ECONOMICS: COSTS OF ILLNESSES AND COSTS OF CONTROLS

The driving force behind the scientific research, workplace intervention and control programs, and case management of musculoskeletal illness is clearly the substantial cost of these illnesses. For the individual worker the costs come in human terms of pain, suffering, or disability, medical treatment and rehabilitation, and lost work opportunity; for the employer and the economy the cost is in terms of medical treatment, workers' compensation, lost worktime of a skilled or experienced employee, and the need to evaluate and implement interventions and controls.

Economic incentives can be powerful justifications for intervention programs if they are based on careful, convincing analysis of the effectiveness of interventions and the actual costs of both the illnesses and the controls. For some employers and industries, the impact on costs have been direct, measurable, and predictable and the net results have been clear and unequivocally positive. Some simple interventions have paid off well particularly where the workers' compensation costs have been high. For employers in other industries, the relationships are less clear. In these cases the net results of early intervention, workplace modification, training, or "warnings" are questionable, ineffective, or impractical -- and the unintended consequences unacceptable. The economics and the effectiveness of interventions are also key elements of the policy debate. This panel will focus on field research as well as the appropriate methods of cost-effectiveness analysis.

Gordon R. Reeve, PhD, Corporate Epidemiologist, Ford Motor Company
Heather Grob, Economics Research Coordinator, Center to Protect Worker's Rights

David C. Alexander, PE, CPE, President, Auburn Engineers
The Economics of Ergonomics

J. Steven Moore, MD, MPH, CIH, Prof. of Occup. Hlth. Services, Univ. of Texas Health Center
Changes in Workers' Compensations Expenses following Implementation of a Participatory Ergonomics Program in a Red Meat Products Corporation and a Meat Packing Plant

Mark Berkman, PhD, Vice President, National Economic Research Associates
Costs and Benefits of Ergonomics Regulations

Susan Pastula, MPH, Epidemiologist, Ford Motor Company
The Economics of Ergonomic Disorders at Ford Motor Company

Heather Grob, Center to Protect Workers' Rights
Ergonomics and the Economic Payoff in the Construction Sector

Elyce Biddle, Senior Economist, Div. of Safety Research, NIOSH
Peter Dorman, PhD, Assistant Professor, Michigan State University

Welcome back. It is now my pleasure to introduce the Session Moderator for today's last session on Economics: Costs of Illnesses and Costs of Controls. Gordon Reeve is an epidemiologist for Ford, but he also participates in several of my different AAMA Task Groups. He also wanted me to remind you that hes been the best speaker today. So just some important tidbits about Dr. Reeve. He received his Ph.D. from the University of Texas School of Public Health in 1982 with major concentrations in epidemiology and toxicology and with a major concentration industrial hygiene. He also received a Master's in Public Health from the University of Texas in 1975. His focus of study at the master's level was occupational health. Dr. Reeve has spent 21 years in public health. From 1975 through 1979, he coordinated a program at the University of Texas Cancer Center to evaluate the effectiveness of lung cancer screening for asbestos workers. In the summer of 1979 he began work at NIOSH in Cincinnati - right here. During the next five years he conducted several occupational cancer studies involving chemical industry workers and a major study of heart disease among munitions workers exposed to nitroglycerin. In 1989 Dr. Reeve began a slightly more civilized existence as a corporate epidemiologist at Ford Motor Company. He conducts occupational health research jointly with the United Auto Workers Union involving the 800,000 current and former employees of the Ford. Most recently he completed a major effort of designing a near real time injury surveillance system which was installed in 57 Ford plant locations during 1994. His current research interests and assignments are risk factors associated with acute and cumulative trauma, linkages between injury data and manufacturing quality indicators, and patterns of health care utilization among Ford employees. Dr. Reeve, the session is yours.

I didn't know Dave was going to read the long version, and probably he said more than I'm going to say all afternoon. I would like to welcome you to this session on the economics of ergonomics as we know it at this point. This session was jointly arranged by myself and Heather Grob who is the Economics Health Research Coordinator at the Center to Protect Workers Rights in Washington, D.C. And we have five speakers today, two discussants. We are going to try very hard to stay on time and also to provide sufficient time for questions from the floor and appropriate discussion.

Our first speaker, who will be talking about the economics of ergonomics is David Alexander. He is the President of Auburn Engineers, Inc., which hails from Auburn, Alabama. So in the interest of time, well go ahead and have David Alexander present.

Thank you. Our next speaker is Steven Moore. Dr. Moore, you've already heard from at least on one occasion so far on the program. And he's going to talk about changes in workers compensation expenses following implementation of some changes in the meat packing industry. He is with the Occupational Health Services Group at the University of Texas Health Center at Tyler, Texas. Dr. Moore.

Thank you Steve. I've been slipped a note by someone from the pork producers association to remind the audience that even though they were glad that he used the red meat packing guidelines, pork is the other white meat. Our next presenter is Mark Berkman. Dr. Berkman is with National Ergonomics Research Associates, Inc. He's based in San Francisco although they have offices in many parts of the United States and elsewhere in the world. And hes going to talk about costs and benefits of ergonomics regulations.

