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Understanding the costs of poorly managed RTW

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prod_tip Who should know about the costs?

Return to work coordinator
Senior Management
Finance managers
Human resources
Line managers


Management in both small and large organisations tend to underestimate the costs and misunderstand the impacts of workplace injury.
Ironically, while stationary purchase systems are in place to save hundreds of dollars, the mismanagement of RTW means that tens of thousands of dollars are spent without a clear understanding of the issues or a sensible decision-making process.

Why everyone benefits from understanding costs...

When an organisation understands the costs associated with different approaches to injury management, it can make an informed, business-savvy decision about what approach is best.
There are strong business benefits to best practice injury management: there are also substantial health benefits for injured or sick workers.
All levels of an organisation benefit from understanding the issues at stake in RTW. The more staff and management ‘get it’, the better off the entire organisation.
Here’s how everyone benefits from understanding the injury management bottom line...


Return to work coordinator

Being able to quantify and compare the costs of poor injury management with best practice injury management enables the RTW coordinator to:

Make the case for best practice systems; and
Knowledge-share with the rest of the organisation

In the long run, this means that the RTW coordinator will have to spend less time worrying about the nitty gritty aspects of individual cases, and be freed-up to focus on strategic goals.


Senior Management

When the upper levels of management understand the costs of poorly managed work disability systems, they can provide the organisation with more effective leadership and are more likely to continually review the relevant procedures. This benefits the entire organisation.

tipbulb Senior managers who understand the costs are more likely to be positively involved and support injury management.


Senior managers who understand where the financial bottom line sits in relation to work disability are more likely to:

Also understand how they can contribute to reducing costs;
Have confidence in the injury management system;
Be involved in the injury management system;
Hold subordinate managers to account for their role in injury management; and
Lead the organisation in reducing unnecessary disability.

Understanding the costs of injury management is good for productivity and profits.


Finance managers

Finance managers who understand the cost implications of injury management are more likely to:

Know how insurance premiums are calculated;
Recognise the indirect costs of a claim;
Set up reporting systems that are transparent and practical; and
Provide senior managers with accurate information about the relevant costs.


Human resources

tipbulb HR teams can exert greater influence over the team approach when they understand and communicate the human and cost implications of injury management.


A clear understanding of disability and work absence costs allows the human resources team to engage others, build a team, and make clear decisions about case management and the work injury system. A HR team that understands costs is able to:

Talk to senior managers about the cost implications of different approaches to injury management;
Influence line managers; and
Decide on case management strategies at an early stage of the claim.


Line managers

tipbulb Line managers who understand their roles, and the human and cost implications of their actions, are more confident and helpful.

Line managers are more likely to comply with best practice procedures when they are aware that their actions have demonstrable cost implications. A line manager who understands injury management will know that spending money and time in the short term is sometimes the best way to make long-term savings.
Line managers who ‘get’ the relationship between costs and injury management are able to make informed decisions about employee support and claim disputation.

A production manager does not consider a worker’s stress claim to be valid and she must decide whether to dispute or accept the claim.
If the claim is accepted...
The production manager estimates that adopting a supportive approach as soon as the claim is presented will bring the person back to work within a week, taking the cost of the claim to $6500.
If the claim is disputed...
Claim disputation is likely to result in the person remaining off work for longer. There are two possible outcomes:
1.A successfully disputed case will have lower direct costs than an accepted claim, although indirect costs will still be incurred.
2.However, if the claim is disputed and subsequently accepted the worker is unlikely to return to work. The cost here is estimated to be $185,000.

The production manager calculates the chance of the claim being ultimately accepted at approximately 60%.
Faced with those two options, and understanding the financial impact and the odds, the production manager picks up the phone and calls the stressed worker to ask how she - and the organisation – can be of assistance.



tipbulb Employees who understand the financial impact of being off work are in a better position to make important life decisions about their situation and their future.


Employees who do not understand injury management may inadvertently opt for perceived short term gain (eg. prolonged time off work with full or near-to-full pay) at the expense of long-term rehabilitation. This trade-off means poorer medical, financial, social and family outcomes for the worker.  Employees who understand best practice injury management are more likely to:

Want to be partners in the return to work process;
Cooperate with rehabilitation requirements;
Return to work sooner; and
Have better health outcomes and job prospects in the long run.


System benefits

An understanding of costs also assists in the development of best practice systems. For example, an organisation might decide that in some circumstances it is more cost effective to budget for capped assistance payments to employees who lodge a questionable claim than to dispute the claim.

Case study tick 32 A worker in a call centre has a throat problem and after assessment the insurer indicates that it is not a work-related matter. The worker requires minor surgery. Rather than go through a lengthy dispute process, the workplace allocates up to $850 to assist the employee with surgery through a special budget set up for the individual. By doing this the organisation helps the person with their needs, avoids disharmony, and expedites early return to work.