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Case study: how Macy’s saved on workers’ compensation costs

With total workers’ compensation costs continuing to rise, employers like Macy’s, Inc., are looking for strategies to help control those expenses. The situation is especially challenging in California, where workers’ compensation premiums have increased 41% since 2009 due to the high price of care delivery, litigation rates, and workplace injury costs.1

A closer look at Macy’s workers’ compensation challenge

Lifting, pushing, pulling, holding, or carrying objects is normal for many of Macy’s 29,000 retail workers. Unfortunately, these activities are also the leading causes of disabling workplace injuries.2 And much of Macy’s workforce is concentrated in Southern California, where the cost of workers’ compensation claims is high. In fact, the average medical costs for claims in Los Angeles are up to 39% higher than in other parts of the state.3

To offset these cost drivers, Macy’s added Kaiser Permanente’s occupational health program Kaiser Permanente On-the-Job® to their provider network. By focusing on providing the best possible care, Kaiser Permanente On-the-Job helps return employees to work faster and lower the number of claims involving litigation.

Macy's employee care from Kaiser Permanente On-the-Job resulted in: 41% lower total costs per claim, 45% lower direct medical costs per claim, 59% lower average pharmacy costs per claim, 64% fewer claims involving litigation.

Lower costs, even for multiyear closed claims

To measure the performance of their occupational health providers, MedMetrics conducted a study of Macy’s workers’ compensation claims. They compared Kaiser Permanente On-the-Job’s results treating injured Macy’s employees to results from other occupational health providers. After reviewing a total of 2,754 claims that had opened and closed during a 3-year period, MedMetrics found that Kaiser Permanente On-the-Job drastically lowered the following cost drivers:4

  • 41% lower total costs per claim
  • 45% lower direct medical costs per claim
  • 59% lower average pharmacy costs per claim
  • 64% fewer claims involving litigation
  • 42% lower medical costs for low-back injuries per claim
  • 73% lower costs for shoulder and upper-arm injuries per claim

Typically the cost of a workers’ compensation claim goes up the longer the claim stays open, even doubling from the first to the second year.5 But total claims costs remained lower even for multiyear closed claims with Kaiser Permanente On-the-Job — real-world evidence that Kaiser Permanente On-the-Job’s integrated model of care delivery and evidence-based medicine provided Macy’s with a better bottom line.

Integrated occupational health care with Kaiser Permanente On-the-Job includes an occupational health physician, therapist, care coordinator, pharmacist, and nurses.

Better care for a better bottom line

Kaiser Permanente On-the-Job follows state-mandated fee schedules, relying on an outcomes-based strategy to manage claims costs. Elements of this approach include:

Integrated care — Our occupational health physicians, nurses, care coordinators, and therapists are connected to the same electronic health record system. Real-time access to medical records means they can make well-informed decisions faster for better outcomes and higher patient satisfaction.

Convenient locations — Many Kaiser Permanente On-the-Job facilities are located at or near our medical offices and hospitals. This means employees — even those who aren’t Kaiser Permanente members — can get the care they need quickly, so they can return to health and to work as soon as appropriate.

Coordinated case management — Kaiser Permanente On-the-Job keeps employers informed with regular work status reports, and works with them to help ensure employees return to work appropriately.

A more effective workers’ compensation solution

As the impressive results from this study show, a partner with an integrated model, focused on high-quality care and better outcomes, can help protect your business from rising workers’ compensation costs. Learn more about Kaiser Permanente’s occupational health programs.

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  • Kevin Smith, “California Ranks Highest for Workers’ Compensation Costs,” San Gabriel Valley Tribune, October 22, 2014.

  • 2016 Liberty Mutual Research Institute Workplace Safety Index.

  • California Workers’ Compensation Institute, “California Workers’ Compensation Regional Differences,” presentation to the Committee on Labor and Industrial Relations, December 2, 2015.

  • “Macy’s Workers’ Compensation Claim Costs in California,” MedMetrics, 2016. From July 1, 2012, to June 30, 2015, MedMetrics compared care provided by Kaiser On-the-Job® health centers and physicians with the care offered by other programs used by California employees of Macy’s Inc.

  • “Costs Mount Quickly As Workers’ Comp Claims Age,” Business Insurance, May 9, 2016.