Thank you, Mark. Our next speaker is Susan Pastula. She is - it depends on whos at the microphone first whether I am or she is - but shes the other Epidemiologist at Ford and she and I work together. Susan is going to take another slice through the data at Ford and talk about the economics issues of ergonomic disorders at Ford Motor Company.

Thank you, Susan. In the few minutes we have left, wed like to hear from my co-arranger, Heather Grob. Shes going to talk briefly about ergonomics in the construction industry. And I have to admit, the first time we talked about this, about three months ago when we were organizing this session, somehow it didn't click for me about the repetitive nature of some of things construction workers do. I think more of situations of people falling off roofs, falling off steel beams or something of that sort, or being run over by a tractor or earth moving equipment. So with that we want to give you sort of a quick overview on ergonomics issues in the construction industry.

That concludes our prepared remarks of the presenters. Our next person up is our first discussant, and she is Elyce Biddle. Shes a senior economist, newly arrived at the Division of Safety Research at NIOSH in Morgantown after a previous stint of many years at the Bureau of Labor Statistics.

Thank you Gordon. And I have one of those booming voices so that Ive never had to use a microphone, so if I'm blasting you, I apologize up front.. Id also like to thank all of the conference organizers for allowing me to be here today. Its truly a thrill to be able to be with folks who have similar views that want to use the tools of their trade to be able to help improve a workers life. And that's why we're all here to begin with, whether were economists or we're M.D.'s or we're epidemiologists or industrial hygienists. And my particular field just happens to be economics. I wanted to thank Steve for reminding me of where my roots actually came from. When he was talking about some of the meat packing plant problems in 1986, I was with the Department of Labor at that time and one of my charges was to be able to look into those meat packing plants and see whether or not they, in fact, were following recordkeeping guidelines. And also, at the same time, to attend Congressional hearings on those particular areas of meat packing. And then thats when the heart began to throb. I watched some of the workers as they approached the podium to be able to discuss the things that had occurred to them at some of these meat packing plants in that industry. So what culminated from that particular experience was, I moved out of the recordkeeping arena and moved into establishing classification structures and hopefully trying to identify through a classification system those particular repetitive stress disorders and particularly be able to count carpal tunnel syndrome. And as a long time bean counter, that's what I did at BLS until I was fortunate enough to go to NIOSH, now I get to work here and try to be able to establish some economic costs associated with those particular disorders as well as injuries.

One of the things that I wanted to start off with today was really just to take a step backwards and discuss just exactly what economics is. Because often times we hear this word thrown around but nobody really tries to define it or does define it for us. And economics is really nothing more than the study of the distribution of scarce resources. So what in fact are we talking about? Were talking about land, labor and capital, right? And what are we talking about today? Predominantly we're talking about either capital in the form of financial resources or we're talking about labor in the distribution of our own workers. How do we use them most effectively and without hurting them, in the least amount, so to speak. Economics does not really offer explanations, nor does it have ready made solutions. But it does offer tools and methods to be able to analyze problems. And Id like to thank David at this point for going over a lot of those methods so that I dont have to do that, the methods and tools. But what it also does is it leaves the individual the task of applying those tools, choosing those methods, to be able to identify or to be able to analyze the problems that the individual wishes to solve. What that means is that the burden rests on the researchers. What tools, what method, what cost data are they going to use? What magnitude of the injury are they going to use? Which study are they going to look at to be able to work with? What discount rate are they going to use when theyre using a present value calculation? And all of this ends in how does that researcher interpret the data that they come up with at the end? Its all well and good to come up with a cost benefit analysis, but its also very important that the economist or the analyst actually evaluates what thats telling us. What does that mean in common lay terms? We need to make sure that we remember, as we go through our analysis that we do a sensitivity analysis. Putting in variables, changing things just a little bit to see what kind of changes that they would make to our cost benefit analysis. If we looked at some of the things that were said today, we can clearly see that depending upon what your inputs are into those formulas, into those models, that it's going to make a difference in what your end result is. So you have to make sure that you do look at different variables, different discount rates, different cost estimates to be able to come up with an end result.

Now what have we actually done here today? Well, weve looked at three perspectives. We've looked, first of all, at the economic or the financial aspect of a particular corporation. We've looked at the corporate level, how do they make decisions when they are actually analyzing, do we want to implement a particular ergonomic program? We've looked at the methods that they use for cost effectiveness. And the bottom line is, and I think we all know this, that when a corporation or an establishment looks at implementing a particular program, what are they looking for? Bottom line dollars, right? They want to know whether its profitable or it's not profitable. Weve also looked today at the public sector. Weve looked at how OSHA regulations are analyzed, what they're going to do as far as standard setting is concerned. Weve looked at, sort of in a broad brush, what the federal government does as far as policy setting is concerned, which is where most of my interest lies - in how do we use economic analysis, cost benefit, cost effectiveness to be able to choose an intervention and how to be able to set that policy so that we can effectively use our tax dollars in a method that will best suit the workers.

