Why Smart Hiring Is the Smartest Way to Cut Workers’ Comp Costs

The Rising Tide of Workers’ Comp Costs

Over the past year, I’ve been talking to more employers than ever who are feeling the squeeze from rising workers’ compensation costs. For a while, it seemed like things had stabilized after the pandemic — but the latest data shows a clear reversal of that trend.

According to the Workers’ Compensation Research Institute (WCRI), medical costs per workers’ comp claim are up 5–12% across most states. After several years of relative calm, we’re now entering a new cost cycle — one that’s affecting nearly 18 major states, representing about 60% of total U.S. workers’ comp benefits. That means these increases aren’t isolated; they’re happening everywhere.

WCRI’s “CompScope™ Medical Benchmarks” show total costs per claim rising by 2–14% annually between 2021 and 2023, driven by several converging factors:

• Rising medical utilization (more treatments per claim)
• Increased provider prices
• Adjustments to state fee schedules
• Longer disability durations tied to wage inflation and labor shortages

The National Council on Compensation Insurance (NCCI) has flagged similar trends — noting that while the overall workers’ comp market remains profitable for now, the underlying medical inflation and wage growth pressures could significantly increase loss costs in coming years. Meanwhile, PwC’s Health Research Institute projects an 8% jump in medical costs in 2025, the steepest rise in nearly a decade.

Put simply: even if your injury rates haven’t changed, each injury is now costing more.

That’s the part that often gets overlooked. Employers may think, “Our safety record is solid — we’re fine.” But when each claim becomes 10–20% more expensive, even a stable injury rate can turn into a major financial liability.

And that’s why, in this environment, the most effective way to manage workers’ comp costs isn’t just better claims handling — it’s prevention.

Why Prevention Has the Best ROI

At DataFit, we’ve built our approach on a simple principle:

The right person, in the right role, from day one — that’s where injury prevention truly begins.

Our post-offer employment testing (POET) program helps employers make sure every new hire can safely meet the physical demands of their job. It’s an objective, validated, and fully compliant process that identifies potential physical mismatches before they lead to injuries.

This isn’t about disqualifying people — it’s about ensuring fit and safety.
And it’s one of the few HR investments that consistently produces measurable, repeatable financial returns.

The Hidden Cost of Doing Nothing

Let’s put this in perspective. A company with 1,000 employees and a modest 2.5% injury rate can expect about 25 injuries a year. If the average claim costs between $40,000 and $80,000, that adds up to $1–$2 million annually — and that’s just direct claim costs.

Indirect costs — things like lost productivity, replacement labor, retraining, and lower morale — often double or triple the true expense. What looks like a few injuries on paper can quietly become a seven-figure problem every single year.

Without proactive prevention, those costs don’t go away. In fact, as medical inflation continues to climb, they’ll likely grow faster than your ability to offset them.

A Simple, Scalable Solution

Here’s where DataFit’s LiftSmart POET Program makes a difference.

Lets say testing costs around $150 per candidate, meaning an employer hiring 1,000 workers spends about $150,000 total. That small investment identifies 2–5% of applicants who can’t meet the physical requirements of the role — individuals statistically more likely to be injured once on the job.

By recognizing that high-risk group before they start, employers drastically cut both claim frequency and severity. The result is a ripple effect across operations: fewer injuries, fewer lost days, lower insurance premiums, and stronger workforce stability.

It’s prevention that’s scientifically validated and financially undeniable.

Real-World ROI

We’ve seen this play out again and again across industries. Here’s a straightforward example:

• Without LiftSmart:
  25 claims per 1,000 workers = $1–$2 million in annual claim costs.
• With LiftSmart:
  $150,000 testing investment = 2–5% of high-risk candidates identified.
  Prevents those injuries before they ever happen.

That translates into $850,000–$1.85 million in annual savings, or roughly $6–$12 saved for every $1 spent.

In higher-risk operations — warehousing, logistics, manufacturing — we routinely see returns closer to $15–$25 per dollar spent.

The 5% Rule

Here’s something every employer should know:

5% of total employees typically drive over 50% of total workers’ comp and health costs.

It’s not that these employees are careless — often, they’re just not physically matched to their role. By identifying those mismatches up front, DataFit allows employers to target prevention where it matters most.

And when a single back, shoulder, or lifting injury can cost upwards of $100,000, preventing just one major claim can easily pay for the entire testing program.

Looking Ahead

With medical costs, wages, and comp expenses all trending upward, doing nothing is no longer a neutral option. Employers who continue to hire reactively will see their claims costs climb — even if their safety practices don’t change.

Those who invest in prevention, however, will not only stay ahead of the trend but build a safer, more resilient workforce in the process.

Because the most cost-effective claim is the one that never happens —
and with DataFit, that’s exactly the claim you’ll never have to pay.