The government has set itself ambitious targets to return more people who are claiming incapacity benefits to work, but are there enough incentives for employers to introduce vocational rehabilitation strategies? Jane Bernstein investigates
The last few years have seen the government place ever greater emphasis on getting people with disabilities back to work and various initiatives are now in place to maximise numbers. But some rehabilitation experts believe the government is missing a trick by failing to focus on vocational rehabilitation as a vital tool in helping people return to work. The question is, should the onus be on the government to put pressure on businesses or can the insurance and rehabilitation industries themselves do more to encourage take-up?
The government has set itself some ambitious targets - to reduce the number of incapacity benefit claimants by one million by 2015 and to achieve an employment rate equivalent to 80% of the population. And there has certainly been a flurry of recent activity in terms of relevant research and white papers. Notably, this includes the government's response to Dame Carol Black's review of the health of Britain's working age population last November, as well as the government's new Welfare Reform Bill. This bill has been widely welcomed as an opportunity to increase support for people experiencing complex barriers to work.
But the question being asked by many of those involved in the rehabilitation industry is, do these developments incentivise employers to implement vocational rehabilitation schemes? For many, the answer is no. Medicess director Matthew Beard says the Welfare Reform Bill in particular will be "no panacea" to effective vocational rehabilitation in the UK. For him, the point is that while this Bill provides the opportunity to get more people currently on long-term benefits back into work, an increased uptake among employers of vocational rehabilitation would help lessen the numbers moving onto benefits in the first place.
One view is that the government should be providing financial incentives for employers in return for implementing effective vocational rehabilitation. Melanie Summers, managing director of AIG Medical and Rehabilitation, observes: "Many employers are cautious when it comes to paying for services to reintegrate people into the workplace, so any financial aid or reward for using this service would be welcome. Employers need to be incentivised to reintegrate employees back to work."
Bob Rabbitts, technical claims manager at Allianz Insurance, asserts that if the government was prepared to spend money through tax breaks, then it should recover this investment by helping more people return to work.
Conversely, Adam Skinner, principal consultant at PA Consulting, puts forward the view that although insurance-backed vocational rehabilitation services are a good thing, it could be argued that the cost to the Exchequer of making these tax free could be better spent on direct measures to support the unemployed.
His colleague and partner at the firm, Andy Vernon, also argues that making vocational rehabilitation tax free may create savings for larger companies that already purchase it but is unlikely - especially in an economic downturn - to encourage small and medium-sized companies to fund it. Therefore, making it slightly cheaper is unlikely to significantly increase its uptake.
While it seems very unlikely the government will ever use tax breaks as a carrot for employers to introduce vocational rehabilitation, the good news is that its current actions are helping to raise the issues and profile of these services. In fact, the Department for Work and Pensions is keen to emphasise its support. A spokeswoman states: "We know that work is generally good for health and well-being and that it is better for people to remain in employment than slipping onto benefits. Therefore, vocational rehabilitation is clearly a priority for us."
The DWP also points to some recent positive steps, particularly in response to Dame Carole's review: "We have announced a range of occupational health-related services to support employers in response to this review," says the spokeswoman, who goes on to explain these services include a telephone helpline service for smaller businesses. "This will offer professional occupational health advice to managers on individual employee health issues - including mental health - that cause problems that the manager or owner is unsure how to address."
Dame Carol's review also recommended that the government take radical action to facilitate a revision of the existing 'sick note' process to create a 'fit note'. She envisaged that the revised certificate or 'fit note' would act as a vehicle for providing practical advice to both the patient and the employer about how a return to work can be achieved. The response to this committed the DWP to delivering such a system.
While these developments are certainly encouraging, do they go far enough? Spencer McCabe, manager of Zurich's medical management centre, agrees the government is taking some positive steps and mentions the Welfare Reform Bill in particular. "The general ethos relating to giving individuals personal responsibility, as well as improving support from the government, is good." He adds, however, that the government is inevitably taking a broad-brush approach rather than focusing in on the specifics of rehabilitation.
Andrew Pemberton, director at Argent Rehabilitation, believes that rather than calling for tax breaks, the insurance industry should be working towards making rehabilitation a compulsory part of employers' liability insurance. But other experts maintain that making rehabilitation obligatory is not the way forward. Joy Reymond, Unum's head of rehabilitation services, observes: "People can't be forced to do this and it is not something that should be imposed. If you provide something that has value and has been proven to work, then people will choose to do it." Emil Kowalski, managing consultant at PA Consulting, adds that the cost to companies and the government in imposing it would outweigh the benefits.
For many industry insiders, it is not a question of needing to incentivise take-up of vocational rehabilitation - or making it compulsory. Many believe the figures should speak for themselves and that simply introducing vocational rehabilitation will bring employers all the financial reward they need. The problem remains the age-old issue of lack of awareness - employers unaware of the potential benefits are simply not doing the cost benefit analysis.
Mr Beard asserts, for example, that while tax incentives would be helpful, the benefits would pale into insignificance compared to the cost saving potential of cutting long-term absence for the employer and insurer alike. Mr McCabe agrees, asserting that the costs associated with having people off work dwarf any benefits tax breaks could afford. The message is that businesses are still failing to see the financial gains to be made through effective use of vocational rehabilitation.