I'd also like to thank Heather for bringing up that final perspective of how you look at economic analysis. And thats from what the cost to the employees are. Frequently when you do an economic analysis, you focus merely on the financial aspects, and on occasion, you get an individual who does look at what the impact on the employee is. And its not necessarily always economic, in the sense of the term that we mostly think of economics. Its in a social setting, that kind of information. So that we can look at psychosocial factors and try to be able to build those into our models. One of the things that Id also like to discuss quickly is the kind of things that I am aware of that are going on in the federal sector, in the public sector. I know that there are a number of agencies out there, as we speak, that are working on reviewing and revamping their cost models so that they can more accurately use that which the academicians have arrived at, which is now the most current thought in determining costs, in modeling techniques, in econometrics. There are a number of agencies that are working on that. Within NIOSH we have a partnership arrangement that's called NORA. And I believe if you were here for the first day, Linda Rosenstock spoke of that at length. And what NORAs efforts are, at least in this particular arena, are trying to determine what kinds of research we should be doing in the future with economic and social impact of the consequences to the worker. We also have funded in the public health service, a group of public health or public policy experts to formulate a standardization of cost effectiveness modeling so that, in fact, when you have multiple interventions that are possible to solve a specific problem in say, ergonomics, then they have a uniform method so that you can apply that across the board.

What I'd like to end with is just a question to you folks, and that is 'where should we be going from here? Weve heard a lot about the kinds of work that are being done, what has been done. But we also need to look at what we need to do in the future. We need to improve our body of knowledge. We need to improve the tools and the methods that we use as economists. We need to possibly standardize techniques wherever that is a possibility. Cost effectiveness, cost benefit analysis should be standardized. We need to improve data. Frequently some of the measurements that we make are a function of how good the data is that we can get our hands on. How good is BLS data? How good are workers comp figures? We need to include analysis that broadens our horizons. We need to look at psychosocial problems. We need to know whats the effect on the local economy when a meat packing plant, for instance, would come in and utilize the workers there. If they become injured, where do they bring those new workers in from? What happens to that community? There are a variety of things that we need, to ensure that we do look at these factors. But what I'd like to finish off with this afternoon is just to say to all of you out there that you are advocates for workers. Each and every one of you are an advocate for a worker out there. And I think that we need to continue along the same lines. When we are doing economic analysis thats yet another tool that we can use in order to convince the folks that it is important that we keep our workers safe, and provide for them a safe environment. And that is a charge of the federal government to keep a safe workplace for every worker. Thank you.

Thank you, Elyce. Our second discussant, and I guess final speaker for this afternoon before we get to questions and answers is Peter Dorman. Dr. Dorman is an Assistant Professor at James Madison College at Michigan State University in Lansing. And he'll be talking, again, about the issue of economics and ergonomics.

Thank you Gordon. I would like to thank you all for hanging in there. Its been a long day. We're now near the end of it. Of course at the end of the day, you always have to consider the economics of something, right? So were doing the right thing at the right time. I would like to make three general types of comments on what you've heard so far. The topics I want to consider are, first, the relationship between 'firm level economic analysis, and economic analysis as an economist considers it, which is to say social analysis.' The second is the issue of uncertainty and how uncertainty ought to be incorporated into our thinking. And the final area to look at - Ill just spend a minute or two on it - is the validity of workers compensation claim data. I'm going to respond in particular to the previous criticism of that in this panel. So going to the first issue. Id like to do a bit of damage control if I can here. And by saying that, I dont want to impugn what the others have done before me, but I think weve used terms in a casual way, like direct cost, and indirect cost, and internal cost. And we haven't really defined what those terms are. I think theres a lot of confusion about it. So let me begin by giving you a particular categorization that I hope will clear up some of this confusion.

The first distinction to make is, within the realm of internal costs, we would distinguish between direct and indirect cost. And direct costs are the out of pocket costs that people can experience. You really dont need an analyst to tell you what your direct cost is. For instance, workers compensation costs are direct costs. The indirect costs would be all the other costs which, for instance, David Alexander described or which were also discussed in meat packing by Steven Moore. And those would be costs associated with the disruption to production, the training costs, replacement of workers, etc. There are all sorts of costs which require some analysis to get at, but which are there. And one of the functions of the health and safety analyst is to go after those costs and bring them to the attention of the firm. Its a wonderful thing that this is being done. Its a necessary process. But doing this does not exhaust the category of cost. The external costs would also have to be brought into discussion. Now the external costs are the costs that are not paid by the firm but are real costs. They include workers compensation costs that are not experience rated, right? Because those are not costs to the firm; they are costs to society. Second, you have publicly subsidized medical costs. Many of the medical procedures employed by people even in these days of high medical inflation, are subsidized. Third you have financial cost to the workers that are not compensated. So, for instance, workers' comp does not replace all the workers income, only some of it. You have the discomfort and loss of function outside the workplace. You can't do the dishes any more because of that carpal tunnel problem you have. That's a real cost. But its an external cost to the firm. And finally you have the non-financial costs to the workers family and community. Since people are involved in many different ways in society, a lot of these costs have ramifications outwards. All of these are external costs in the sense that they're not costs picked up by the firm. The economic logic of regulation is that we need regulation where the external costs are significant. If we only had internal costs, all we would need would be people who could bring these costs to the attention of management and then management would deal with them. And in many cases, the internal costs are the primary costs, and thats all we need. But in other cases, the external costs are significant and thats where the public intervention comes in. So I would like to impress upon you this dual categorization. Direct, indirect, internal, external. Distinguish between them and try to use them effectively.

