In a prior post we discussed two areas that can greatly affect margins in the healthcare staffing world; unemployment and workers compensation. These two components of the cost of labor are directly applied to actual payroll amounts, thus decreasing the gross margin.
Both premiums are calculated based on historic figures, and proper tracking for both items is the key to managing cost. Proper tracking is required for auditing purposes, but the real work in managing these figures pro-actively is to have your system set up beforehand to mitigate unnecessary costs.
The workers compensation premium is largely a component of three variables;
- Claims History
- Type of worker
- Location of worker
Workers Compensation
It’s too late to consider last year’s claims history, but moving forward, it is important to take the other two items into consideration. Assuming you have in place sufficient health and safety education and protocol, the only other two variables are the type of worker placed, and where this worker is placed. There are standard rates that most insurance companies employ to assign degree of risk for what type of worker you have sent, and where they are performing their duties.
You should be able to address both of these factors in your staffing software. Considering there are hundreds of potential rate groups based on the job type, and location, it is imperative that both of these factors are inputted as templates for all possible scenarios. As an example, it would not be impossible for a registered nurse to work in an acute care hospital, a doctor’s office, in a nursing home, or even in home healthcare in any given year. The typical rates for each of these scenarios is likely to be quite different, with location of greatest risk to be assigned the highest premium per payroll dollar. Accuracy in reporting these locations along with the applicable type of worker can save thousands in premiums after an audit.
Unemployment Insurance
The unemployment insurance rate is also calculated based on historical claims, and is typically a charged percentage on total payroll dollars. Again, it is done on an historical basis, but moving forward you should have tools to more effectively manage these claims. Payments for unemployment claims are a necessary safety net for millions of displaced workers, but unfortunately there are those that will try to “play” the system. In the event you believe a claim has been made under false pretenses, there should be tools within your software platform that can identify many of these. Upon the receipt of a claim, you should be able to immediately generate a report with time and date stamp that;
- Verifies the last time the claimant was notified of work
- Verifies the response received from the claimant
This tool should be available in a simple report to eliminate wasted time looking through memos, emails, or personal notes. This won’t eliminate valid claims, but will certainly cut down on the number of fraudulent requests.
