Is OHC a cost centre?
An Overview by Dr. Satyanarayanan, MBBS., AFIH, Medical Director, HOSCONS Occupational Health
Employees are a company’s most important investment. When a team member gets sick or injured at work, getting him or her back to health is always a pressing priority. However, making sure that employees don’t get hurt or sick in the first place is always the main goal.
More than 3 million people struggle with some kind of serious work-related injury or illness annually in India. Millions of employees are exposed to environmental health hazards that could develop into health challenges in the years ahead. Estimates suggest that worker’s compensation claims add up to Lakhs of rupees each week. And this doesn’t count the lost wages and other expenses, such as decreased productivity and the psychological challenges that are the results of dealing with an injury.
Regardless of what type of business a company operates, understanding occupational health and having a program in place are key to reducing overall health costs, improving productivity and ensuring a safe workplace.
COSTS OF AN OCCUPATIONAL HEALTH
The National Institute for Occupational Safety and Health (NIOSH)published a study in 1980, which
addressed the costs of occupational health. I It states that little work has been done from the
managerial perspective toward evaluating the nature of the relevant costs and benefits of occupational health programs, even though benefits in improved employee morale, increased efficiency and productivity, and reduced costs for lost-time and medical treatment have been commonly acknowledged The study, comparing four manufacturing facilities with Occupational
Health program and four without Occupational health program showed the facilities with
OHC have a lower average annual rate of OSHA log reports and a lower average annual rate of lost-time cases than the facilities without OHC. These were favourable findings for an occupational health program. However,
In general, costs to the employer for an occupational health program includes
- Costs of the physical facility,
- Costs of supplies,
- Cost of staff,
- Other costs e.g., travel, employee time & Accommodations for staffs.
- Hidden cost which includes
- Insurance premium,
- Referral cases
- Lost time injuries cost,
- Absenteeism cost
- Occupational illness
Very often employer use to see only the tip of iceberg (1/4thcost involved in setting & running occupational Health Centre) but the hidden part of iceberg which contributes the 3/4thcost of health expenditure such as insurance premium, referral cases, lost time injures, occupational illness etc. isoften neglected by the employer. This Hidden cost, which contribute the major portion of healthcare expenses by employer. A good occupational program in place will help to reduces hidden cost, improving productivity and ensuring a safe workplace
BENEFITS OF ANOCCUPATIONAL HEALTHPROGRAM
Depending on the scope of the occupational health program provided, the benefits may vary. Benefits of an Occupational Health program to the employer are both direct and indirect. Direct benefits consist of reductions in costs & liabilities. which could include:
- Reduction in occupational injury and illness costs.
Treatment of minor illnesses and injuries by the Occupational Health Team is generally less expensive and requires less employee time away from work than an outside visit for treatment If your organization currently has no OHS management system in place, you’ll be painfully aware of how expensive it can be to correct mistakes and problems. You see, without a system to track and monitor accidents and incidents, you have no formula for reducing the risks faced by your employees.
Staff compensation claims that push up your insurance premiums
The cost of hiring temporary staff to plug gaps in your workforce while the injured workers recover.
But there are other indirect costs too.
Your workforce is your business’ greatest asset: each accident and incident WILL dent staff morale. When workers feel that their employer doesn’t take OHS management seriously, they’ll be less likely to engage with their work. This has a significant knock-on effect when it comes to productivity
- Reduction in costs for physical examinations.
The Occupational Physician may perform part or all of the examinations or He may arrange for a Consultant to visit the facility to perform the examination thus saving employee lost-time formwork.
3.Reduction in non-occupational medical costs. Health promotion programs coordinated/conducted by the Occupational Physician may have an impact on decreasing the employee’s insurance claims thus decreasing expense to the employer.
4.Lower insurance premiums
When most businesses start considering a formal OHS management system, one of their first considerations is cost. While cost is certainly part of the equation, it is important to understand how the outlay is offset by cost savings.
In today’s litigation culture, insurance premiums are mandatory, but insurers will offer lower premiums if you can demonstrate that you are effectively controlling risks to your workers on your premises.
If you can use an OHS management system to reduce injuries and illnesses by – say – 20 percent, this is valuable evidence that you can use when you come to renew your premiums. Your organization’s perceived risk is lower and this may result in cost savings through lower insurance premiums.
5.Regulatory compliance Increased
If there are two words that strike fear into the heart of most business owners, then these two may be it: ‘regulatory compliance’.
