The cost controllers: absorbing the impact of two big mergers, the resilience of AT&T's Teddy Award-winning workers' compensation and disability management programs is a tribute to the teamwork that spawned them

Risk & Insurance, Nov, 2007 by Michelle Kerr

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Hey, who's your telecommunications provider? That's a simple enough question for some customers. But for the past two years, many have found it difficult to keep the players straight without an illustrated diagram.

In late 2005, SBC Communications Inc. merged with AT&T and elected to adopt the AT&T name. A second merger in 2006 pulled BellSouth under the AT&T umbrella, as well as Cingular, which had been jointly owned by BellSouth and AT&T.

If you think all of that sounds exhausting for the dozens of lawyers and accountants it probably took to pull it off, try to imagine what it must have been like from a workers' compensation and disability management perspective, weaving four programs into one with minimum disruption.

To its credit, however, AT&T has made it look (almost) easy. With Risk Management Director Michael Weiss and a talented team of dedicated professionals to navigate through the process, AT&T has not only survived, it has thrived, and its workers' comp programs have posted consistently outstanding results. That's why it's fitting that the company has been named winner of the 2007 Theodore Roosevelt Workers' Compensation and Disability Management Award in the for-profit category.

Since 2003, AT&T has reduced its claims frequency by 39 percent, with a parallel reduction in lost-time per claim. For the same time period, the company's total incurred cost per claim has plummeted by 28 percent.

From 2005 to 2006 alone, the company realized a savings of $5 million in total incurred costs. Despite a workforce increase of 11 percent, the company celebrated an additional 7 percent decline in frequency and a 9 percent drop in temporary total disability days.

And don't forget--this is all while in the throes of two large-scale mergers. No small feat.

START WITH PREVENTION

The driver behind all of this success is a sweeping overhaul of the company's programs, begun in 2003. AT&T, then SBC, took a long, hard look at its numbers and didn't like what it found--an upward trend in frequency and severity in workers' comp and disability claims.

In response, it formed an interdepartmental core team representing risk management, safety and human resources. With shared data, resources and goals, the team took on the task of drawing a roadmap for a new way forward.

The team agreed to move first into areas where the largest impact could be made. One goal set early on was to enhance the utilization of environmental, health and safety resources.

The organization began using its existing data to identify the highest risk locations and activities for targeted training and intervention. In 2004, 21 work groups were targeted for improvement, expanded to 52 work groups in 2005 and 87 in 2006. The efforts have netted a year-over-year reduction in incident rate of 30 percent or better.

One critical piece of the safety puzzle is the company's Work-Safe Observation program, a process of demonstration, explanation, observation and feedback. The observations are conducted in every facet of the organization, from climbing poles to driving trucks to desk work.

Hundreds of thousands of observations are recorded annually and added to a database. The system has multiple functions. It helps ensure accountability, and it also helps the safety organization and the core team track progress as well as further target needed improvement.

IT TAKES A VILLAGE

Leveraging the company's partnership with third-party administrator Sedgwick CMS, one of the areas where AT&T has made tremendous strides has been its transitional work program. Bearing an uncanny resemblance to an "it takes a village" philosophy, each return-to-work case is guided by a Sedgwick job accommodation specialist, who serves as expert and liaison for the employee, as well as for claims examiners, telephonic case managers, AT&T supervisors, union representatives and medical professionals.

If for some reason the employee's supervisor does not return him to work according to the plan outlined by the claims team, an escalation process routes the case to management for further action.

One of the most noteworthy aspects of AT&T's return-to-work program is the full-time dedication of an associate director of human resources, Carla Putnam, to the transitional work program.

Putnam's impact cannot be understated, says Weiss, particularly in her capacity to advance the program's overall goals.

For example, he explains, a lingering obstacle to RTW has been the resistance of managers to the presence of an employee unable to work at full capacity. Knowing that the situation could affect the productivity measures that their own bonuses are calculated from, managers balk at transitional placements. In response, Putnam has been actively working to get those productivity measures revised in order to remove the obstacle.

Explains Kimberly George, Sedgwick managed-care practice lead, "One of the reasons the organization took what Carla was doing and made it a formal role is because we were able to show all of the missed opportunity days that (the company) was experiencing and the dollars associated, literally down to their location level.