Demonstrate your worth with dollar figures, or risk layoffs
Speak 'in the language of measurable results'
[Editor's Note: This is a three-part series on using financial data to demonstrate the value of occupational health programs. This month, we report on how to demonstrate cost savings to your employer and give a checklist of data you should present. In future issues, we'll report on how to align occupational health programs with business objectives and how to identify the top health care cost drivers at your workplace.]
To cut costs, executives at Deerfield, IL-based Baxter Healthcare Corp. were talking about eliminating an occupational health nurse (OHN) position at one of the company's manufacturing sites. What they failed to consider were the costs of providing these services offsite, but OHNs wasted no time in presenting this compelling information and saved the nurse's job.
"Without data, it would have been very difficult to save this position," says Sharon Kemerer, MSN, RN, COHN-S/CM, FAAOHN, Baxter's corporate director of occupational health. "You can't get emotional about these things; you need to make a business case. You can't do that unless you collect the data."
Your goal is to prove that although you might not be generating revenue, you are saving the company money. "Monika Fischer, MN, RN, APRN BC, CCM, COHN-S, FAAOHN, health services administrator for the City of Glendale, CA, says, "With current talks of recession, companies are looking at where they can cut costs. They always look at non-revenue generating areas first."
Too often, OHNs lack any proof of the money they are saving employers. "People often say, 'I don't have to report what I do. They know I'm working hard,'" says Kemerer. "I don't think that is ever true in for anybody in business, no matter what your profession. We need to be effective business partners, and business speaks in the language of measureable results."
At Baxter, metrics a set of measurements that quantify results, such as return on investment are used to document the OHNs' contribution in case management and to perform periodic cost/benefit analysis. "This approach has been extremely beneficial for us in terms of strengthening our perceived value in the organization. We rely quite heavily on metrics," says Kemerer.
To demonstrate your worth in dollar figures, do the following:
Collect data on your encounters with employees.
At Baxter, this data is collected on a quarterly basis and used to obtain an activity per FTE analysis.
"Previously, we didn't have a lot of reportable measures for occupational health, but we have changed all that," says Kemerer. "More importantly, we use the detailed level of the information to do periodic cost/benefit analysis, to demonstrate the savings by having OHNs onsite." Since data is collected electronically, there is no question about its validity, with every number relating to a specific employee visit.
In 2007, Baxter's occupational health department documented savings of over $2.6 million dollars as a result of U.S. case management interventions. "By showing some of our savings on case management, we were able to add a corporate level occupational health position," says Kemerer. "We just added another two positions at our sites in the last six months."
Be sure your data is valid.
When determining future benefits of a program, it is often difficult to have true numbers, and you may need to extrapolate, says Fischer. "Validity of statistics is vital, especially when money is at stake," she says. "I would recommend that you underestimate as long as it still supports your goal."
For example, showing a $2.50:1 return on investment (ROI) is impressive, but if you come up with a $5.75:1 ROI, you might have an uphill battle to make management believe your numbers. "You need to triple check all figures before presenting," says Fischer. "Remember, if they look too good to you, they probably are, so go back to the drawing board."
At Baxter, the methodology used to demonstrate case management savings was developed with the company's finance department, so occupational health is not accused of reporting soft numbers, says Kemerer. "Unless you have a consistent methodology and agreement that it is valid, you can be subject to a lot of criticism," says Kemerer. "We have all our reported savings peer reviewed, so people have a high degree of confidence. They feel the numbers are conservative and not being inflated."
Outsourcing can be stopped
Look at your practice or clinic as a business model, not a medical model, recommends Fischer. "A company's worker's compensation costs may decline, but the nexus between having an OHN and that decline won't be recognized unless the OHN makes some noise about it," she says.
Showing cost savings often can stop a company from outsourcing the OHN's services, says Fischer. "Many outside agencies tout good prices, but they don't affect the businesses' bottom line like someone inside the company can," she says. "I have heard many stories of outsourcing, only to have the company end up bringing the services back in a year or so."
To make the best possible case, however, you'll need more data than worker's compensation costs, adds Fischer. Obtain absenteeism numbers and what this costs the company, health care costs, turnover rates, and productivity statistics, she advises.
"If involved in training on safety issues, you should be looking at injury counts," says Fischer. "You can work with the safety section on this."
One area that often is overlooked is the true value of direct care services given by OHNs, says Fischer. Determine the cost of everything you do for employees, then determine what it would cost if done externally and do periodic comparisons of these, she advises. "This is how our cost/benefit analysis process is designed," says Kemerer. "We used it proactively to demonstrate business value on an ongoing basis."
Track all of your daily activities, and attempt to quantify what those activities would cost if the services were outsourced, says Judy Van Houten, manager of business development for Glendale (CA) Adventist Occupational Medicine Center. "For example, if you provide first aid services, drug specimen collections, or breath alcohol screenings, what would those services cost on the outside? How much time would the employee lose in traveling to the clinic and back, and what does that equate in lost productivity?" asks VanHouten.
You'll need to know the number of employees treated per day, the costs to treat similar conditions or ailments at an occupational medicine clinic, the number of case management calls per day, and case management costs from your worker's compensation carrier, says Van Houten.
"The value of case management communications phone calls, e-mails, and review correspondence is often undervalued or overlooked," adds Van Houten.
It's a major task to determine what the outside cost would be for all the services you provide, but if your process is ongoing, you will always have this data available, Fischer notes. "I send it to my manager periodically, even if he doesn't ask," she says. "I use my expenses as a source for in-house cost and the National Fee Schedule for outside results. I have found that my numbers are significant."
SOURCES
For more information on demonstrating the cost savings of occupational health, contact:
- Monika Fischer, MN, RN, APRN BC, CCM, COHN-S, FAAOHN, Health Services Administrator, City of Glendale, CA. E-mail: [email protected].
- Sharon Kemerer, MSN, RN, COHN-S/CM, FAAOHN, Corporate Director, Occupational Health, Baxter Healthcare Corp., Deerfield, IL. Phone: (847) 948-4194. Fax: (847) 948-4114. E-mail: sharon_ [email protected].
- Judy Van Houten, Manager, Business Development, Glendale Adventist Occupational Medicine Center, Glendale, CA. Phone: (818) 502-2050. E-mail: Van [email protected].
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