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The economy does not care if you are a Fortune500 company or a mom-and-pop operationwhen significant cost-cutting measures arerequired as they have been over the past year. Itcauses belts to tighten in organizations every-

where. Sagging profits have prodded management teamstoward one common strategy: How to protect erodingassets and safeguard the bottom line.One line item that takes a big bite out of budgets in

most companies is the rising cost of workers’ compensa-tion and healthcare. Implementing a return-to-work (RTW)program with transitional duty can manage workers’ com-pensation and disability costs, which can result in smartsavings during these troubled financial times.

RTW PROGRAM SENIOR MANAGEMENT

PRESENTATION STRATEGYTo make a presentation and business case to senior

management, you need a strategy and presentation thatdrives home the cost savings of the program. First, pro-vide an overview of the program (not the nuts and bolts)so that senior management can understand the basics ofthe program. Next, explain the program in businessterms and highlight the smart savings it will deliver dur-ing these challenging financial times and thereafter.Third, talk in financial terms, such as initial investmentcosts, projected savings (both direct and indirect), returnon investment (ROI) and payback period.Transitional duty allows workers who are unable to

perform their normal job duties because of injury or ill-ness to return to work in temporary modified-duty capac-ity. By allowing workers to return in a temporarilymodified role, companies can:•maintain an experienced workforce;•maintain production, workflow and quality standards;•stabilize wage and production expenses;•improve compliance with state and federal employ-

ment regulations;•improve morale and self esteem;•accelerate/improve recovery.Transitional duty can also help decrease insurance

overhead, hiring and job-training costs, use of nonessen-tial medical treatments, injury rates, frequency of lost-time claims, litigation costs, fraud and abuse.

EVOLUTION OF RTWDuring the 1970s and early 1980s, RTW was not

nearly as prevalent as it is today. For most employers,workers’ compensation injuries were treated much likeshort-term disability, with a distinction of able to per-form the job or unable to perform job. Thus, employeeswere typically required to be fully recovered or 100% toreturn to their jobs.

During the 1980s, many employers realized thatreturning employees to their jobs within their physicallimitations during the final portion of their recovery peri-od benefitted both the employer and the employee.While employees often did not return to their regularjobs, they were able to mentor junior employees, providesupport and produce goods and services in a limitedcapacity. In many cases, employees returned for shortershifts, allowing for physical reconditioning as they grad-ually returned to full capacity. Over time, insurers andemployers found that expected recovery times werereduced through this conditioning period, further reduc-ing the cost of claims.Adding support to the growing trend, OSHA’s record-

keeping rules of total lost days (as a measure of work-place accident severity) allowed employers to enjoyreduced statistics by returning employees earlier thantheir full recovery date. The trend continued throughoutthe 1990s, with many employers implementing someform of RTW.Following the recordkeeping changes in 2002, RTW

underwent another change. By this time, virtually allinsurers and most employers accepted that (early) RTWwas a positive factor in workers’ compensation costreduction, and many insurers offered significant premi-um credits for employers who practiced or pledged topractice RTW.By this time, full-shift RTW, but with limited duties,

was largely the norm, and many employers had begunthe practice of paying employees full wages while theywere placed on restricted work. However, many RTWprograms were managed informally, or on a case-by-casebasis, with little planning and documentation regardingthe duration and parameters of the program, require-ments for eligibility, planning for specific duties of therecovering employee and extraordinary management ofthe job assignments and performance within restrictions.In addition, in 2002, OSHA revised the recordkeeping

practice to begin tracking cases involving days awayfrom work (regardless of the number of days) as well asrestricted or transferred work, placing additional pressureon employers to keep the number of lost-time cases low.This resulted in a growing disparity among employers inthe application of RTW programs.Frustrated by the administrative and supervisory bur-

den, some employers have ceased accommodatinginjured employees until full release. Others have experi-enced a sort of RTW inflation, using RTW as the firstcourse of treatment, accommodating workers for anextended and indefinite period of time in the hope ofreducing their lost workday case rate. Neither strategyaccomplishes the cost savings intended by RTW. Takento extremes, this situation sometimes places effective

BUSINESS OF SAFETY BY LESLIE M. BATTERSON, CSP, CPEA, BRUCE J.FYFE, CSP, ARM, CPEA, & DEBORAHWEIGAND

Return-to-Work Programs

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double to triple total workers’ compen-sation costs. Most Americans withDisabilities Act (ADA) lawsuits are theresult of failed workers’ compensationclaims. One of the best defenses againstADA suits is a strong RTW program.An effective RTW program is nowaccepted as the best practice for reduc-ing workers’ compensation costs.

