INSIGHT

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1. The Debate over OSHA's Ergonomic Program Standard
OSHA's Ergonomics Website

2. The Apparent Failure of Care-Denying Case Management to Reduce Costs
UnitedHealth Group Website

3. The Departure of Occupational Medicine Clinic Ownership from the Stock Market

4. The Impact of the Declining Injury and Illness Incidence Rate
Bureau of Labor Statistics Website

Surprising events in 1999 challenged many conventional predictions about the direction of occupational medicine. The year ended with several key stories still unfinished. As year 2000 begins, occupational health providers must stay alert for new developments. Here are four you should watch:

1. The Debate over OSHA’s Ergonomic Program Standard
In 1999, Congress adjourned without passing the "Workplace Preservation Act," a law designed to block, yet again, the ability of the Occupational Safety and Health Administration (OSHA) to promulgate a safety standard on ergonomics. Seizing on this opportunity, on Monday, November 22, 1999, OSHA announced that it was officially proposing the ergonomics program standard. OSHA predicts that "300,000 workers can be spared from painful, potentially disabling injuries, and $9 billion can be saved each year under a proposed ergonomics program standard." OSHA expects the standard to protect 27 million workers.

As it has for most of the 1990s, the fight over the ergonomic standard will continue in 2000 as business and labor hotly dispute the costs and benefits of the standard. As expected, many business groups strongly oppose it. Kevin Burke of Food Distributors International stated: "The proposed ergonomics regulation by the Occupational Safety and Health Administration (OSHA) and its estimate that it would cost American business some $4 billion is absolutely ludicrous…[T]he costs would be in the hundreds of billions of dollars – costs that would result in closed plants and warehouses, and lost jobs, and that would be reflected in the cost of goods." Labor leaders predictably support the standard. Stephen Yokich, President, International Union, UAW stated: "The UAW applauds the release of OSHA’s long overdue proposal for an ergonomics program standard. We are pleased that the Clinton Administration has been able to overcome the Congressional obstacles and corporate opposition to letting the standards process go forward."

OSHA’s Ergonomics Program Standard has the potential to profoundly affect occupational health providers – perhaps dramatically increasing the demand for providers with ergonomics skills. In 2000, occupational health providers should monitor the progress on the adoption of the standard and keep their clients informed. OSHA has announced that informal public hearings will begin February 22, 2000.

2. The Apparent Failure of Care-Denying Case Management to Reduce Costs
Insurance company management of medical cases that over-rules treating physicians and denies medical care has been an unmitigated public relations disaster. In 1999, because of this practice, popular media and political debate increasingly portrayed HMOs and other managed care organizations as villains. Nonetheless, the process seemed firmly established under the widely held assumption that the case managers, physician reviewers, and care protocol guidelines were effective in lowering health costs. In 1999, surprisingly, impetus for terminating this controversial process came not from its public relations liabilities, but from increasing evidence that the expensive medical bureaucracy required for care denial costs more than it saves.

On November 8, 1999, UnitedHealth Group Inc., the country’s second largest insurer, announced that it was stopping the practice of having insurance staff approve or disapprove a doctor’s recommended treatment. Under the new UnitedHealth policy, the company reviews the procedures that physicians prescribe but will pay even if it disagrees with a doctor’s decision. This decision affected 14.5 million people in the United States.

UnitedHealth based its decision, in part, on a study it performed in Tennessee that found that abandoning care-denying case management actually reduced costs by 8%. Under the old system, UnitedHealth spent about $100 million a year on medical review and approved over 99% of physician decisions.

If other organizations find results similar to UnitedHealth’s, year 2000 could represent a significant turning point in the evolution of managed care.

3. The Departure of Occupational Medicine Clinic Ownership from the Stock Market
In the 1990s, publicly traded corporations, led by HealthSouth, Concentra and NovaCare, changed the occupational medicine landscape by rapidly acquiring privately owned occupational medicine clinics. For a while, the stock market reacted enthusiastically. Riding this crest of enthusiasm, predictions for the future of occupational medicine rested largely on the assumption that publicly traded corporations would become the dominant delivery source for occupational health services. 1999 witnessed the collapse of this notion.

In two 1999 transactions, 238 clinics changed from being owned by publicly traded corporations to being privately owned. The first transaction occurred on August 17, 1999 when Yankee Acquisition Corporation purchased Concentra, which owns 201 occupational medicine clinics. The sale followed a dramatic drop in the stock price for Concentra that attracted several companies who felt that the market had over-reacted to Concentra’s failure to meet earnings estimates. The second transaction occurred on October 4, 1999, when Select Medical Corporation purchased Novacare’s 37 occupational medicine clinics. NovaCare sold the clinics because it was unable to sustain its highly leveraged capital structure in light of weak reimbursement for its long-term care business.

The impact of this ownership transition is uncertain. Concentra and NovaCare may well be more successful, in the long run, being privately owned and freed from the pressure of maintaining their short-term stock price through acquisition. One thing seems certain: the change takes some steam out of the clinic acquisitions market. Novacare, for example, found that the price it was paid for its clinics was at the low end of the price range it felt was possible.

4. The Impact of the Declining Injury and Illness Incidence Rate
The Bureau of Labor Statistics (BLS) analysis of work-related injury and illness rates generally trails actual events by about a year. On December 16, 1999, the BLS issued its report "Workplace Illnesses and Injuries in 1998," noting that 5.9 million injuries and illnesses were reported in private industry workplaces during 1998. Employers reported a four percent drop in the number of cases and a three percent increase in the hours worked compared with 1997, reducing the incidence rate of illnesses and injuries for 100 full-time workers from 7.1 in 1997 to 6.7 in 1998. The incidence rate for 1998 was the lowest since the Bureau began reporting this information in the early 1970s.

Several factors contribute to the falling incidence rate: effective prevention programs improve worker safety; changes in workers’ compensation laws, such as the reduction of benefits and lengthening of waiting periods, discourage injury reporting; and a strong economy increases worker hours which is the denominator for the incidence rate calculation.

The falling incidence rate is certainly good news for employers and employees, but from a business perspective, is a potentially ominous trend for occupational medicine clinics. Lower injury and illness rates translate into reduced injury treatment revenues for the clinics. Consequently in 2000, expect the occupational medicine clinic business to become more difficult as clinics compete for a larger piece of an ever-shrinking pie.