My second point. Managing uncertainty. Id like to take you back, perhaps against your will, to introductory statistics. And a topic which, if you were like me, you covered in ten minutes. But really, it is one of the most important topics in all of statistics, and that is, how do you deal with the cost of error?' You may recall that there are two fundamental types of costs - types of estimating error costs. The first is the cost of overestimating what youre trying to estimate - a cost or a benefit - and the second is the cost of underestimating. The problem is you cannot avoid these costs in an uncertain world. And in ergonomics uncertainty is very great. You can increase oneYor you can decrease one only at the expense of increasing the other. So, for instance, if youre worrying about underestimation, you lower your estimate but that increases your risk of overestimation. SoYdo I have that right? No, I said that wrong. You know what I mean. You get one at the expense of the other. And so the issue then is one of comparative costs. And the formula for costs is that the cost ofYtimes the probability of one error plus the cost, the second error times its probability, is your total cost. And if you want to minimize those costs you come to the golden rule of how you deal with uncertainty. And that is that the ratio of estimation error costs should be equal to the inverse of the ratio of estimation error probabilities. Sounds a little confusing, but if you think it through it just says that if the cost of overestimating something is very, very great then you should take a greater risk of underestimating. Now if the costs are equal - the simplest case - then the probability should also be equal. If you are a public health advocate, you assign a greater cost to underestimating a health risk or overestimating the cost of abating it. If we just want to simplify the problem, though, we can assume the costs are equal and then the probability should be equal. And this becomes a rule of thumb for looking at the analyses that youve been given today and the others that you'll see in the future. Ask yourself, is there a more or less equal probability that the number is too low or too high. Just to give you one example, in the trucking study that was presented or alluded to earlier, the cost estimate for how much it would cost the trucking industry to respond to a potential OSHA regulation, assume that every single truck used for commercial purposes in the United States would have to install an advanced suspension system, okay? My estimate here, or my sense, is that the risk of overestimation is very great and the risk of underestimation is very small. If they're following the golden rule, that must mean that they think that the cost of overestimating the costs is practically nil and the cost of underestimating the costs is enormous. But, of course, theyre the trucking industry, so it stands to reason.

My third point is how do deal with the issue of workers comp data. I'm an economist, so I believe incentives matter. And if you give people more workers' comp benefits, they may in fact file more claims. So what we get then is a situation that's assumed to look like this. Claims are measured vertically, the number of claims, and we have two possibilities. We can have low workers comp benefits on the left or high workers' comp benefits on the right. The true incidence level is measured by that white line. So when the benefit level goes up and the claims go up, youre moving away from the true incidence. You're now over-utilizing the workers comp system. This is an assumption that most economists have made when they look at the data. Mark Berkman, as a matter of fact, used the phrase incentives for over reporting' in his talk which suggests that thats the model he has in mind. And I think if you sit down with most safetyYwell, not safety managers, but managers generally in industry, they will tell you that thats how the world works. On the other hand if you talk to most workers they see it like this. Yes, the claims go up when the benefits go up and now you move closer to the true incidence level, which had previously been under-reported, now is less under-reported. So theres less under-utilization of the workers' comp system. A great deal, in fact an enormous amount, depends on which of these two scenarios is correct. The kinds of analyses weve looked at today, the recommendations for regulations, even within the company the recommendation for whether a program will pay for itself depends on which of these two models you think is correct - over-utilization or under-utilization. Tragically we have no really good studies of this. And so you get, Ahe said, she said types of arguments about it. I did see a study by Andrew Hopkins of WorkSafe in Australia, who found some evidence that in the process of claims management, firms were bringing down the claim but they were not changing the true incidence of injuries and illnesses. But thats Australia; that's the other side of world. We need some data from the United States. It would be nice to have harder data on this question and then we would know which is correct.

Mr. Steve Thompson: Excuse me. I dont mean to be impolite, but I thought the discussants were supposed to be responding - and Im kind of lost. I know that I wish, and I'm sure several others do, that the panel would do that. The real question seems to be, or there's a lot of questions that I think a lot of people are wondering about, is that I think that theres a line that either we have a standard, and it costs billions and billions of dollars, or we dont have a standard and everybody gets injured. I think the real question is, isnt there some difference between the specification standard, which was talked about in the high cost one?' And then the performance standards that were alluded to, which allow individual industries, or maybe even within an industry to address that and then, say, move to a place that we all hear aboutY

Dr. DORMAN: Could I assume the chairs function for the moment? We need to have a little more structure because I think therell be a lot of people who want to ask questions.

