1 lynn r. talford marsh risk consulting benchmarking show me the metrics money! july 2005

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Lynn R. TalfordMarsh Risk Consulting

BenchmarkingShow Me the Metrics Money!

July 2005

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BenchmarkingCharacteristics of Companies:

Those That Benchmark Not Afraid to Admit They

can Improve Competitive Proactive Fear of Being “Second” Leader - Search for “Best

Practices” Continuous Improvement

Philosophy Performance Based

Compensation

And Those That Don’t Lead by perception Fear of change Perceive lack of

competition Lack of clear goals,

expectations Reactive Complacent, comfortable

with status quo

Change the thought process:Not better or worse …..but rather

Is there money to save?

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Levels of Benchmarking

Best PracticesV Process AnalysisA Competitor AnalysisL Trend AnalysisUE Informational Analysis

C O M P L E X I T Y

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Informational Analysis

$0

$1,000

$2,000

$3,000

$4,000

$5,000

Costper

Claim

2001 2002 2003 2004

Average Total Incurred per Claim

Company High Level Quick Pulse Data Dump Carrier data Single point in time

Frequency / Severity, Stratifications, Large Losses, Report Lag (accident to supervisor, supervisor to carrier) Percent indemnity claims (avg: pd, inc, duration, lag) Percent of open claims (all, indemnity, by jurisdiction, categorize) Claim duration (accident to close, to assignment, managed care, rtw) Medical/Indemnity/Expense trends Repeat claimants Cost drivers - what body parts, causes, natures

$3,000

$3,100

$3,200

$3,300

$3,400

$3,500

Costper

Claim

2001 2002 2003 2004


Company

Trend Analysis

Multiple points in time Equalize (same time, valuations) Add base lines (fte, payroll, rev, sales) Dissect claim components Geographic drill down (region, state, location)

Iden

tify

Opp

ortu

nity

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Competitive Analysis

$0

$1,000

$2,000

$3,000

$4,000

$5,000

Costper

Claim

2001 2002 2003 2004


Company Peer Group

Add new perspective Is it us or an industry trend? Jurisdictional issue? Is there money to save? Where? How?

Avoid Inappropriate Peers / Correlations : Compare like industries / processes Similar activities Consistent Time periods Related Jurisdictions

$0

$1,000

$2,000

$3,000

$4,000

$5,000

Costper

Claim

2001 2002 2003 2004


Company Other

How Do You Report Claims? How Do You Rehabilitate Workers? How Do You Implement Integrated

Disability Management? How Do You Park Your Car?

Process Analysis

After ChangeBeforeChange

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$0

$1,000

$2,000

$3,000

$4,000

$5,000

Costper

Claim

2001 2002 2003 2004


Company Peer Group Best Practice

What goes into Safety Manuals/Training Programs?

When does 1-800 Claim Reporting work? How do you implement a Return-To-Work

Program? What reports provide a basis for measuring

effectiveness? What is the safest way to leave a parking lot?

Best Practices

Industry Avg

Client Avg

Measuring Best Practices

Expected Outcome Distribution

0

2000

4000

6000

8000

10000

10% 20% 30% 40% 50% 60% 70% 80% 90%

Claim Cost Distribution

Com

pany A

vera

ge P

aid

Your cost per claim is $8,000. How does that compare to average? Compare to Best of class? What is your savings potential? Is it worth pursuing? Break down by job, state – find ROI potential

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Benchmarking Pitfalls

Provide Clarity (definitions (indemnity) venti, grande?, subjects, etc)Minority Business Owners Recently Complained that They Received Only 6% of the contracts for the $600 million Stadium Project. [6% of All Contracts? 6% of What They Bid? Or 6% of $600 million?What percent of contractors were minority?, What is a minority contractor?]

Insufficient sample sizes One-time comparisons Irrelevant comparisons Forcing results

About 6 Billion People Live on the EarthWorld Population Growth is Under Control, at Only 1% per YearWe Must Do Something! Each Year the World Has 60,000,000 More People on it

Keep a constant ground floor (baseline, time moves to right) Unknown data / unreliable data Numbers are only one “dimension”

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CONSULTATIVE Benchmarking

RANK - WC Program to Industry Peers How are my WC costs compared to Industry Peers?

QUANTIFY: Place Dollar Value to Rank: Industry Position = Financial Advantage / Disadvantage

IDENTIFY RETURN ON INVESTMENT: Savings Potential Where? Identify location and/or job classes

IDENTIFY STRENGTHS & WEAKNESSES How do I compare to my peers? What programs should be better? Where can I make improvements? What are my loss causes?

STRATEGY – CONTINUOUS IMPROVEMENT Develop cost savings strategy and next steps for improvement

Putting it together… tell a story.

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QUESTIONS ?/ COMMENTS

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Wellness Programs A Critical Step in Managing Workplace Health

Marie Potty RNMarsh Risk Consulting

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Wellness Objectives, Impact and Value*

Major Employer Wellness Objectives: Attempt to control rising healthcare costs Assist senior management in addressing employee health

issues

Employer / Employee Wellness Impact: Improve overall employee health and productivity Reduce incidence of injury / illness and fatalities Reduce sick days and unscheduled absences

Wellness Priorities and Value Proposition: Employers offering employee incentives to participate in

wellness programs for sustained, positive outcomes Employee health is crucial to the overall business success

ROI: Employer uncertainty of continued employee success

*American Association of Occupational Health Nurses AAOHN News (Vol., 25 – June 2005)

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Absence and Health Care CostsComparable and Related

Direct absence costs are 14.2% of payroll

2.9%2.9%4.0%4.0% 7.3%7.3%

Unscheduled Absence (Incidental Absence/Sick Days,

STD, SC, WC, LTD)

