Workplace related injuries costing Australian economy $60.6 billion each year

18 December 2013

Early intervention can help mitigate economic and social cost, major new report shows…but Australia behind the eight ball

Workplace related injuries cost the Australian economy an estimated $60.6 billion each year (4.8 per cent of GDP); however, the economic cost could be mitigated if workers receive early intervention (treatment / rehabilitation) after suffering a physical or psychological injury – plus they will likely experience greater health and return to work outcomes. However, Australian organisations are dragging the chain, a major new report has shown.

The Konekt Market Report provides valuable insight into workplace injuries over the past five years, what the impacts are and how they can be mitigated. It is the largest report of its kind in Australia, with more than 95,000 compensable cases (where there is a compensation claim arising) and non-compensable cases* (no compensation claim arising) analysed over a five-year period. It was conducted by Konekt Ltd (ASX: KKT), Australia’s largest private sector rehabilitation provider.

“One of the key findings of this report is that the earlier a referral is made post injury, the greater the likelihood of a successful return to work,” says Matt May, Head of Product at Konekt. “The report confirms that the less time people spend in the compensation system, the better their health and return to work results.”

Further, the report clearly demonstrates the considerable opportunity presented by the non-compensable data. Overall, the non-compensable cases outperformed the compensable cases on all criteria including return to work rates, cost and duration of the claim. “Policy makers and the regulators need to be looking more closely at this as a best practice model for the compensable market,” says May.

Dr Peter Cotton, a clinical and organisational psychologist who has consulted with many Australian workers compensation authorities on the management and prevention of work-related psychological injuries, says that Australia is “behind the eight ball” when it comes to early intervention.

“Traditionally a lot of organisations are more reactive than proactive, and wait until a formal claim or complaint is made before acting,” Dr Cotton says. “There is enormous scope for this to change. If more Australian companies were on the front foot, it would make a huge impact. There are some great Australian success stories, but we need a lot more.”

Dr Cotton points to the Queensland Government’s ‘Resolve at work’ early intervention program which Konekt provides services for. This program was implemented for the public sector and provides for timely and early identification, reporting and management of workplace issues such as injuries. It ensures support for individuals and managers and is designed to create a supportive workplace.

“To date this program has saved the Queensland government around $9 million, which gives a return on investment of 1:8,” Dr Cotton explains. “It provides a far better outcome in dealing with cases which could have become psychological injury claims.”

But despite the benefits of early intervention, the Konekt Market Report showed that over the past year there has been an increase in the average time from accident / injury to referral for support and return to work services of 90 weeks.

“This is really alarming,” says May. “Compare workplace injury to sporting injuries – if a professional sportsperson is injured, the help they receive is immediate. So why can’t it be the same for workers?”

“It has been proven that, for most individuals, working improves general health and wellbeing and reduces psychological distress. Even health problems that are frequently attributed to work – e.g. musculoskeletal[1] and mental health conditions – have been shown to benefit from activity-based rehabilitation and an early return to suitable work[2].”

Types of injuries

According to the report, the majority of injuries were musculoskeletal (60 per cent) whilst 12 per cent of referrals were for psychological injuries. Interestingly, there were almost three times more referrals for mental injuries in the non-compensable data. However, reporting of mental injury cases is more often delayed than other injuries.

“At least 20 per cent of Australia’s workforce suffers from mental health issues, but not all make it to the claim stage, particularly as there are more avenues opening up to manage mental health concerns, such as online support services,” Dr Cotton says.

“And whilst there is greater awareness of mental health issues and the stigma associated with such problems has reduced, we still need to do more to manage psychological injury more effectively. That includes moving from reactive to proactive approaches, resolving conflict early before it progresses to a claim or complaint, providing vital training to managers, and creating psychological / social quality – i.e. a better quality ‘people environment’ where workers are given good support and the workplace is more protective.”

Without such approaches the cost on society can be significant, Dr Cotton adds.

“These claims are very costly, and the individuals may end up on long term benefits without a return to work outcome,” he says. “A significant percentage are high risk, particularly if solutions aren’t provided early.”

The timing of the initial return to work is critical. It’s been found that if an individual is off work for:

–          20 days, the chance of ever returning to work is 70 per cent

–          45 days, the chance of ever returning to work is 50 per cent

–          70 days, the chance of every returning to work is 35 per cent[3]

Other findings of the report include:

  • The average age of a worker being referred for rehabilitation services is 41, with 51 per cent of all referrals being for people between 30 and 49 years of age
  • Males account for two thirds of all serious workers compensation claims lodged [claims requiring an absence from work of one working week or more] [Safe Work Australia, 2013]
  • There were more females in the group with mental injuries compared to the group with other injury types
  • The rate of compensable referrals which did not result in a return to work was 12 per cent, double that for non-compensable referrals at 6 per cent
  • For mental health injury, on average there was an 84 per cent return to work, compared with 89 per cent for other injuries
  • Those with lower socioeconomic profiles had a significantly longer average delay to referral time [102 weeks] compared to those with the higher socioeconomic profiles [84 weeks]

 About the Konekt Market Report

The Konekt Market Report is the largest of its type and looks at latest trends in the Australian workers’ compensation market by analysing data across more than 95,000 Konekt cases from the past five years (between 1 July 2008 and 26 June 2013). The report is one of the most comprehensive reviews of both compensable and non-compensable cases in Australia, and allows a genuine insight into the impacts on costs, durations and outcomes.

The report was undertaken by Konekt Limited, the largest private sector provider of organisational health and risk management solutions in Australia, in partnership with Cortex Solutions, one of Australia’s most experienced and respected researchers and personal injury management consultants in the area of workers compensation, to analyse the data and to ensure the integrity of the findings.

Of the 95,470 referrals, 74,395 (78%) are referrals related to cases in the workers’ compensation system [workers’ compensation referrals and 21,075 (22%) are referrals direct from employers [non-workers’ compensation referrals].

[1] Musculoskeletal injuries are injuries that affect muscles, tendons and ligaments, nerves, blood vessels or related soft tissues
[2]  Australasian Faculty of Occupational and Environmental Medicine
[3] Johnson, 2002, cited in AFOEM, 2011, P. 12

December 2013