Quantifying the financial impact of occupational injuries and illnesses, and the costs and benefits associated with an ergonomic risk control intervention within the Uniprise business segment of UnitedHealth Group

Abstract

The Uniprise business segment within UnitedHealth Group has experienced considerable direct costs associated with occupational injuries that have impacted overall profitability since 1999, with 44% of the total cost driven by cumulative trauma disorder. A clear, standardized method of quantifying the financial impact of injury is critical to effectively propose and gain support for a risk control initiative focused on the reduction of cumulative trauma injuries within Uniprise. Currently, UnitedHealth Group has neither a formal system to effectively quantify direct costs associated with occupational injury and illness nor a formal financial model to estimate the costs and benefits associated with risk control initiatives. The methodology used to accomplish this study included identifying and quantifying the historical cost of occupational injury and illness, translating related costs into impact on profitability, projecting the estimated costs associated with an ergonomic program intervention, and applying UnitedHealth Group’s cost-benefit financial model to estimate the return on an ergonomic risk control initiative. The literature reviewed the types of related costs to be considered, methods of translating costs into business terms, cost and benefit statistics associated with ergonomic interventions, and financial cost-benefit models to project return on investment. The first goal of this study was to conduct an analysis of Uniprise workers compensation claims to determine the number, total cost, and distribution of claims as they relate to the Uniprise business segment. Based on the distribution and cost of claims by injury cause, a risk control intervention focused on reducing cumulative trauma disorders within the Production and Service divisions would have the greatest impact on the costs associated with occupational injuries and illnesses occurring within the Uniprise business segment. The second goal of this study was to quantify the operational impact of occupational injuries and illnesses by translating costs into impact on profitability within the Uniprise. Using 2001 as an example, $7,297,382 in additional revenue was required to compensate for Uniprise occupational injuries and illnesses occurring that year. While substantial, in addition to showing impact on revenue, the cost of occupational injuries and illnesses in terms of impact on productivity would provide a more meaningful business measure. The third goal of this study was to estimate the costs and benefits of an ergonomic risk control intervention and apply those estimates to a financial model to determine the return on investment associated with the intervention. Based on the positive return on investment resulting from the application of the UnitedHealth Group Cost-Benefit model, a formal ergonomic risk control intervention would be a profitable investment for Uniprise.