Health Care Workers’ Comp Claim Severity On the Rise: Aon

Workers’ compensation claim frequency is expected to decrease but claim severity will rise in 2013 for the health care industry, according to a new report.

Aon Risk Solutions, the global risk management business of Aon plc, launched its first Health Care Workers’ Compensation Barometer report, representing workers’ compensation exposures from more than 1,000 health care facilities across the country. For the 2013 accident year, Aon projects that health care systems across the country will experience an annual loss rate of $0.79 per $100 of payroll, which continues the stability that has been in place since 2008.

Aon’s study also shows that loss rates will continue to increase at a 1 percent annual rate. The stability in workers’ compensation loss rates has been driven by the decrease in claims frequency, which has experienced a steady decline over the past decade and is expected to continue that trend at an annual rate of 1 percent in 2013.

There are several factors likely responsible for the consistent decrease in frequency, including:

• The health care industry’s intense focus on patient safety has direct implications for workers’ safety, as an environment that is safe for patients is also an environment that is safe for employees.
• The use of new technology, including beds and patient lifting devices, has helped to make the workplace safer.
• Nursing staff turnover at the lowest levels in years, the average experience and competency has risen dramatically with favorable implications for workers’ compensation.

While claims frequency remains low, claim severity, including medical, indemnity and expense costs, has been steadily increasing, and projected to continue at a rate of 2 percent per year. There are several reasons causing the increase, mostly related to outside influences like the challenging economy

Survey Findings

Patient handling tops the list of greatest concerns for risk managers, as claims connected to patient handling account for 25 percent of all health care workers’ compensation claim payments. It also has the highest average indemnity payment. Absence management, managing costs and aging workforce round out the remaining top concerns for risk managers.

“It is interesting to note that employee turnover is at the bottom of our report’s list. The economic condition of the last several years has dramatically changed the employment landscape for nurses,” said Greg Larcher, regional director and actuary with the Actuarial & Analytics group within Aon Global Risk Consulting. “Part-time nurses are working full-time and nurses that left the profession for other industries are coming back to nursing. The bright side for health care providers is that they are now able to select the best and brightest to join their staff.”

The availability of registered nurses has allowed health care systems to decrease their reliance on unlicensed personnel. While employee turnover may be low on the list of concerns, the shift in the overall experience and competency of nurses has important considerations for workers’ compensation results.

“Our experts were also surprised to find that two-thirds of survey respondents either do not have a return to work program or do not have any way to test the effectiveness of their return to work program,” said Martha Bronson Posey, senior consultant and actuary with the Actuarial & Analytics group within Aon Global Risk Consulting. “Without a measure of efficiency and effectiveness, the health and productivity of the workforce is suffering. It has been illustrated time and again that return to work programs keep business and premium costs down as well as benefit injured workers. It’s a win-win for both the health care system and injured worker.”

Topics Trends Workers' Compensation Aon Medical Professional Liability