Regulations are increasingly stiff and the punishments are ever-fiercer.
For example, The Factories Act requires that Indian businesses immediately notify their regulator whenever a ‘notifiable’ incident occurs – such as a death, serious accident or injury. If you have no OHS management system in place, the chances of unwittingly committing an offense are quite high, whether due to negligence or human error.
A proper OHS management system will help ALL of your staff stay aware of current legal requirements. This improves your regulatory compliance and lowers the risk of you having to pay a fine.
Indirect benefits to the employer
1.Reduction in absenteeism
Sickness absence represents a significant burden on both the employer and the employee. The outcome for the employers is mounting sick pay, reduced productivity and unnecessary recruitment and for the employee, reduced earnings, job loss for some and an increased workload for colleagues.
Sickness absence is either defined as short term or long term absence. Short term is often easier managed and can be dealt with using absence policies, disciplinary procedures and occupational health. It is important for employers to have effective occupational Health program and return to work procedures in place.
A good occupational Health program in place will improved employee morale, improved health status, and reduced anxiety related to illness or exposure to hazards.
2.Improved staff relations and morale
If your organization currently has no OHS management system in place, you may kid yourself into thinking that members of staff haven’t noticed.
But they probably have!
Employees will notice whether their managers are taking a genuine interest in their health and safety.
They may not articulate it, but you’ll notice it in their engagement levels and their on-the-job behaviour.
At one extreme, organizations with no OHS management system in place may see employees engaging in unsafe behaviour on the job, either intentionally or unintentionally. Without a solid safety culture, employee may put their own safety or the safety of others at risk.
All of this changes when a company invests in an OHS management system. Employees will start to feel more comfortable and secure as they’ll have a set of clear OHS practices in place. After completing their training, they’ll know the exact guidelines to follow in any situation, helping them gain confidence while at work.
When you start implementing an OHS management system, you’ll notice that workers’ productivity and morale will improve, employee retention rates will increase and your organization’s growth will rise.
3.Improve business efficiency
An OHS management system can help you:
Reduce the number of sick and ill days that your staff take
Lower the number of temporary workers you need to hire
Lower insurance premiums
Increase staff morale and productivity
Improve staff retention rates
Reduce training costs (for new and temporary staff)
Improved efficiency SHOULD be a strong incentive for taking action and an OHS management system offers unbeatable advantages compared with having no system or one of limited effectiveness.
A strong OHS management system helps drive down costs in almost every way.
By reducing risk, you’ll have a lower accident and injury rate, helping you avoid the cost of hiring and training temporary workers and having to replace or repair damaged property and equipment.
With fewer accidents to investigate, OHS management systems also reduce the cost of investigating accidents and help you avoid scheduled delays that you’d otherwise encounter.
In the long run, starting an OHS management system is one of the most profitable steps that any organization can take.
4.Improved public image and PR
Whoever coined the phrase “There’s no such thing as bad publicity” obviously never worked in PR for a multinational!
For modern organizations, serious health-related accidents and injuries DO become public and CAN cause irreparable harm to a company’s public image. When it comes to building brand appeal and gaining new customers, you’re swimming against the tide. The last thing your organization needs is a major incident to detract from your good work.
Consumers are far less likely to trust companies that don’t take their employee’s health and safety seriously. That’s why putting in place an OHS management system is a sensible precaution to take. It shows your employees that you value their rights to a safe and healthy working environment and have every intention of respecting this. Over time, this can help you boost your public image, making staff hiring and retention far easier: a win-win for both you and your employees.
5.Easier access to finance
Gaining finance from banks and investors is never easy, especially in today’s challenging business climate.
But an OHS management system is an important part of proving to potential investors that your organization is well-managed.
There is strong evidence that banks and investors will be more willing to finance businesses that can show they are well managed.
With fewer accidents and injuries and a set of clear guidelines that help you respond to any incidents that occur, your company will have a healthier bottom line and an improved chance of winning investments that it may otherwise not.
As a business or organization adopting an OHS management system should be irresistible. Focusing on employee health and safety can have major ramifications for your business and can impact everything from your profits, to your costs and even your public image. Occupational health and wellness are about more than just preventing accidents. It’s about cultivating a workplace that promotes health and wellness. With the right programs in place, employers can reduce absenteeism, decrease turnover rates, increase productivity, and improve morale.
To Know more
If you’re keen to learn more about how to put intentions into actions and start investing in your OHS management today, give us a call!