COST SAVINGS & ROI POTENTIALA significant cost savings opportu-

nity exists for companies to controlworkers’ compensation and disability costs through theuse of a formal RTW program. By tracking data for aparticular company, a properly administered program canrealize an $8 to $10 savings for every dollar invested in aproactive RTW program.Financial improvement results will vary for compa-

nies based on many factors. The most important of theseis senior management’s support and the cultural accept-ance by location management of the RTW program as animportant part of the company’s business model andday-to-day practices.In several states, workers’ compensation benefit costs

are rising at double-digit rates. In its full cost study, theIntegrated Benefits Institute (IBI) reported that directlosses, which include time loss payments, medical, legaland benefits costs, comprise only 28% of the total costsof a disability. The remaining 72% represent indirectcosts not covered by insurance. These costs can includeitems, such as work productivity losses, replacementworker costs, training, management or supervisor timespent due to the absence of the employee, to name a few.One particular company which implemented a formal

RTW program determined that the average cost for bothindemnity and medical-only claims was close to thenational averages and that timely reporting of injuriesand rate of injury per 100 employees were better than thenational averages. The formal RTW program resulted inthe reduction of indemnity claims and resulted in signifi-cant savings and an excellent ROI.The projected direct cost savings, based on the com-

pany’s implementation of a formal RTW program andthe corresponding reduction in indemnity claims, weresignificant enough to grab senior management’s atten-tion. Even a 10% reduction in the number of indemnityclaims would result in over $150,000 in savings. A 30%reduction would save in excess of $460,000, while a50% reduction would result in savings of more than$768,000, based on the company’s prior 3-year history.Based on these data and the estimated $30,000 cost of

RTW program implementation, ROI was projected(Table 1). Combined with the additional indirect costfactors, these cost savings are further accelerated.Studies show that many organizations, after imple-

menting RTW programs, have experienced significant

claim management at cross purposes with attempts toattain favorable OSHA rates.If RTW is to be successful, the benefits of modified-

duty assignment must be fairly weighed against the costof the program.

WHO IS RESPONSIBLE?A RTW program assigns responsibilities to the

injured employee, the supervisor and the RTW coordina-tor as follows.Injured employee:•reports injury immediately to supervisor;•completes all needed paperwork as soon as possible;•follows RTW guidelines and practices;•maintains contact with employer;•provides regular updates on health condition, medical

status and restrictions issued;•returns to modified duty that is within medical

restrictions as set by the doctor.Supervisor:•conducts initial investigation;•completes all needed paperwork;•informs employees of RTW program guidelines and

practices;•maintains contact with injured worker, RTW coordi-

nator and doctor for work restrictions;•assists in assigning or developing modified work for

employee;•identifies and offers modified-duty assignment;•monitors recovery through incoming medical work

restrictions.RTW coordinator:•thoroughly interacts with employee and supervisor at

every stage of overall process;•informs injured employee and supervisor of rights

and responsibilities under the workers’ compensationlaw;•maintains documentation and data on status of

claims and trends.

NATIONAL STATISTICS & TRENDSSome companies have measured their results and found

that of employees on disability for 6 months, only 50%return to work. If employees are off longer than 12 months,only 5% return to work. Productivity losses are estimated at

Table 1 RTW Program Implementation ROI

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reductions, 25% to 50%, in time loss payments and lostdays due to workplace injuries. Helve (1993) reportedthe savings formula at 54% of current workers’ compen-sation costs. This formula indicated that the ROI wasnine dollars for every dollar spent by the organization inimplementing an RTW program.Actual savings and ROI for companies will depend

on the level of implementation of a formal RTW pro-gram organization-wide. An effective and thoroughimplementation, sooner rather than later, with full sup-port of senior management and a cultural acceptanceby location management, will result in substantial sav-ings, as evidenced by companies’ historical data andstudies cited.

