the following manner:

  • treatment employer/treatment clinic – 2,175
  • control employer/treatment clinic – 150
  • treatment employer/control clinic – 64,941
  • control employer/control clinic – 6,619

The key measured outcomes were:

  1. Medical expenditures (diagnostic, treatment, and pharmacy costs)
  2. General indemnity expenditures (short and long term disability payments for non-industrial injury/illnesses)
  3. Workers’ compensation expenditures (medical costs, time-lost payments, and permanent disability liability)

This study can be acquired at:

Article Title: The Economic Impact of a Disability Prevention Program

Publication: Journal of Occupational and Environmental Medicine, 52:15-21, 2010

Authors: B Dowd, M McGrail, W H Lohman, B Sheasby, H O’Connor, M Calasanz, R Gorman, and S Parente

This article originally appeared in The Ergonomics Report™ on 2010-02-09.