Mr. Steve Thompson: Let me finish!

[Dr. Dorman resumes presentation] So I will say a sentence or two and then perhaps the chair can impose a structure on questioning. What I just wanted to say to close this off is that, if we are experiencing a reduction in workers comp claims as a form of claims management but not a reduction in the incidence of musculoskeletal disorders, then what we are experiencing is a shift of costs from the internal category to the external category. And then thats, of course, where I came in. That's the real problem for public policy which we would have to address. Thank you.

Dr. GORDON REEVE, Ford Motor Company: Would the gentleman like to continue his question?

Mr. Steve Thompson: Yes, I guess my real question, and maybe the panel could address this, is that, 'do we have to have a specification standard to make ergonomic policy work, or can we have a performance based standard? And there's many examples of both high tech, high cost standards going in; the one example already given of two million dollars being spent with a 3 2 million dollar return, I think it was, and then there were other examples of low cost standards being set that allow individual places the latitude to adapt things that were not only best for their industry, but maybe more specifically, best for their particular shop.

Dr. REEVE: Would you like to direct that to any particular person on panel?

Mr. Steve Thompson: NoYI mean, this is a general question. That seems to be one of the issues when you have a standard, of whether it has to be a specification standard that applies across everybody, or whether you have a performance based standard which allows a little more flexibility and individuality.

Dr. REEVE: Mark, would you want to comment on that?

Dr. MARK BERKMAN: My only response to that is that Im not yet convinced we need any standard. I mean, if you look at this from a performance basis what you're saying is, each particular plant or industry is going to have a different set of circumstances and they should be allowed to find whatever program works where benefits exceed costs. Now that may be a particular technology or a particular procedural change for one plant, but not another, even within the same industry. So Im not even convinced that a simple standard, at any level, is needed.

Mr. Steve Thompson: Well I guess maybe I should clarify what I mean by performance based standard. For example, a performance based standard that would be based on your OSHA recordable injuries. For example, if you have an OSHA recordable injury of, let's say 20 or whatever the number turns out to be, the performance standard would be that you have a reduction the next year. If you have a reduction you have a good ergonomics program. And at some point you have to have a level, whether thats an industry average plus or minus a standard deviation or whatever, that allows the performance of the individual company to reduce injuries.

DR. GORDON REEVE: Let me comment on that comment very quickly. It is important to look at the injury data and the rates in your own company. Hinging everything on a specific reduction in injury rates is difficult because a lot of times when you increase the awareness for ergonomic activities or prevention efforts, typically the first thing that happens is your rates go up because people are aware of things, theyre reporting things more. The other trap that you fall into is looking at specific reductions. Then the erasers and the sharp pencils come out very quickly to change the data. And then you lose the compass in terms of your injury patterns and things of that sort. I don't know that we'll be able to resolve this issue today and it wasnt our intent to do that. But clearly there's a point on, Ashould there be a standard, what type of standard, and should there be one across the entire U.S. industry? And it seems as if, looking at the discussion from the panel members, that the consensus was no. But if we could, I want to make sure that we get to the other folks at the microphone.

Mr. Scott Schneider: Scott Schneider, the Center to Protect Workers Rights. I have a question for Mr. Berkman. The transportation industry has the highest sprain and strain injury rate for any industry in the United States. And, Im wondering, have you calculated the costs of injuries in your industry overall. And, second, what is the industry doing about this? And lastly did you, in your study, look at the benefits that might accrue? It seems like in every other industry these ergonomic programs are showing positive benefits where they greatly outweigh the cost. And why would that be different in the transportation industry?

DR. MARK BERKMAN: There were maybe a dozen questions there. Let me see if I can sort it out. First of all, I dont represent the Trucking Association. I did a study for them. So I cant represent myself as representing them here. The costs and benefits I produced on that chart were taken out of an OSHA study; they're not my estimates for the American Trucking Association. OSHA's own estimates suggested that the benefits of the proposals that they were thinking of did not exceed the cost to that industry. And my point was that on the cost side, I believe they seriously underestimated those costs. I didn't address the benefit side. We didnt do an independent benefit study. All I did was suggest that the underlying assumptions that OSHA was making in driving its benefit estimates were not overly convincing to me. And we did not have, as a mandate, a benefit study more carefully defined than that.

Mr. Schneider: You said you havent looked at the cost of sprain and strain injuries to the transportation industry as a whole?

DR. BERKMAN: No, we didnt independently estimate the benefits to the industry, as you're defining it, as to the cost of sprains and strains. Although I have to say that in discussions, many of those seem to appear to be related to slips and falls in and out of truck cabs. And Ive been told by at least one trucking official that that often can be attributed to the cowboy boots as opposed to ergonomic problems. But I'll leave that alone.

Dr. REEVE: Could we go to the gentleman in the blue shirt on the other side of the room?

