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Workplace Injury Cost and Effect to Bottom Line

Risk Management |
Written by Dell Dorn

By Lynn Whitbeck, DORN Companies

 

We have all begun to recognize that workplace illnesses and injuries are more expensive than historically thought. In most cases, we have only reviewed and compensated for the DIRECT costs associated with injuries, which are in fact considerable. The direct costs of an injury are the easiest to see and understand. These costs include emergency room and doctor visits, medical bills, medicines, and rehabilitation. But direct costs are just the tip of the iceberg.

Risk managers and corporations are now thinking about health/safety and injury prevention and their collective recognition of the importance of the INDIRECT costs of injuries and illnesses. The indirect costs can be best described as all unbudgeted costs associated with an injury in order to get the employee back to pre-injury status.

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“The direct costs are literally just the tip of the iceberg. Indirect cost multipliers for work related injuries range from 3 to 10 times as direct costs!”

R .Gagne, VP Worker’s Comp and Disability Fit2WRK

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Based upon the National Safety Council cost formula a company experiencing an employee injury with direct costs of $5,000.00 is expected to carry indirect costs of approximately $20,000.00. This brings the total cost to the employers’ bottom line to $25,000.00. Assuming a profit margin of 10%, it would take the same company $250,000.00 of revenue creation and collection to offset the expense.

Direct and Indirect Costs Graph DORN

Recognition of the true costs of workplace injuries has spurned interest in properly constructed “preventative” programs to prevent injuries from occurring in the first place. Corporate America is making intervention and prevention programs a primary objective. From post offer screening and integrated soft tissue injury management programs to preventative maintenance protocols for the aging workforce, it is clearly a positive return on investment.

Focus on tracking both the direct and indirect costs associated with a work related injury results in a bigger picture of their effect on the bottom line. The DORN PainFree™ treatment is a nationally recognized early intervention and prevention program. An evidence-based worksite hands-on therapy that quickly and effectively relieves and eliminates employees’ muscular pain. We significantly reduce workers’ compensation and healthcare costs. DORN can help you achieve your objectives of reducing Direct and Indirect workplace injury costs with positive bottom line impact.

Read the article by R.GAGNE, EET, CFE, NADEP

 

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About the Author

Dell Dorn

Dell Dorn is the founder of DORN Companies. He started DORN in 1998 to help employers save money on workers' compensation claims and reduce OSHA recordables. Today, DORN customers realize the immense cost of employee pain and the enormous impact our service has on employee morale and their bottom line.
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