How to Keep Medical Costs Proportionate to Overall Cost Reduction

The second of the nine Myths & Realities:

MYTH #2: You should begin by reducing the cost of your medical providers.

REALITY: Reducing your medical providers’ fees is a noteworthy cause, but it is not the first thing to do when establishing a comp control plan. If you have employees sitting home on workers’ compensation, you should bring them back to work before you focus on medical cost containment issues.

If you can reduce the number of “lost days” and bring your employees back to some sort of transitional duty position, you will be taking a giant step toward controlling your comp costs. That’s because for each day your employees are out of work, you pay more in indemnity payments.

Half the cost of WC is lost wages. Indemnity payments are tax-free payments made to your employees to replace the wages they lose while they are out of work. The sooner employees go back to work, the more money you will save. While it is true that some employees will only be partially productive during the transitional duty period, it’s better to have them at work being partially productive than losing all productivity by sitting home.

Also, the longer someone remains out of the workplace, the less likely it is that they will ever return to your workforce and the more likely it is they will suffer some level of clinical depression. As your lost day count goes down, so will all of the costs — including medical costs — associated with workers’ compensation. Often employees seeking to stay out of work use a doctor as a tool and seek treatment continuously in order to accomplish their objective of staying out of work longer.

For more cost-saving tips go to WC Cost Reduction Tips.
Show the REAL cost of workers’ comp with the Real Cost Calculator.

Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs.