New Brunswick

Province advised to privatize WorkSafeNB rehab centre, documents show

The provincial government is being told to consider privatizing Worksafe New Brunswick’s Workers Rehabilitation Centre in the Saint John area as a way of reducing costs, according to an internal report obtained by CBC News.

Internal review says centre spending too much money on too few people

The provincial government is being told to consider privatizing WorkSafe New Brunswick's Workers Rehabilitation Centre in Grand Bay-Westfield as a way of reducing costs.

The centre treated only six per cent of workers injured on the job in 2015 at a cost of $7.8 million, says a July 2017 PowerPoint presentation obtained by CBC News.

The internal report, by the Office of the Comptroller, an internal government office that monitors spending, says the centre takes a "significant amount of resources to service a small population of injured workers," and almost half of those treated there do not return to work.

The review says privatizing the centre would reduce the upward pressure on Worksafe premiums paid by employers. The centre is funded by employer premiums.

"There are opportunities for cost savings by outsourcing the services provided by the WRC," says the presentation.

"Impact of savings would include: potential reduction in rates paid by assessed employers [and] lower claims costs for self-insured employers."

Millions in savings 

The report estimates the savings could be between $2.8 and $5.9 million, translating to a reduction in claims costs of $670,000 to $1.4 million.

The document notes the centre, which opened in 1965, was established to offer services such as physiotherapy and occupational therapy that weren't available from the private sector at the time.

But the centre is expensive, with more than half its operating budget devoted to salaries and benefits, the report says.

Among the workers who do use the centre, the percentage returning to their jobs after treatment has been dropping —from 66 per cent in 2014 to just 52 per cent in 2016. Workers who can't return to work continue to draw salaries from the Worksafe fund.

If the return-to-work rate improved by 10 percentage points, Worksafe would save $55 million, the report estimates, and that would relieve some of pressure for higher premiums.

Premiums paid by employers have been a contentious issue since Worksafe raised them on Jan. 1 from $1.11 to $1.48 per $100 of payroll. The agency blamed decisions by an appeal tribunal that have forced it to cover more injuries.

As an insurance fund, Worksafe is legally required to collect enough in premiums to cover the costs of the benefits it pays out.

Report backs premium hike explanation 

The document backs up Worksafe's explanation for the premium hikes, saying claim costs jumped from $292 million in 2015 to $377 million in 2016, an increase of 29 per cent.

But administration costs also climbed over the same period, from $43.7 million to $48.7 million, an 11 per cent increase.

The PowerPoint document says salaries and benefits make up three quarters of Worksafe's administration costs, and that salaries are $2.4 million higher than equivalent jobs in the provincial civil service.

On Monday, Worksafe announced premiums would jump again on Jan. 1, 2018, from $1.48 to $1.70.

The agency said in a press release the increase was smaller than originally planned because it had reduced its administrative costs by 16 per cent.

It said it was also changing its policy of having 110 per cent of the money it needs to cover claims. It will now need 100 per cent.

ABOUT THE AUTHOR

Jacques Poitras

Provincial Affairs reporter

Jacques Poitras has been CBC's provincial affairs reporter in New Brunswick since 2000. Raised in Moncton, he also produces the CBC political podcast Spin Reduxit.

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