Dr. Bradley Evanoff: Just a second to follow-up on that question. OSHA in their cost estimates used only direct workers comp costs as estimated in Washington State data in their estimation of what the potential benefits would be. And so they didn't include any indirect costs. They included no cost for the workers. So did you make any attempt to estimate indirect costs. And if not, how can you question OSHA's estimates which were probably the lowest, most conservative estimate that could be arrived at?

DR. MARK BERKMAN: Well, first Id quarrel with your conclusion that it's the lowest possible number you could arrive at. My recollection is that their estimates included more than simply workers comp costs. No, there were lost work day expenses included there as well. It depends on how you define workers' comp costs. If youre talking about workers' compYI don't want to belabor that point. The notion, though, that they have the lowest possible cost because theyve avoided indirect costs, I cant address other than to suggest that maybe the cost thatYand were going back to Peter's observations that you would call indirect, I would claim that they are already internalized. People make trade offs every day in terms of the jobs they do and the risks they present. And people, if the costs become too great in terms of the expected risks, often times shift jobs. So you have to be very careful in simply adding, what I think you're referring to as indirect costs, to any kind of cost benefit calculations.

Dr. REEVE: If we could we go to the gentleman at the center microphone.

Dr. Gary Franklin: Gary Franklin from Seattle. And I have two questions for Dr. Berkman. The first is the benefit level curve that you had - was that adjusted for inflation? That's the first question.

Dr. MARK BERKMAN: Well, Im not sure what you mean by benefit curve.

Dr. Franklin: You showed a curve of increasing benefits paralleling the increase in injuries, and said that the increase in benefits might have had something to do with the increase in injuries.

Dr. BERKMAN: Yes, that was an index of benefits that is inflation adjusted.

Dr. Franklin: Okay. And the second question is, I think the epidemic might have started in the mid- to late '70's - not the mid 80s. My own experience and practice in the late '70's in Oregon, I had 400 cases of carpal tunnel in the late 70's in Middletown. So I think the epidemic actually started earlier. My question is, if you looked at productivity in the mid- to early 70s, would you have seen any productivity changes or did you have an opportunity to look at earlier years of productivity.

Dr. BERKMAN: I didn't look beyond the years that I presented there. The data I had available to me was that period forward, 84 forward. Id certainly be interested to look at that. My big recollection of productivity changes over that time were they weren't any more impressive than that period that I did look at. But that's certainly a valid analysis to do.

Dr. REEVE: Can I ask, do you have a question for anyone other than Mark?

Dr. Ted Courtney: Actually I hate to ask questions of less popular speakers, but I have questions for two other speakers.

Dr. REEVE: Oh good, please go ahead.

Dr. Ted Courtney: The first question is for Dr. Moore regarding your study. I have a question as to whether you were adjusting your costs to reflect the, sort of, secular trend over the last decade or so in premium, benefit levels, such as state reform, and medical costs through utilization reviews and case management because all of those have been very aggressively occurring in the insurance industry over these times. By the way, Ted Courtney, Liberty Mutual, Research Center for Safety and Health.

DR. STEVE MOORE: No. [laughter]

Dr. REEVE: We'll allow you one follow-up.

Dr. Courtney: My second question may have an equally brief answer - or maybe a more descriptive answer. It's for Heather, regarding her statement that the standard would create a level playing field for small business. And I just want to know, what did you see as the economic incentive basis of that statement?

Ms. HEATHER GROB: Well, this is going to be a little bit of a longer answer. But I think that there are hesitancies of employers to invest in ergonomics based not necessarily on their evaluation of the cost and benefits, but due to competitive conditions where they perceive that there may be some costs or they dont want to spend much time implementing ergonomic interventions. If there were a standard that would give them some reason to say, Awell, everybody else has to do this too. So that was part of our thinking on that. And the other important thing to remember is that in construction you have a lot of small employers working on one site. And so if theres attention to site planning and if small employers want to get those contracts, then they may have to think about how they're going to implement their ergonomics programs.

Dr. Courtney: Okay, my only brief suggestionYcan I briefly follow-up? My only counter to that was that I think that in terms of level playing field,' the organizations that get the most enforcement potential will probably have the greatest level of effect. And the smaller institutions probably see on the order of several orders of magnitude less enforcement activity because theres so many of them. There are literally hundred and thousands of them. And so I would see a greater incentive coming through positive examples like the things that Dave Alexander was talking about, like the things that others from Ford have been talking about in terms of small business being 'attracted into ergonomics because of the benefits and the increases in their competitiveness they can create using it.

Ms. GROB: Yeah, I agree with that. And just to follow-up I think that some of the things that OSHA's trying to do in getting small employers who have done these things to be role models for their peers is an important thing.

Dr. Reeve: We will take questions from all those that are currently, and who remain standing. [laughter] But no new people can stand up. If we can go first to the gentleman in the blue shirt.

Mr. Jerry Wagner: Jerry Wagner, UAW-Delphi. I have a question about the Ford presentation. Did you ever consider the S&A database and what portion of that is musculoskeletal? And of that, what portion of that might be work related?