COMMON BARRIERS & PITFALLSTO TRANSITIONAL DUTY PROGRAMS

“We do not have any modified-duty jobs.” One canmodify the job to meet the restriction; examine the job’stasks to determine which tasks can or cannot be per-formed; or examine other areas within the facility wherehelp may be needed and at the same time keep the em-ployee within his/her restrictions (e.g., filing, greetingcustomers, answering phones).“What if an employee’s condition gets worse by

coming back early?”Many studies suggest the longeremployees remain at home, the less likely they willreturn to work. Motivation and psychiatric overlay canbecome issues. The benefits of returning employees towork early can far outweigh the risk of reinjury.“I have a lot of work to be done. I need everyone

to be able-bodied.” A cost to absenteeism exists with orwithout a transitional-duty program. If you need a cer-tain number of able bodies to work, you need them withor without transitional duty, so the hiring of a temporaryis a sunk cost. By allowing the employee to return towork in a transitional-duty capacity, you benefit fromthat person’s ability to provide some productivity ratherthan none.“The budget does not allow for ‘extra’ employees.”

Your employees are not extra. They are your employees.To overcome this barrier, create a transitional-duty costcenter. By shifting the employee’s salary to a transition-al-duty cost center and by having the employee performsome job functions, the department receives productivitywith no effect on the (departmental) budget. This strate-gy has often been effective as supervisory personnelbecome familiar with transitional duty and developingmodified-duty assignments.“Modified duty is bad for morale or encourages

favoritism.” There is no favoritism. Modified dutyshould be offered to everyone who is disabled by aworkplace injury and has restrictions placed on his/herability to perform all essential functions of the job. If theprogram is introduced in a positive light and if manage-ment supports this positive culture, the morale should

change. Cultural change takes time, but it occurs withmanagement support and commitment.“The program is too time-consuming to adminis-

ter.” Perform the cost-benefit analysis by comparing thetime it takes to administer versus the savings realized byhaving this program in place. Designate someone to bethe program coordinator to streamline the process.Outline that person’s responsibilities to administer theprogram and gain everyone’s support to keep the admin-istration simple.“I cannot have everyone on permanent light-duty

assignments.” Consider placing a time limitation on thetransitional-duty program, perhaps 60 or 90 days.Remember, transitional duty is a temporary modificationof someone’s job to meet restrictions. If the restrictionshave not been lifted after 90 days, the restrictions maybecome permanent. If this is the case, it may be an ADAissue, and a decision must be made whether to provide areasonable accommodation for the permanent restric-tions.Your transitional policy must be clear that the pro-gram ends once the restrictions are deemed permanent.“The program costs too much.” A comprehensive

cost-benefit analysis of the direct and indirect costs ofemployee absenteeism should reveal the benefit inreturning employees to work on transitional duty. Askkey questions: How will the work get done? Will itrequire payment of overtime or hiring of additional tem-porary staff? Consider the morale of the workers whopick up additional duties for the employee who is absent.Consider insurance costs for the payment of disabilitybenefits. These are all quantifiable and will support thebenefit of transitional duty implementation.“The union will never agree to this.”When the pro-

gram’s benefits are properly presented to the union, mostwill agree to it. If the employee is receiving his/herwhole salary while working in a transitional-duty capaci-ty, both the employee and the union benefit from the pro-gram. If presented to employees in a positive light, itcould boost morale.

COMMON PITFALLSMany times, employers fall into common traps.

Following are some strategies to avoid them.Failure to adequately determine whether the

injury has been caused by a workplace condition orpractice. In these cases, employees report to the employ-er and subsequently to the physician the nature of theirsymptoms and their own description of the work envi-ronment. The physician begins to treat the case as aworkers’ compensation injury barring any strong chal-lenge from the employer. If conservative treatment andmodified duty is sought as the primary and initial courseof treatment and the injury is not work-related (i.e.,caused by lifestyle factors outside of their employment),the modified-duty assignment may continue indefinitelywith little to no resolution (since the causal factors, out-

