How to cut down on sickness absence

Sickness absence can be extremely costly to an organisation and a management strategy depends on using the right benefits, says Peta Hodge

The role of employee benefits in reducing sickness absence and getting staff back to work is going through a period of reappraisal. This is illustrated by the fact that if employers ask an expert which benefits work best in this area, the chances are they will answer by pointing out which do not work.

David Prosser, strategic development manager at Axa Icas, says: “What it is fundamentally not about is gym membership or lettuce in the staff canteen.”

Sarah Brown, principal at Mercer, says many employers are “backing the wrong horse” when it comes to rehabilitating staff on longterm sick leave. “You find employers spend a lot on benefits such as private medical insurance (PMI) and income protection. But those are not the types of benefit they need to manage sickness absence and meet their rehabilitation objectives.”

Some traditional insured benefits are also falling out of favour in some quarters, says Prosser. “Income protection has tended to suffer from a lack of innovation in recent years.Yes, it will manage sickness absence, but only at the stage where it looks like it is going to become a claim. Yes, it does attach other benefits, such as employee assistance programmes (EAP), which is a good thing, but at the end of the day, I do not believe you can outsource sickness absence [management].”

On average, organisations spend £3,000 a year per employee on health, according to calculations by Mercer. This splits roughly into one-third on insured and non-insured benefits and services, and two-thirds on the cost of ill health, including the direct and indirect costs of sickness absence, employers’ liability and illhealth early retirement.

For Brown, such figures confirm employers are not spending enough time managing sickness absence. “It is a surprise organisations do not focus more on it,” she says. “Think of any other problem in an organisation that has a price tag of £500,000 to £1 million – it would be all over it like a rash.”

So it appears conventional wisdom on getting employees back to work after a longterm absence is sometimes wrong. Perhaps it is time for employers to go back to the drawing board and look at doing things differently.

So what exactly should employers be doing to reduce sickness absence and help employees return to work? “The first thing is not so much a benefit as a tool for employers, without which they cannot possibly manage sickness absence, and that is good sickness absence data,” says Prosser. “If they have not got good data, employees will slip through whatever support networks employers have.”

Once good data is generated, employers can start to address any trigger points and problem areas by making use of benefits and absence management tools. Prosser and Brown both recommend a number of benefits and services that are specifically geared to quick rehabilitation. These include occupational health services, an EAP or some other counselling facility, and fast access to physiotherapy. Where benefits like this are not enough, some kind of vocational rehabilitation service, with a more intensive approach to problem-solving, may be required.

Paul White, head of risk benefits at Aon Consulting, says: “There is a wealth of evidence that identifies the earlier intervention takes place, the shorter the duration of absence. Depending on the nature of absence, the duration is reduced by at least the period of early intervention, but potentially much longer for certain conditions, particularly those with a psychological underlay.”

White believes traditional risk benefits can play a role in rehabilitating staff and, unlike Prosser, suggests there has been some product innovation in recent years to reflect an understanding of the importance of active absence management and early intervention.

“Traditionally, insurers sought notification of a potential claimant six to eight weeks before the end of the deferred period,” he says. “Now insurers are seeking earlier notification on the basis that the earlier they are notified, the greater the likelihood of successful rehabilitation. In some cases, insurers are looking to manage the rehabilitation. Examples include the provision of cognitive behavioural therapy, access to return-to-work rehabilitation programmes, physiotherapy, or access to an alternative opinion service [such as that provided by Best Doctors]. Many insurers also recognise the value of paying for interventions if it is likely to significantly reduce the duration of absence, and hence their liability.”

Employers may also find advantages in identifying and focusing on particular issues within their workforce, such as musculoskeletal problems and stress. Brown cites the example of one client in the manufacturing sector where musculoskeletal problems were a major issue. A combination of an absence-recording system that automatically flagged up problems at an early stage, and an occupational health service that could refer staff directly to physiotherapy, reduced absences due to musculoskeletal problems by two-thirds and cut sickness absence overall by half over a three-year period, she claims.

This type of approach can deliver a good return on investment, says Brown. For example, an occupational health service costs £35 to £50 a year per head, but counselling through an EAP might be £7 a head, and four sessions of physiotherapy might cost £200. “The costs are quite low compared to the large costs of sickness absence,” she adds.

There is also a place for wellbeing benefits in an absence management strategy, especially if they include some kind of assessment of the employee’s health and lifestyle.

Prosser says a large part of minimising absence, particularly frequent short-term absences, is creating a good place to work. “It is also about how people feel valued, and how they are treated by their managers,” he says.

It would be nice to think all working environments are benign, all staff engaged and resilient, but this is not the case and in cases of serious illness, engagement and resilience are not enough to keep staff at work. It is therefore vital for employers to have an active, robust system for monitoring and managing absence, and ensure that line managers are skilled and equipped to deal with the issue.

Case study: Isle of Wight NHS Primary Care Trust

A number of government initiatives are looking at ways to reduce sickness absence across the UK workforce.

Staff in selected areas of the Isle of Wight NHS Primary Care Trust recently took part in a nine-month pilot scheme using a telephone triage system to reduce sickness absence.

Staff still reported in sick to their manager, but details of the absence were immediately forwarded to a dedicated email address at the PCT’s occupational health (OH) service. This ensured a member of the OH team spoke to the employee on the first day of absence and gave support and advice, where appropriate. After this initial contact, OH emailed the manager an assessment of the individual’s fitness, likely length of absence and whether a further call was planned.

Evaluation of the first six months of the scheme, from May to October 2008, showed 934 fewer days were lost to sickness absence compared with the same period the previous year, equating to a notional cost saving of £118,620. (This gain is a measure of improved productivity and cost avoidance because workers’ salaries would have been paid whether they were at work or off sick).

The PCT is now looking to extend the scheme, not only to the whole of the trust, but also to the wider employed community on the island.

Case Study: Cadbury Trebor Bassett

Cadbury Trebor Bassett has effectively used targeted private medical insurance (PMI) to get staff back to work.

It uses Axa PPP Healthcare’s Back to Health policy, which only covers the cost of treating conditions that stop people doing their normal job. Because of this, it costs roughly half the price of traditional plans. In the first three years that it offered the scheme – between 2004 and 2006 – the company saw long-term absences fall from about 4% to 2%.

Over the same period, the scheme saved the company more than £1 million across the 2,100 employees it covered, based on a saving of £2.26 million in sickness absence costs, set against the £1.16 million premium for the cover.

Will Nice guidance make a difference?

Back in March, the National Institute of Clinical Excellence (Nice) issued guidance on managing long-term sickness absence in the workplace, some of which is aimed specifically at employers.

In the main, the Nice guidance simply reflects best practice, describing what any employer with an active absence management programme would probably take for granted. It suggests properly trained staff should undertake initial enquiries with staff who are on long-term sick leave or who are frequently off work, referring them on to more detailed assessment from a specialist, where necessary.

It also says employers should co-ordinate and support any health, occupational or rehabilitation interventions or services, and any return-to-work plan agreed with the employee.

Although many employers already do all this, some fall a long way short of this best practice. Paul White, head of risk benefits at Aon Consulting, says: “The guidelines provide a framework which, if implemented by all employers, would lead to a significant improvement in the state of health of the workforce.”

But many people do not believe this will happen, partly because the guidance has “no real teeth” and partly because many employers will not have the appropriate expertise to identify how this relates to their own absence strategies and what steps they should take, says White.