Complexity and adaptation in workers’ compensation systems: Implications for

policy, practice and worker health.

Alex Collie

CEO, Institute for Safety Compensation and Recovery Research, Monash University, Melbourne, Australia.

Adjunct Professor (Research), Department of Epidemiology and Preventive Medicine, Monash University, Melbourne, Australia.

Complexity of human systems

Bar-Yam Y. Complexity rising (1997). www.necsi.com

Complexity science ?

• Classical scientific / attribution paradigm– System behaviour can be understood by studying the system's parts

independently at each level.

– We can attribute certain outcomes to certain actions/inactions.

• Complexity science / adaptation paradigm– System parts interact on many time and length and intensity scales

and are interdependent.

– System is adaptive and system outcomes are an emergent property of these interactions.

System features

Simple or Complicated systems Complex systemsHomogenous HeterogenousDeterministic StochasticStatic DynamicNo feedback FeedbackAttributable AdaptiveLinear Non-linearClosed OpenCentrally controlled Self-organising

Systems have a single primary driver

• Systems and system agents tend to organise themselves around a primary driver / objective.

• Primary drivers influence the overall behaviour of the system.

• Competing objectives will at times be sacrificed in order to achieve the primary objective.

• Differing views of the primary objective are a barrier to cooperation and coordination between system participants.

Sturmberg J & Martin CM. Medical Journal of Australia (2009)

A workers’ compensation system?

Injured

worker

Insurer / case

manager

Health-care

provider

Employer /

workplace

Lawyer

Occupational

Rehabilitation

Regulator

A workers’ compensation system?

Proposition

• Workers’ compensation systems, such as those in place in Australia and Canada, are complex adaptive systems.

• WC systems are currently managed using a classical / reductionist / deterministic paradigm. This can lead to negative outcomes for system participants and the system as a whole.

• Effective management of WC systems requires a fundamental shift in both thinking and behaviour of system operators and system participants.

• Moving to a complexity / adaptation paradigm presents multiple opportunities for system improvement.

Some observations that demonstrate complexity and adaptation in workers’ compensation systems

• Feedback loops

• Unintended consequences of policy

• Openness to external influence

• Primary of financial drivers

• Fundamental attribution error

• Policy resistance

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Feedback loop – system processes affecting worker mental health

Kilgour B, Kosny A , MacKenzie D & Collie A. J Occ Rehab (2014).

Adversarial relations

Difficulty getting a diagnosis

Difficulty getting

treatment

Chronicity of injury

Psychosocial consequences

Legitimacy concerns

Feedback loop - income replacement

Total Cost of

Income Compensation

Number of Claims

Avg. Duration of Claim

Avg. Claim

Payment

System with no feedback

Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12800

900

1000

1100

1200

1300

1400

1500

1600

1700

Pre-Policy Forecast

Num

ber o

f Cla

ims

The impact of feedback loop

Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12800

900

1000

1100

1200

1300

1400

1500

1600

1700

Pre-Policy Post-Policy Forecast

Num

ber o

f Cla

ims

Share of Claims with Income Benefits

Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-1220%

25%

30%

35%

40%

45%

Pre-Policy Post-Policy Pre-Policy Trend

Some unintended consequences of system interventions

Injured people involved in compensation processes have poorer recovery and return to work than matched people receiving treatment/rehabilitation via public or private healthcare. (Harris I, et al. JAMA 2005;293:1644-1652)

System processes designed to ensure efficient and effective rationing of system resources for provision of healthcare contribute to negative health impacts, increasing the requirement for healthcare amongst injured workers. For example use of independent medical examinations to determine eligibility for compensation and benefits are reported to have a negative impact on the mental health of some workers (Lippel K, Int J Law Psych 2007; 30: 427-443)

Experience rated employer premiums designed as a financial motivation for employers to maintain safe and health workplaces can lead to suppression of work injury claims, thus excluding some injured workers from system benefits (Tompa E, et al. Pol Prac Health Safety 2012; 10: 117-137)

Some injured workers find themselves in a ‘cyclical’ and iterative relationship with insurers that reinforces negative stereotypes of both worker and insurer, and leads to the onset of secondary, system generated mental health and social conditions (Kilgour E, et al. J Occup Rehab 2014; online)

