How to Reduce Injuries and ControlWorkers’ Compensation Costs byHolding EVERYONE Accountable

10/28/09

Joe Caracci, CWCA, ASCVice PresidentSOS ConsultingPH: 717-645-8381jcaracci@sosconsultinglp.com

1. What are your biggest safety concerns?

2. Most common injuries?

3. Biggest issues with Workers’ Comp?

My Main Point:

YOU can control injuries andhow much you pay for your

Workers’ CompensationInsurance

What would it mean to your company andto YOU if you could save 25% - 75% on

your Work Comp Expenses?

“I was immediately struck by Joe’s passionfor attacking root causes rather thantreating symptoms. It’s about positiveculture changes, which help companiesgrow.”

Michael Walmer,CEO/PresidentElectron Energy Corp

Landisville, PA

Injuries

“Zero Injuries”

Is This Your Expectation?

Or would you be satisfied with a % decrease?

“Let’s pick names now” Phil

Have you ever paid aclaim you thought was

NOT work related?

Before we worked with SOS & Synergy we started everyyear wondering which of our employees was going to“Get us” on bogus work comp claims.

Bob Zabady, CEOEllen Memorial Retirement Community

“SOS Consulting helped us drasticallyreduce work injuries and costs byholding EVERYONE accountable.”

Cindy Rouvre, Employee Health & SafetyGSV, New Holland

We see 40 - 90% Reductions in claimdollars, depending on level ofmanagement commitment.

Work Comp Claims HistoryYears with SOS Loss Control in Blue

$322,639

$536,545 $488,440

$106,469$56,345

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

2000-2001 2001-2002 2002-2003 2003-2004 2004-2005

For best results EVERYBODY needs to beinvolved and willing to be held ACCOUNTABLE.

We’ve worked with safety consultants fromall the big insurance companies. They triedto re-engineer our environment with nosuccess.

SOS Consulting & Synergy Comp Insurancehas “re-engineered” our people with GreatResults!

Joe GallagherPine Grove Manufactured Housing

Pine Grove, PA

Mistake # 1:

Confusing Workers’Compensation Tax with

insurance

No “Shared Risk” (expensive finance mechanism)

Reserves are set by the insurance carrier and areASSUMED to be spent if not removed by yourevaluation date.

RESERVES CAN KILL YOUR BOTTOM LINE !

Mistake # 2:Not Knowing The System

Government

Nurse CaseManagerLawyers

Communication is Vital to Success

Government

Lawyers

Employer

LET’S TRY THIS:

Mistake # 3:

Delegating The Responsibility ToYour Typical Insurance Carrier

“Average’ Insurance Claims Adjusters have 200 – 400Files On Their Desks

No financial incentive for Brokers, Carriers or ThirdParty Administrators to reduce your losses

Usually HR & Safety Managers don’t have time orauthority to RADICALLY CHANGE THE CULTURE!

How the Mod Effects Your PremiumExample Mod of 2.011

$77,194

$155,237

$58,281

$96,956

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

Average Mod1.000

Current Mod2.011

MinimumMod 0.755

PotentialSavings

“Most CEOs & CFOs don’t understand this.”Mike Smeltzer, President, South Central PA Mfg. Assoc.

Mistake # 4:

Ignoring Problems All Year ThenTrying To Solve By Quoting

CAN I GIVE YOU A QUOTE?

DOES THIS PREVENT INJURIES?

DOES IT SAVE MONEY IN THELONG RUN?

$900,000 to play golf

Safety Tip to Eliminate Dangerous Blind Spot

Facts:

113,000 Unintentional Deaths Yr.

108,000 Happen away from work.

Most happen while DRIVING.

Disabling Injuries = 24,000,000

Mistake # 5:

Huge Claims Often Start OnDate Of Hire

Would youhire theseguys?

PRE-PLACEMENT SCREENINGS

Items donated by localbusinesses so potentialemployees can beobserved and evaluatedwhile lifting, climbingand handling prior tostarting work.

Controlling the Hiring Process:

Background checks

Credit checks

Call references

Drug screens

Post Offer / Pre Placement Screening Process

Job Specific Functional Capacity Evaluations

Mistake # 6:

Giving NonOccupational MedicalDoctor$ Free Acce$$To Your Checkbook

The number of injuries are down…

However, …Costs have skyrocketed

Due to mismanagement

5 Minute Break?

Rocks & Sand Demonstration after the break

1. Production (Sand)2. Quality (Rock)3. Efficiency (On Time & Profitable) (Rock)4. Minimal Waste (Rock)5. Presenteeism (Rock)6. Morale (Rock)7. Safety (Big Rock)

What should you expect fromyour Work Comp physician?

1. Determination of causality

2. COMMUNICATION

3. Minimization of Lost Time (TRTW)

4. Expectation of decreasing occurrence

5. Work towards to goal of 0 injuries

A PARTNER TO HELP YOUR COMPANY INCREASEPRODUCTIVITY AND IMPROVE YOUR BOTTOM LINE

MISTAKE # 7Not getting “buy-in” from

employees

You must love…(or at least genuinely care about)your employees.

Treat employees as adults and hold themaccountable for safety.

Lacerated finger.

Direct cost: Hospital Bill $106.41

Indirect costs:

Wages paid 3.5 hours off job

Transportation to hospital

Overtime to cover remaining 4 hours

15% decrease in production

Damaged product

Four employees assist for 15 min.

7 employees discuss - 70 minutes

Employee seen for follow up visits

Supervisor investigates and reports

Total indirect costs - $750

Total costs - $857

$107

For every $1 spent on injury, $3 - $54 is wasted in time &opportunities (National Safety Council Statistics)

$750

STEEL TUBEWork Comp Expenses 2002 - 2006:

$4,667,179

x 8

= $37,337,432

This does not include increased penaltieson past or future premiums

How Many Tons of Steel Shipped to Pay for

$5,000 Claim? 25 T Direct 200 T Total

1 Hr ½” 8 Hr

$50,000 Claim? 250 T Direct 2,000 T Total

10 Hr ½” 80 Hr

$500,000 Claim? 2,500 T Direct 20,000 T Total

100 Hr ½” 800 Hr

$5 Million Total? 25,000 T Direct 200,000 T Total

1,000 Hr ½” 8,000 Hr

Averaging ~ 200 8 Hr Workdays / Year or 2 Months 24/7

How many hours are you working to pay for WC?

Revenues Needed To Cover Costs

1% 2% 3% 4% 5%

$1,000 $100,000 $50,000 $33,000 $25,000 $20,000

$5,000 $500,000 $250,000 $167,000 $125,000 $100,000

$10,000 $1,000,000 $500,000 $333,000 $250,000 $200,000

$25,000 $2,500,000 $1,250,000 $833,000 $625,000 $500,000

$50,000 $5,000,000 $2,500,000 $1,667,000 $1,250,000 $1,000,000

$100,000 $10,000,000 $5,000,000 $3,333,000 $2,500,000 $2,000,000

$150,000 $15,000,000 $7,500,000 $5,000,000 $3,750,000 $3,000,000

$200,000 $20,000,000 $10,000,000 $6,666,000 $5,000,000 $4,000,000

Co

sto

fIn

jury

Profit Margin

MISTAKE # 8

No Accountability SystemFor Behavior

AccountabilityWho needs to be held accountable?

• Top Management: Policies, Procedures & Commitment

• Supervisors: Training & Enforcing Policies

• Employees: Behavior

• Insurance Industry: Claims Management (Victor)

• Medical Providers: Best Care & Communication (TRTW)

Zinc BurnCT / Liver

Rep Motion after 1 dayMarie PV construction

Ask Yourself …

Do More Accidents Occur in theWorkplace

Because of Unsafe Conditionsor

Unsafe Acts?

2006 NASCAR Champion: "Jimmie Johnson was horsing aroundand was on top of the golf cart when he fell off," spokeswomanKristine Curley said.

Swimming Pool

What’swrong withthis picture?

Where is hissupervisor?

Who trainedhim?

Middle School Report Card

Class Name Instructor Last Updated Grade GradebookClassNotes

Term 1: LA 7-2 Schober11/04/2005

12:26PMA+

97.3%

Bottom of Form

Term 1: Science 7A3 Mr. Mease10/31/2005

02:52PMA+99%

Bottom of Form

Term 1: MUSIC Miss Prussner11/04/2005

02:55PMA

100%

Bottom of Form

Term 1: KB Mrs. Meiskey11/04/2005

02:56PMA

97%

Bottom of Form

Term 1: Tech Ed Mr. Meier11/04/2005

04:01PMA

92.3%

Bottom of Form

32-54%

THE ACCIDENT REPEATER• Represents less than 10% of the workforce

• 50%-75% of total claim frequency

• 25%-95% of total workers’ comp costs

• Safety must be a condition of employment.

• “Door that was once wide open, slams shut!”

If you want to experience somethingyou have never experienced before,you must do something you havenever done before.

“Insanity: doing the same thingover and over again andexpecting different results.”

Albert Einstein

Are you afraid to let go of your nickels?

CHANGING YOUR CULTURE

Commitment & Sense of Urgency needed

The CEO must “get it”.

“Whole Nine Yards”

“Balls to the Wall”

Paul O’Neill (Alcoa 1987-1999)

Jack Welch (GE 1980–2001)

“Beat the Drums”

SOS Consulting

SYNERGY OF SAFETY

SOS MODEL CORE ELEMENTS:

Safety Culture Evaluation & Gap Analysis

Accident Repeater Program

Supervisor Training & Mentoring

Employee Training & Incident Investigations

Monthly Department Safety Audits

Review & Assistance with Safety Policies & Procedures

Help With Hiring Practices (Post Offer/ Pre Employment)

Claims Management Guidance

SAFETY FIRST

Asking me to overlook a simplesafety violation would be

asking me to compromise myentire attitude towards the

value of your life

This attitude doesn’t work!

This attitude does!

If you want to improve your safety culture…WE CAN GET YOU THERE!

I interviewed three other safety consultantsbefore hiring SOS. I had the feeling the otherconsultants just wanted everyone to holdhands and sing Kumbayah.

I was impressed when Joe started talkingabout holding everyone accountable, includingme!

Rick Merluzzi, PresidentPennex AluminumWellsville & York, PA

Did you learn anything today?

Questions?