Ms. SUSAN PASTULA: We have access to all occupational visits that come in through the medical department in our plants. And so thats what we had for analysis. And you saw that 27% of everything that we see coming in is ergonomically related, according to our system.

Mr. Wagner: So you havent looked at the S&A database?

Ms. PASTULA: No.

Dr. REEVE: The reason we have not looked at it is that it is not in a suitable condition for analysis. We're working on that though. Was that tactful enough? Over to Sue.

Dr. Sue Rogers: Just a quick comment on the cost benefit generally. It sort of relates to everybody's presentation. Two things Ive found about asking in a plant, the way I've tried to teach it is to say what does it cost you to do nothing compared to doing something? Nobody can answer that because they don't have the data in any system that will allow them to get that. So until we have decent data on what it costs us to run the jobs the way theyre run now, I don't think we can be too sensible about making this statement about the cost of the operation. And the second thing is I find people who jump from the identification of a problem to a solution without really going through the analysis. Too often they come up with an expensive solution. And youre balancing that against the benefit. And so I think you need some system to force them into finding a series of solutions that really arent based on what the target problem is. If you do that, we find a 10 to 1 ratio of the benefit to the cost in most of the problems that we work on. But you do have to force them to analyze the problem before they start solving it.

Dr. REEVE: Thank you. Frank?

Dr. Frank Mirer: I want to make a couple of observations on the analysis that also might be helpful to people who are trying to perform the analysis at their on workplace, to make a pitch to your own management. The first is on cost benefit. I think the virtue of doing calculations is that, if were ever at a bright line point where in your management, either upper or lower management is going to say we have to make more money on these solutions or were going to continue to hurt people. You know, I think then that were in a sorry state. I think it's important to show that there is some return on this. But I think it's crazy if were in a position where you have to make money on health and safety. But just a couple of points. First, the real issue in this cost business is how we allocate the strains and sprains. Everybody will look in their database, find 50% of their comp more or less is strains, sprains, CTD together. And we've talked ergonomic standard. The question is how we allocate the 25% of the injuries which are back injuries and the strains and sprains on the size of the problem. Clearly if you just look at, carpal tunnel or CTD diagnoses youve reduced to problem to a fifth I think of what it really is.

The second is that when youre analyzing workers comp, roughly half the claims more or less are medical only, and half of them include disability. And at least where we looked, it was about half, to a little less than half of the costs are direct medical costs. So if youre only looking at disability costs to management you're looking at less than half of the problem. And then on top of that the worker is paying the other half because theyre not getting their full benefit. If you're also dredging for other costs, days when somebodys out getting medical treatment for one of these disorders or physical therapy or whatever it is, are also lost days that you never find even in the OSHA 200 or in your workers compensation costs for that matter. They're absences or costs that are, even for management, and there's probably about four or five of them for every case. And then just the other point for methods is that the ratio of non work-related disability that's not paid workers compensation to those which are workers' compensation cases are 10 to 1, more or less. So, then probably about a third to, a quarter to a third of that other stuff is musculoskeletal either aggravated or people can't work because of another injury or theres so much stress on their job. So there's a huge other set of costs associated with jobs people can't do.

Dr. REEVE: Frank, can I ask...

Dr. Mirer: And then finally, the last technological question is that when we're looking at costs of control we need a consensus on how you cost the improvements that come as equipment is turned over. Because the equipment turns over every 5 to 10 years, and what's the additional cost of putting in new stuff that doesnt hurt people compared to putting in new stuff that does hurt people that doesnt have the problem wired out of it?

Dr. REEVE: Frank, thank you. Can we go to the gentleman on the far side of the room?

Mr. John Amell: My name is John Amell with Boeing in Seattle. Im sorry I have one more question for Dr. Berkman. Weve heard some argument about the validity of the cost data on your cost benefit analysis. And just for a moment say all that is correct, were still equal, or some are equal. It seems to be that cost benefits are a wash in that situation but your benefits for your health and safety of employees is greatly enhanced. I dont see what the resistance is.

Dr. MARK BERKMAN: Well, this actually goes in part to the probability analysis that Peter Dorman was talking about. Again both those costs and benefits that youre comparing there are assumed to have equal accuracy. And if that were the case then youre right, there'd be a wash, and you might want to proceed as a result of that. My position was that I think that on the cost side, again, those were the OSHA numbers, that those were seriously underestimating the real costs and so theres a high probability in error of there in one direction, and that the OSHA benefits on the other side, notwithstanding the issue of indirect costs, were likely to be going in the other direction, especially as they relate to whats being done to achieve those costs. Remember not only do you have to identify the avoided injuries, you have to identify how you achieve that and will you achieve it given the amount of money you spend. And I don't think the data is there on much of that either.

Dr. REEVE: Thank you. Can we go to the gentleman in the center?

Mr. Jim Ayre: Thank you. My name is Jim Ayre with Rohm and Haas Company. When it gets to paying for costs of these injuries and illnesses that take place, other companies are somewhat like ours. The business units themselves often dont bear the burden of those costs, of those injuries and illnesses. Do you have any experience or do you have any information or data that might show how these injuries and illnesses may go down or go up as those costs are actually charged back to the business units and not paid for out of some other fund that the business units dont generally deal with.

