I recently had the opportunity to review the WorkCompEdge site with the risk manager of a large corporation. It was a fascinating conversation because he had extensive experience, possessed an analytical mind (I’m partial to those), and could tell a story related to every topic within WorkCompEdge. But, for this blog, I wanted to share with you one particular insight I gained from this meeting.

If your “defense system” lets 100% of your potential new hires through, you need to be concerned.

In the Avoid Hiring Your Next Workers Comp Injury module, we discuss the importance of the post-offer, pre-employment medical screening. Bob (not his real name) shared his experiences with this method for preventing a new hire from quickly becoming your newest work comp claim. Bob verified what we thought when we developed this module: he had definitely seen situations in which an effective medical exam program made a dramatic impact on the frequency of work comp claims and resulted in verifiable long term significant savings. But, just as importantly, he had also seen cases in which the effort to screen out candidates with preexisting conditions or physical ailments or limitations was NOT effective.

This got my attention, of course. I asked Bob, “How can you tell in the early stages of a medical screening effort whether or not it’s effective?” His answer, in retrospect, makes so much analytical sense that I’m almost embarrassed to admit I hadn’t thought of it! “Look at the reject rates, “Bob said. “If you’re passing 100% of the candidates, you have a problem.”

This reminded me of a challenge from my days of working in the defense industry. A ballistic missile delivers a number of decoys and a number of actual weapons to a target. A defense system must determine which of the missile’s reentry vehicles (RVs) are real threats and which ones are not. It can’t identify everything as a threat but it also can’t decide nothing is a threat. If your defense system lets everything in, you know you have a problem! The same principle applies to the medical screening of potential new employees. If your “defense system” lets 100% of your potential new hires through, you need to be concerned. Especially in a challenging labor intensive industry, you can expect to hear a very loud boom in the near future.

So, do you know the percentage of rejects that occur with your medical screening effort? If you have multiple locations across your state or across the country, how do the reject rates compare? Does this correlate to the level of work comp claims by location? If work comp claims are particularly low in a specific location and medical rejects are high, perhaps you need to model that screening or defensive system at your other locations. What do you think? Let us know with your comments.

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In the popular 2001 film “Legally Blonde,” Elle Woods (played by Reese Witherspoon) is a stylish sorority girl who, in a quest to get back the guy who dumps her, discovers her true potential way beyond the stereotypes of her blonde mane.

If you’re just crossing your fingers that you’ve hiring a candidate who’s medically fit for the job, don’t be surprised if you find yourself with costs related to a new or pre-existing injury.

When we employers are interviewing job applicants, we likely have a movie running in our heads that I call “Legally Correct.” Delving below the surface to discover a job applicant’s true potential can feel like tricky business. This age of political correctness can make the most eloquent orators among us stumble. More importantly, there are EEOC guidelines to worry about: What questions we can ask. What questions we cannot ask. While we are trying to determine if an applicant has the abilities and personality to fit in our company, there’s another aspect we often overlook: whether they are medically fit for the work we need them to do.

I can hear you now: “Frank, I can’t ask someone their medical history.”

You’re right. In most cases, you can’t – not until you make them a conditional offer of employment. But after you do that, your applicant should undergo a medical screening to make sure he or she is fit for the specific functions of the job you want to hire them to do. This is a legally correct and – I would argue – moral thing to do. This process will weed out an applicant who truly is not fit – or who has intentions of filing a claim on a pre-existing injury after they’ve been with you a few months.

Most large employers have been doing medical screenings for a long time. But I find that a lot of my small business clients learn about this the hard way.

Here’s a real life success story: I recently met with a client to renew his company’s workers compensation insurance policy. In 2003, this client was paying over $480,000 in workers compensation premiums. The company was scrambling to find an insurance company that would offer them a renewal policy: their experience mod factor was 1.63. If they didn’t get an offer from the voluntary insurance market, then they’d be driven into the assigned risk market, where their cost would exceed $800,000.

Fast forward to 2008 and the story is dramatically different. The company’s projected premium cost for the upcoming year is under $200,000. Their experience mod factor is 0.85.

I asked the Chief Financial Officer what he felt were the major factors influencing this turnaround. Without hesitation, he said, “Beefing up our hiring practices and returning injured employees to work.” (In my next blog, we’ll talk more about back-to-work programs. As Jim mentioned in his comments to my last blog entry, it’s all about expectations.)

You notice the CFO didn’t make any reference to safety? Not safety committees, safety programs, or safety inspections. This company’s problems didn’t arise from an unsafe workplace, and they already had a positive corporate culture.

Now obviously, creating a safe workplace is a foundational and necessary step to any business. But, employers often don’t understand that the safest workplace in the world will not overcome hiring an employee who isn’t a good fit for the job.

Let me hear from you. Do you or your clients use “Legally Correct” pre-employment medical screenings? What’s your experience with them? Have you seen their implementation improve your claims history and premium costs? Is there a down side to medical screenings that I haven’t mentioned?

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