System practices designed to ensure that General Practitioners maintain a role as the healthcare ‘gatekeeper’ leading the care of the injured person (requirements for sickness certification by a GP), are sufficiently cumbersome for some GPs to opt out of involvement in the system by refusing to treat injured workers (Brijnath B, et al. Article submitted for publication)

Multiple competing objectives of workers’ compensation systems

10 Objectives of Act

The objectives of this Act are to—

a) reduce the incidence of accidents and diseases in the workplace; and

b) make provision for the effective occupational rehabilitation of injured workers and their early return to work; and

c) increase the provision of suitable employment to workers who are injured to enable their early return to work; and

d) ensure appropriate compensation under this Act or the Accident Compensation Act 1985 is paid to injured workers in the most socially and economically appropriate manner, as expeditiously as possible; and

e) ensure workers compensation costs are contained so as to minimise the burden on Victorian businesses; and

f) establish incentives that are conducive to efficiency and discourage abuse; and

g) enhance flexibility in the system and allow adaptation to the particular needs of disparate work situations; and

h) maintain a fully-funded scheme; and

i) in this context, to improve the health and safety of persons at work and reduce the social and economic costs to the Victorian community of accident compensation.

Work Injury Rehabilitation and Compensation Act (2013). Victoria, Australia.

Primacy of financial drivers (an example)

• In Dec 2011 Workcover NSW had a deficit of ~$4b

• Oct 2012 - major legislative amendments introduced

• June 2014 - $1 billion surplus

• Sept 2014 – removal of some of the 2012 changes by regulation

Open systems (claim rates and the Canadian recession)

Mustard C, Petch J. 2012. Institute for Work and Health (issue briefing)

Some observations that demonstrate complexity and adaptation in workers’ compensation systems

• Dynamic complexity

• Feedback loops

• Unintended consequences of policy

• Openness of systems

• Primary of financial drivers

Is the ‘long-tail’ a failure driven by system complexity?

Survive

Fail

Individual capacity to

cope

High

Low

Low

System complexit

y

High

Some responses to complexity

• Retreat

• Despair

• Assign blame / responsibility

• Simple solutions

• Lose hope

• Invest resources to better understand the system and identify opportunities for system improvement.

Implications for policy and practice.

• WC systems cannot be controlled by a single omniscient authority (aka a regulatory authority)

• Coordination and cooperation between system participants is necessary for effective system regulation.

• Behaviour of WC systems will gravitate around a single driver.

• Achieving multiple and diverse outcomes will be difficult, as some outcomes will be sacrificed in order to achieve others.

• Reductionist approaches to system interventions are likely to give rise to unintended consequences (of the type described)

• Effective system management requires a nuanced understanding of the interactions between system participants (i.e., the dynamic complexity)

Implications for policy and practice

• Those responsible for system performance should be wary of self-reinforcing analyses and should seek alternative views of system behaviour (using different data sources)

• System and agent behaviour will be influenced by factors outside the control of the system agents.

• Full impact of system interventions will occur over a long time scale. Evaluations of system interventions need to take place over an equivalent time scale.

• System modelling techniques (e.g., agent based modelling) can provide valuable opportunities for system participants to understand system behaviour and agent interactions.

A research opportunity (1)

• Data linkage to examine system intersections

Berecki-Gisolf J, et al. (submitted)

A research opportunity (2)

• System modelling to develop effective policy interventions

Marshall BDL, et al. (2012) A Complex Systems Approach to Evaluate HIV Prevention in Metropolitan Areas: Preliminary Implications for Combination Intervention Strategies. PLoS ONE 7(9): e44833. doi:10.1371/journal.pone.0044833

Proposition / Conclusions

• Workers’ compensation systems, such as those in place in Australia and Canada, are complex adaptive systems.

• WC systems are currently managed using a classical / reductionist / deterministic paradigm. This can lead to negative outcomes for system participants and the system as a whole.

• Effective management of WC systems requires a fundamental shift in both thinking and behaviour of system operators and system participants.

• Moving to a complexity / adaptation paradigm presents multiple opportunities for system improvement.

Acknowledgements

This research was funded by the Victorian Workcover Authority and the Transport Accident Commission via the Institute for Safety Compensation and Recovery Research at Monash University.

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Get in touch…

W: iscrr.com.au

E: alex.collie@monash.edu

@ISCRR

@axcollie