The problem is particularly evident amongst small to medium-sized enterprises. Mr Pemberton says: "The larger corporates do tend to quantify their absence costs and are interested in getting people back to work. If you go to a small organisation, however, with 10 or 20 people, you often find they do not record absence or measure it because they are not required to." He adds that changing behaviour at SME level is notoriously challenging. "The benefits for the SME have to be soon, certain and positive."
There is also some concern that the rehabilitation industry continues to suffer from a lack of clarity. "It's quite a complex message," observes Ms Reymond. "People often don't understand that it is not like car insurance but more a question of risk management." Mr McCabe adds: "The industry generally tends to overcomplicate it. There are lots of different definitions but really the general ethos is very simple - do what needs to be done to get the individual back to work."
The problem is compounded by the fact that businesses have to invest a certain amount of cash up-front before they see any benefits. Karen Gamble, a regional director for Heath Lambert Consulting, points out that the costs of employing the relevant vocational rehabilitation experts can be high and that, particularly in the current economic climate, this is bound to create problems for SMEs.
Credit crunch problems
The credit crunch is certainly not doing anything to encourage businesses to invest in new areas. So, as something still seen as a 'nice to have' rather than a 'must have', vocational rehabilitation is likely to fall even further down the list of priorities for many employers this year. Nancy Hempstead, head of healthcare EMEA at Crawford & Company, believes that while rehabilitation will continue to be talked about with a degree of enthusiasm, only the visionary companies are likely to follow it through. She believes the credit crunch may well exacerbate this situation, "with companies either taking a short-term view of expenditure on rehabilitation or employees returning to work before they are fit for fear of losing their job, with all the risks that involves".
On the other hand, the credit crunch could offer a real incentive for businesses to take vocational rehabilitation seriously. Helen Merfield, chief executive of HCML, asserts: "I believe the cost to employers of having a number of their workforce on long-term sick leave in the current climate is not sustainable; employers will be looking to reduce any unnecessary overheads and costs."
In addition to a lack of awareness, another obstacle to effective implementation of vocational rehabilitation is a lack of proper absence management among businesses. Employers are also failing to notify their rehabilitation providers quickly enough. Ms Reymond explains: "We find there is an inverse relation between our success and the time it takes for us to be notified." And she advocates employers viewing rehabilitation as part of a wider absence management process. "If they don't have good internal processes, and are unaware of an absence that is becoming difficult, then it is harder for them to get us involved early."
Mr Beard says a raft of absence management services are available but explains these tend to monitor routine absence. "These are valuable services but are generally perceived by employees as an adjunct to HR absence policing; rarely do they actively intervene in the clinical and vocational management of long-term absence."
Other industry experts point to additional factors that are currently hindering take-up. Nicola McLoughlin, partner in the large loss team at Keoghs, says there is a lack of skilled personnel in the vocational rehabilitation sector itself and questions whether there are enough rehabilitation consultants to go around. She also highlights the ongoing problems around motivating people on incapacity benefit: "While there are those who do want to get back to work, there are others who I feel go through the motions with no real intention of working in order to enhance their claim."
Ms Gamble is optimistic that the NHS will ultimately look at delivering some form of health into the workplace but is concerned there will be a lack of focus and insufficient funding. "It is likely to be fragmented," she observes.
One area reportedly showing signs of improvement is the communication between insurers, rehabilitation providers and government. Mr Pemberton says this has got better in the last 12 months and praises Post's own Rehabilitation First campaign for continuing to bring industry experts together. A spokesman for the Association of British Insurers adds: "There is now a much better, more joined-up approach between interested stakeholders. For example, the ABI is a member of the UK Rehabilitation Council, which includes other stakeholders."
For some, however, there is still room for improvement in terms of insurers and rehabilitation providers working together. Ms Merfield observes: "Most insurers are using rehabilitation to some degree, but all too often they keep the rehab providers at arm's length. Rehabilitation works, but only if there is trust between both parties and an understanding of the issues both sides are facing. We find insurers that engage and work together with us not only get better results, but also achieve bigger savings."
Asked whether a failure on the government's part to provide incentives like tax breaks will impede the progress of vocational rehabilitation, most industry experts respond that there are wider issues at play. Ms Summers believes it is more a question of education and experience, observing: "Those employers who have had positive experiences of vocational rehabilitation will use it again as they see the value." Equally, Ms Merfield reiterates the message that lack of awareness of what can be achieved through good case management and vocational rehabilitation is the major obstacle.
While there is widespread consensus, the government should be championing vocational rehabilitation. It is also clear that tax breaks or legislative measures cannot offer a magic solution. The task remains for insurers and rehabilitation providers to raise awareness of vocational rehabilitation and demonstrate its tangible, financial benefits.
- Loss-making GRP spent £112.6m on acquisitions over its last financial year
- Hiscox names former claims boss as UK CEO
- Hiscox's James Brady on why cyber knowledge remains a barrier
- Mike Bruce promoted to GRP group managing director
- CBL shareholder in bid to save troubled firm from liquidation
- Top 100 Insurtech: Quarter four update
- Marsh boss joins GRP-backed Marshall Wooldridge