Fixed HolidaysVacation/PTO/Personal Days/ Floating Holidays

Cost for employees’ coverage is typically 50-60% of the total

Active employee health plan costs: 14.8% of payroll*

* Active employee health care costs are for 2003 for employers with 500+ employees, from the 2004 Mercer National Survey of Employer-Sponsored Health Plans

Equivalent to: 26.6 scheduled days off +10.4 unscheduled days off per year

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Employer Structured Lifestyle Risk Modification Program Options

0% 10% 20% 30% 40% 50%

Exercise Classes

Smoking Cessation Program

Nutritional Counseling

Stress Reduction Classes

25% 16%

29% 9%

21% 18%

9%16%

Currently offer to all/most employees Piloting

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Periodic Employee Medical Screening

Percent of Participants

Currently Have at Some or Most Locations Considering

0% 10% 20% 30% 40% 50% 60%

Blood Pressure

Cholesterol

General Health Risk Appraisal

Diabetes

50% 18%

44% 21%

34% 24%

25%29%

70%

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Employee Disease Management

Percent of Participants

Currently offer to all/most employees Piloting

0% 10% 20% 30% 40% 50%

Diabetes

Cardiovascular Disease

Hypertension

Low Back Pain

28% 6%

21% 27%

18% 4%

4%13%

Assess employee health risk

demographics

Employee validation of risk / Wellness Programs

Pilot targeted Wellness Program

Measure ROI

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85% members = 15% cost

15% members = 85% cost

Disability ManagementDisability Management

Prevention Screenings Plan

Incentives

Examples: Ergonomics Exercise

classes Smoking

cessation Stress

reduction

Prevention Screenings Plan

Incentives

Examples: Ergonomics Exercise

classes Smoking

cessation Stress

reduction

WellLife Style

Modification

WellLife Style

Modification

Health risk

assessment Targeted risk

reduction

programs Risk modeling

Examples: Blood Pressure Cholesterol Diabetes

Health risk

assessment Targeted risk

reduction

programs Risk modeling

Examples: Blood Pressure Cholesterol Diabetes

At RiskPeriodic Screening

At RiskPeriodic Screening

Nurse advice line Web tools Consumer driven

health plans

Examples: Out-patient visits Benefit Plan Site /

Web MD Health Savings

Accounts

Nurse advice line Web tools Consumer driven

health plans

Examples: Out-patient visits Benefit Plan Site /

Web MD Health Savings

Accounts

Acute Illness/Discretionary Care

Doctor VisitsEmergency Visits

Acute Illness/Discretionary Care

Doctor VisitsEmergency Visits

Incentive design Self management

training

Examples: Diabetes Cardiovascular

disease

Incentive design Self management

training

Examples: Diabetes Cardiovascular

disease

Chronic IllnessDisease Management

Chronic IllnessDisease Management

Case

management Decision

support Predictive

modeling

Example: ABI – Acquired

Brain Injury

Case

management Decision

support Predictive

modeling

Example: ABI – Acquired

Brain Injury

CatastrophicLife Care Planning

CatastrophicLife Care Planning

2005 Total Health ContinuumAn Employers Guide

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POST INJURY MANAGEMENT

What You Need To Know About Modified / Transitional Work Programs

Rick Poirier, M. A.R.C Knox & CompanyRisk Management Services Division

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HOW TO IMPLEMENT AN EFFECTIVE POST INJURY MANAGEMENT PROGRAM

Overview Understand our goals Establish a collective approach Set benchmarks Evaluate program on a periodic basis Educate workforce, medical provider(s),

and insurance company Take advantage of managed care

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Benefits Gives the employee an opportunity to

return as soon as medically possible Provides the best medical care in a timely

fashion Emphasis is on abilities not disabilities The injured worker benefits and so does

the employer

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MORE BENEFITS

Contributions to the Workforce Reduces Impact of Claims Reserves Reduces Fraud Contributes to Controlling Rising Insurance Costs Other Benefits

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Preliminary Steps Educate the workforce Establish good communications with medical

provider Strengthen job descriptions Develop job bank Try it

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Employee in a temporary position Communications with “Gatekeeper” Follow up with medical provider Monitor performance / evaluate medical

progress & abilities Communications with insurance company

claim / rehab representative Return to normal job

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Manager’s Responsibilities Investigate the incident / notify HR, Payroll,

Ins. Co., etc. Fax job description to medical provider Ensure that medical treatment was

provided in a timely fashion Determine ability level Initiate Temporary Modified Duty Program

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Manager’s Responsibilities Notify claim representative of employee’s

temporary assignment Ensure that employee works within their

medical restrictions Determine if program should be extended Return employee to their original position,

if possible

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Gatekeeper’s Responsibilities Educate management / workforce Develop bank of temporary positions Ensure job descriptions are task oriented

and meet ADA guidelines When informed of an injury requiring lost

time, send appropriate letters to medical provider / employee

Meet with employee on first day

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Gatekeeper’s Responsibilities (cont.) Meet with employee on a weekly basis Monitor performance and medical progress If no temporary position available,

determine if they can be placed in a non-profit organization

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Employee’s Responsibilities Report all on the job accidents to their

manager at the time of injury Obtain medical assistance when necessary Respond to letters or calls from employer Return to work based on temporary

assignment and medical abilities

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Employee’s Responsibilities Stay within level of medical restrictions Meet with “Gate Keeper” when requested Get well

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SOME SUGGESTIONS Have a written policy Make sure everyone understands Invite medical providers to your company What the employee can do Make sure everyone knows that modified duty is

temporary Monitor performance / medical progress Be creative

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1 lynn r. talford marsh risk consulting benchmarking show me the metrics money! july 2005

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