A couple years ago, Jack Trout wrote a book entitled "Differentiate or Die," which explored the differentiation strategies of successful organizations. In today's California Workers' Compensation crisis, health care organizations, perhaps more than any other employer, have to distinguish their organization from the average health care risk in order to survive.

Health care is the second-fastest-growing sector of the U.S. economy, employing more than 12 million workers. Health care workers face a multitude of serious occupational hazards including sprains and strains, repetitive motion injuries, needle stick injuries, exposure to communicable diseases or chemicals, slip/trip/falls, latex allergies, stress and combative patients. Although it is possible to prevent or reduce health care worker exposure to these hazards, health care workers actually are experiencing increasing numbers of occupational injuries and illnesses. Rates of occupational injury to health care workers have risen over the past decade. By contrast, two of the most hazardous industries, agriculture and construction, are safer today than they were a decade ago.

Total costs of the California Workers' Compensation system consisting of medical care payments and wage replacement benefits to injured workers, along with administrative expenses and adjustments to reserves, more than doubled, growing from about $9.5 billion in 1995 to about $25 billion in 2002. During that same period, workers' compensation medical expenditures skyrocketed from $2.6 billion to $5.3 billion, according to the Commission on Health and Safety and Workers' Compensation.

When you combine California's out-of-control claim costs with increased frequency and severity rates unique to health care workers, California hospitals and skilled nursing facilities have a potentially devastating problem. California workers' compensation underwriters are more selective than ever before. Most carriers will no longer even consider writing workers' compensation coverage for health care providers.

Chief financial officers, human resources directors and risk managers, in coordination with their broker, have to aggressively and strategically tackle their workers' compensation problem. Successful health care organizations are distinguishing their programs from the average health care risk in order to control costs and maintain coverage. Several differentiation strategies to consider include:

* Patient Lift Teams. Patient lifting injuries are one of the most frequent and costly injuries to health care workers. Several published studies have shown the most effective way to control this risk is to remove the task of moving patients from nurses and put the responsibility of patient transfers into the hands of a few specially trained employees who use a mechanical device with each lift or transfer. The lift team members are trained extensively in the ergonomically correct way to move the patient. The lift team members are required to maintain their physical condition. To do this, they exercise for 30 minutes before the start of their shift and during the shift perform quick stretching exercises to stay limber.

Injuries related to lifting patients often account for 25 percent to 35 percent of all injuries at a health care organization. Peer-reviewed, published data in the Journal of Healthcare Safety, Compliance & Infection Control demonstrate that Patient Lift Teams can reduce claim frequency and lost time days by as much as 70 percent to 90 percent.

* Accident Investigations. A thorough investigation of all accidents is an excellent method to avoid future injuries and financial losses. The intent of an accident investigation should be to determine the root cause of the accident so that proper controls and corrective actions can be implemented to prevent a recurrence.

Frontline supervisors and managers are the best personnel to conduct accident investigations. They know the employees, job tasks, work processes and equipment, and are responsible for the prevention of future accidents as well as the overall safety of the employees within their department.

The manager performing the investigation needs to gather facts, not interrogate. Effective investigations establish the sequence of events and identify any contributing factors such as: unsafe acts or conditions, equipment malfunctions or safety procedure violations. Once all this information is reviewed, a determination can be made as to the root cause and contributing factors to the accident. In coordination with the safety committee, corrective actions can then be implemented, monitored for effectiveness and adjusted as necessary.

* Return to Work Program. Implementation of an effective early Return to Work or Modified Duty program is perhaps one of the most effective ways a health care organization can reduce workers' compensation claim costs. Health care organizations often claim to have a Return to Work program in place but it is frequently underutilized.

Is your occupational health provider communicating in a timely and thorough manner with your workers' compensation claims coordinator? Does this provider have a thorough grasp of the injured worker's job duties and modified duty tasks available to the injured worker? Is your workers' compensation claim adjuster available to communicate often with your claim coordinator, the occupational health physician and the injured worker? Are department managers consistently using the labor available to their department from the modified duty labor pool?

In this workers' compensation market it is absolutely essential to evaluate the effectiveness of your organization's Return to Work program.

* Use of Comparative Loss Data. Which department has the highest claim frequency in your facility? How does their claim frequency this year compare to last year? What are this year's top 10 claims in terms of Total Incurred Costs (Paid and Reserves)? Do your department managers know how their claim experience compares to other departments? To their own department from last year?

To get some control on your organization's claim costs, it is essential to involve department managers. The best way to involve them is to share claim data with them on a regular basis. Quarterly claim summaries highlighting claim frequency and severity trends by department are effective at involving your frontline people in controlling claim costs. This data also makes it clear where loss prevention strategies need to be implemented.

* Marketing. Prepare for a more extensive and time-consuming renewal process where you will likely get your renewal options only a week or two prior to renewal. Plan on beginning the renewal process 90 to 120 days in advance.

A typical underwriting submission must include: detailed loss, payroll and premium history (a minimum of five years), descriptions of large losses, accurate and complete applications and supplemental applications with clear, concise displays of exposure data and a narrative highlighting effective loss control measures, including the organization's risk management strategies for the coming year.

Make sure your broker has experience with other health care organizations, has a variety of workers' compensation coverage options and can strategize early to understand your appetite for risk. Sharing risk with the insurance company, or exploring alternative risk vehicles like captive insurance companies or self insurance may be the best way for your organization to weather this storm.

Workers' compensation underwriters must feel comfortable that your organization recognizes the hazards that your employees face and is actively addressing them. In coordination with your broker you have to effectively communicate to the marketplace how your organization is unique when compared to the average health care risk. Your health care organization's survival may depend on it.

Buchanan, RPLU, is a principal with Barney & Barney. For information, call (858) 587-7567 or e-mail billb@barneyandbarney.com.