CHAPTER 3: Services to Small Business

In 1977 the National Institute for Occupational Safety and Health (NIOSH) held a conference to discuss the problem of delivering needed occupational safety and health services to small businesses and their employees. Although interest in the problem was traced back as far as 1939 by one speaker, very little new has been contributed to this subject and few alternate models of the delivery of services have been introduced since.

Small business, as a subset of North American business and industry, is very heterogenous. There is no generally accepted operative definition. The current working definition of the U.S. Small Business Administration (SBA) is a sliding scale by which a company's sales, ownership, assets, numbers of employees and other factors are taken into account. This definition is exceedingly complex, relies in large part on prior rulings, rests on SBA adjudication, is not consistently used by U.S. federal and state programs, and is virtually impossible to apply for statistical purposes outside the agency. A proposed simplified definition was published by the SBA in 1980 for preliminary comment and was retracted because of problems associated with firms engaged in more than one industry and because some 250,000 firms then eligible for SBA assistance were threatened with exclusion. It was based solely on the number of employees and the industrial category. Highly competitive industries dominated by smaller firms, particularly in retailing and service, would have qualified up to a relatively low maximum number of employees (as low as 15) while industries with high capital costs, little competition, and a preponderance of large firms would have qualified up to a maximum of 2,500 to be considered "small business". In the absence of a precise definition, the term "small business" is here taken to mean a small operation within the context of a particular industry, be it a machine shop, a dry cleaning establishment, or a computer manufacturer.

Small business is an important sector of the U.S. economy. Small business comprises 96% (SBA-proposed definition) to 99% (SBA-current) of U.S. corporations, numbering roughly 6,250,000 establishments, many of them very small retail, service, and farming entities. Obviously small business is very big business in the aggregate. Of equal importance, however, is the role of small business as the nursery for innovation and technological advancement. The vitality of small business is nowhere so obvious as in the highest levels of technology. Small business leads much of the economy and is valuable beyond its volume of revenues, but faces severe problems in profitability and finance.

Large corporations have several advantages over most small firms in complying with good occupational safety and health practices, among them a much larger pool of technical talent to correct hazards, established in-house medical programs, favorable cash-flow and capital margins allowing resources to be put into occupational health and safety, and the capacity to assign responsibility for fulltime management of safety and health programs to specific employees. The small firm is almost invariably working on a much narrower margin and by definition has far fewer resources in capital, personnel, and facilities at its command. Because of its obvious disadvantages, small business requires special attention if it is to attain improvement in occupational injury and illness rates.

In providing for occupational health services, small businesses are at a particular disadvantage compared to major industry because of the absence of economies of scale. One estimate suggests that for small companies of fewer than 50 employees the cost of regulatory compliance (occupational, environmental, and socioeconomic) is seven to ten times as great per employee as for larger firms of 50 to 250 employees. A similar but lesser differential probably applies to companies with less than 500 employees compared to companies with more than 500. Many of the smallest companies are owned and operated by families or are vehicles for a single individual. Companies with 20 to 250 employees have a higher injury rate than either smaller or larger corporations. Thus small business has a particularly acute need for occupational health services delivered at reasonable cost.

A recent survey conducted in the state of Colorado confirms that industries with less than 100 employees rarely employ full-time occupational health professionals and depend instead on either part-time physician or nurse assistance or on community-based services. By contrast, the majority of large industries employed at least an industrial hygienist. Smaller industries were also much less likely than large industries to offer basic services such as preplacement examinations, periodic health evaluations, industrial hygiene surveys. Interestingly, a third of industries surveyed returned an opinion that present levels of occupational health services provided for them were not adequate to meet their - and their employee's - needs, but there was no consensus expressed on how better to address these needs.

