Defining total corporate health and safety costs--significance and impact. Review and recommendations.

This is the first in a series of studies designed to assist directors of occupational health and safety services in defining, measuring, predicting, and integrating total health and safety costs into useful management information. This study was structured to review recent literature on health and safety costs and to categorize costs as either direct or indirect. This delineation should aid in defining total health and safety costs, delineating priority areas for interventions to reduce costs, and evaluating the effectiveness of health and safety programs. The significance of such efforts is underscored by the reported direct health care costs for the nation's work force of over $418 billion, and indirect costs, using the lower range of estimates for such costs, of over $837 billion. Reducing the total costs of over $1.256 trillion would have major impacts on corporate productivity and competitiveness, as well as on availability of health care programs for employees. Recommendations for follow-up activities to define costs and evaluate intervention programs are provided.

Contracting for occupational health service. An insider's view.

A survey of the Fortune 500 companies reveals that contracting for occupational medicine services is frequent. Contacting is most used for services that are highly specialized and infrequently used. About two-thirds of large companies provide at least some routine occupational medicine services with employed physicians. An economic analysis suggests that for large plants, contracting for general occupational medicine services is usually not an effective strategy for saving money. Intangibles, such as integration of the occupational medicine department with all other health related corporate activities, are postulated to significantly influence corporate decision makers when they consider contracting for occupational medicine services.

The business planning process applied to an in-house corporate occupational medicine unit.

In using the business planning process we defined our services, determined the lowest available open market price for each, and multiplied the unit price by the number we performed in the year to calculate our income. All our costs were then allocated to these services, and a cost per service determined. These were compared to the commercially available rates. Our unit is the low cost provider by 10%, even when using worst case assumptions. We concluded that contracting with outside organizations for occupational medical services could not be justified on either a cost or a quality basis.