BoSCASSE’sBusinessof SafetyCommitteeW

side of work, have not changed). Eventually, after con-servative treatment proves ineffective, more aggressivetreatment is needed, driving costs higher through addi-tional medical payments, possible lost time indemnitycosts and additional restricted duty time.This situation can be avoided by providing the physi-

cian with objective information regarding the workplaceand its exposures, including full job descriptions, job safe-ty analysis and thorough accident investigations when theemployee first reports to the treating medical professional.The employer and adjuster can and should require a med-ical diagnosis and statement of causality from the providerbefore initiating modified duty under a workers’ compen-sation treatment program. For complex cases, a videotapeof the job and/or a nurse case manager assignment may benecessary to adequately determine whether or not theinjury should be handled as a workers’ compensation orSTD case.•Delay in reporting often accompanies the first fac-

tor. This occurs most often in workplaces where someform of on-site medical services is provided outside theworkers’ compensation system by the employer (on-sitenurse, periodic physician visits and on-site physicaltherapy are common examples). If the on-site medicalrepresentative is empowered by the employer to issuerestrictions (with or without documented diagnosis andstatement of causality), the treatment often enters a cycleof accommodated/full duty until the employee seeksalternative medical care outside the facility. Since theemployer has accommodated the employee for a signifi-cant length of time, the opportunity for the adjuster toadequately investigate the claim as compensable is lost,and the employer has foregone the option of denying theclaim as work-related.If employers choose to use on-site medical services

in some form, these services should be used primarily fortriage of injuries and treatment of first aid only. Protocolsfor interaction with injured or complaining employeesshould be clear, and treatment plans (including modifiedduty) should be prescribed by occupational physicianswith full knowledge of the workplace exposures.Modified-duty assignments should specify a time periodfor accommodation and the expected results of the less-demanding assignment in terms of medical recovery.•Lack of strategic plan for subsequent claim man-

agement actions. If no expected outcome is predeter-mined for the modified-duty assignment and no follow-upinformation is requested by the employer, the claim mayenter a repeating cycle. Adjusters typically do not aggres-sively follow claims if the employee is working. If theemployer also believes that as long as the employee isworking, the situation is acceptable, the claim may followthis pattern:1) Employer maintains status quo with modified-duty

assignment, awaiting information on changes from theadjuster.

2) Adjuster continues to process and pay medicalbills, awaiting revised work status from the physician.3) Physician schedules appointments with employee

at 4- to 8-week intervals with no communication of pro-gressive/regressive restrictions in the interim. Criteria forremoval from restrictions becomes employee’s accountof level of discomfort.To avoid this situation, the employer should predeter-

mine the interval between review of restrictions (as partof the overall RTW program) and communicate these tothe physician, adjuster and employees. The adjustershould then ensure that physician visits are scheduled sothat timely medical information is available for theseperiodic reviews and that criteria are set for the expectedoutcomes of the restricted assignment. In this way, anearly and objective determination of whether the modi-fied duty contributes to recovery may be made and moreaggressive treatment sought if necessary. This also pro-motes and reinforces the RTW program as a temporaryarrangement.•Lack of documentation, including the aforemen-

tioned job exposure information, accident investigation,past treatment history (including lost and restricted timeperiods) and specific information on the modified-dutyassignment (job steps, weights handled, frequency oftasks, tools used, rotation schedule and assistancedevices), are necessary to determine when modified dutyno longer benefits the employee and employer. Whenstakeholders have this information available, the mostcost-effective outcome may be determined, whether it bea return to full capacity, more aggressive medical treat-ment or permanently issued restrictions and reevaluationof the employee’s ability to perform the job.

CONCLUSIONTo make a presentation and business case to senior

management, you need a strategy that drives home thecost savings of the RTW program you plan to present.First, provide overview of the program so that seniormanagement can understand the basics. Next, explain theprogram in business terms and highlight the smart sav-ings it will deliver. Finally, talk in financial terms. If youfollow these guidelines, senior management will em-brace your program, and you will be well on your wayto having an effective RTW program that delivers thedesired results. �

REFERENCESHelve, P.F. (1993). Evaluating the practicality of

return-to-work programs.Atlanta, GA: Crawford & Co.Integrated Benefits Institute. (2001). Full cost study.

San Francisco: Author.

The authors are with AON Risk Consulting. Leslie M. Batterson,CSP, CPEA, is a senior consultant in Chicago. Bruce J. Fyfe,CSP, ARM, CPEA, is director of risk consulting in Irvine, CA.DeborahWeigand is a strategic director in Detroit, MI.

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