Dr. PETER DORMAN: Could I reply to that? Thats a wonderful question. And that question in particularYI mentioned this fellow Hopkins in Australia. He looked at that in some detail in multi-unit enterprises. He found that the general ruleYId be interested to know if it's true for this group too. The general rule is that the worker comp costs for instance are paid at the employer level, right? At the company level. And very little counting, if at all, is done to determine where those costs originate. So on the one hand, the unit may have its own budget and be required to account for how it's spending its money, if it has an intervention program or something like this, on the cost side. But the benefit side gets washed out in a large organization. It seems to me one the very first steps that we need to be taking in any type of analysis program was to begin to attribute the costs within the company to the units which are incurring those costs.

Mr. DAVID ALEXANDER: Anecdotally I would just concur. Its just one of the first steps that we always recommend if those costs arent being charged down to the unit level to do so, so people really understand and appreciate in their pocketbook what the costs are.

Mr. Ayre: It might behoove us all to think about doing that, at least whether it in fact goes back to those units, but just cost it out and show where they come from and show it back to the manager.

Mr. ALEXANDER: I like to give them the real dollars. Its one thing to be aware of it, it's another thing to actually feel it in your gut.

Mr. Ayre: Thank you very much.

Dr. REEVE: Well at Ford, what theyve done in the last two years is they started putting those back as a line item charge against the plant manager's budget. So, he feels it a little more than just in his gut.

Ms. HEATHER GROB: I just wanted to recommend to the audience, that Oxenburg, our wise sage in Australia, has a very good computer program available. If youd like to find out about that you can write to us or call us at the Center to Protect Workers Rights. We can put you in touch with him. Its about $200, I think.

Dr. REEVE: We'll go to the gentleman in the blue blazer. And well finish up with someone who has local turf from Sharonville.

Mr. Stuart Flatow: Thanks. Im Stuart Flatow, the Director of Occupational Safety and Health of the American Trucking Associations. I normally try to stay unrecognizable in a crowd [laughter] for obvious reasons. But I just wanted to make a couple of brief comments. First off is the AK Foundation did publish a study about two or three years ago acknowledging the large and significant concerns regarding injuries in the truck industry and the cause of those. Thats not a secret. Its public information available to anyone. I want to add that part of that study said that about 25% of the compensables were due to slips and falls, very few due to RSIs and things of that nature. And while some might scoff at what Mr. Berkman said in terms of part of that is due to drivers wearing cowboy boots, that is not an untrue statement. Thats not to say to hang our hat on that. But that is not an untrue statement. There is a transition there in going from wet to dry, dry to wet, etc. The other issue thats come from the trucking industry is that a lot of the injuries occur, especially the truck loading industry, off-site, away from the employers fixed facility. And that is difficult for the employer to monitor the activity of the employee. It's not putting any blame on anyone; its not hanging our hat on anyone. It's a whole lot different to try to monitor off-site injuries once a driver's away from that dock than it is to monitor it at a fixed facility or an assembly line.

The last point that I'd like to make is that I spend most of my time talking to carriers, talking to HR people, trying to come to some consensus on what we can do to separate pain from productivity. I will add though that if the trucking industry had to comply with the latest OSHA draft and the NIOSH lifting equation they would not be able to conduct trade, and commerce would stop almost immediately.

Mr. Don Crabtree: Don Crabtree from the Sharonville Transmission plant, Local 863. This is for Mark again. And I was listening to your presentation, and I was trying to follow you. And I thought you implied during your presentation that because of high benefits, more cases are reported. Ergo, if theyre lower they might not be reported. Is that true?

Dr. MARK BERKMAN: Well, yes and no. I can use both the yes and no answer to that. The yes is that there will be more reports as benefits go up. The question is, are those claims for benefits legitimate ones? Theres a much greater incentive, as benefits go up, for false reporting. And thats what we're trying to document. We're trying to understand how it is that all this in the workplace got that much more dangerous. Did it? Or is it the fact that theres a greater incentive for more false reporting to go on? And the evidence suggests, as in the literature I reviewed, that there is a lot of false reporting going on.

Mr. Crabtree: I certainly dont have the information you have. I can only go from my own experience of 33 years. Most of the folks would probably go under the S&A benefits just to avoid the hassle of workers comp, and that's been my experience. Also, in closing, Id just like to say that, if you're talking about reducing benefits in order to lower reporting, I think they give like $3,750 for a lost finger. And maybe they have two or three reported incidents in a year. But by that theory, if you reduce it to $100, does that mean nobody's going to get a lost finger? Or if they are, are they going to report it? I don't quite understand that.

Dr. BERKMAN: Well, no. Im certainly not suggesting that the benefits level may not be correct.

Dr. REEVE: Well, seeing there are no further questions, I want to thank you for staying and I hope you enjoyed the session.