Unfortunately, the decentralized nature of small business makes it difficult to serve their needs in a coordinated fashion. Practical limits on cost and local accessibility make serving small business logistically difficult except through an equally decentralized network of facilities. The very decentralization of the network makes it all the harder to provide services at a consistent standard, both because it is difficult to exert quality assurance without control and because smaller service units are more likely to be responsive to what the client wants rather than what the client needs. On the other hand, a smaller, decentralized service unit is likely to establish a closer relationship with the client-employer and to become more aware of the client's constraints and perceived problems. This is both good and bad, because it enhances responsiveness to the client but may also create a cozy, uncritical, dependent relationship that excludes the employee-patient. Also, smaller service units suffer from many of the same resource constraints as their clients and may even qualify themselves as small businesses. It is common, for example, for small facilities on the "industrial medicine clinic" model (see Chapter 4) to open without staff qualified in occupational medicine and to limit their activities to treating routine injuries and to performing periodic or preplacement evaluations without ever realizing the larger potential of their services. Even so, decentralization of services has proven to be the only satisfactory means to date of serving the needs of small business.

Although the logistical problems of providing consistent occupational health services to small business are formidable, the potential rewards more than justify the effort. As noted, most of society's economic activity and employment is to be found in small enterprises. This is true not only for the United States and Canada but in every economy around the world regardless of economic system. Developing services for small-scale industry is therefore an important strategy to improve occupational health standards in general and the effect of even small improvements consistently applied will be multiplied by the larger numbers of workers involved. From the standpoint of marketing, small business ultimately represents a much larger market for occupational health services than large corporations. The latter are more likely to have internal resources to resolve their health problems and may have their own plant occupational health services or corporate occupational health department already. Small industry must cope as best it can and usually must turn to resources in the community to provide assistance in solving its problems.

The direct benefits of prevention-oriented occupational health services for small enterprises are also proportionately greater than for large concerns. Few small business can absorb the consequences of absence or disability of a trained employee or manager without the loss being reflected in performance. The direct costs associated with workers' compensation assessments, retraining and recruitment costs, and administrative overhead for dealing with absences would seem to provide an incentive for small business to use sound occupational health services, particularly those oriented toward prevention. Employees of small enterprises usually develop a more personal relationship with their managers than in corporations. Indeed, in very small enterprises the workforce may be made up mostly or entirely of family members. One would think that small enterprises would demand preventive services up to the limit they could afford. In practice, this is rarely the case.

The properties of small enterprise have many competing priorities and often perceive occupational health and safety as a regulatory burden imposed on them rather than as an integral part of operating a business. Many managers in small business have no clear idea of the hazards of their workplace or think only of one or a few highly visible hazards. This should not be surprising because their interest and expertise is in business, not health. Invisible threats, such as cancer-causing chemicals, tend to be lost among urgent day-to-day matters of business. A handful of these managers, especially owner-managers, take the attitude that acceptance of some risk is a necessary part of success in their business and that if they have taken risks themselves, their employees should be prepared to do so as well. The great majority, however, are simply not knowledgeable about the cost-effective prevention of injury and illness in the workplace and would have little time to learn if they were aware. The successful provision of sound occupational health services to small businesses therefore requires two levels of activity, the easy availability of effective consultation to solve problems and education regarding the value and appropriate utilization of such services by small business managers. It is not reasonable to expect all managers of small businesses to solve their own problems in their own way. They must have help based nearby in their own community.

Managers and owners of small businesses tend to be conservative in their use of occupational health services, limiting use to the care of injured or ill employees or screening activities required by law. Most perceive preventive or health promotion services with some skepticism but the depth of this attitude depends in large part on the nature of the industry and the attitudes in the community. Small firms involved in professional services or up-scale retail or service functions have shown interest in participating in community-based health promotion activities, as long as the financial burden is not excessive. Employee assistance programs designed to serve many small firms have been successful, usually when the firms served are dependent on a few key people. Even so, there is usually more ready acceptance of treatment and rehabilitative services than preventive-oriented services. Occupational hygiene, the evaluation of hazards in the workplace and the design of controls, is not a familiar concept to many small business managers, who assume that they will incur an excessive cost. Thus, it should be a function of all services available to small businesses to educate and guide managers in achieving greater cost-effectiveness through selective utilization of occupational health services.

To the owner or plant manager, occupational health coverage is a consumptive rather than an investment cost as it might be seen from the overall perspective of society. A heavy involvement in prevention or hazard control or health promotion may or may not forestall a future event from occurring; the cost is tangible but the benefit is not. Furthermore, employees come and go and a heavy investment one year may be lost with personnel turnover the next, particularly since the benefits are usually apparent only in the long term. In larger companies costs associated with disability and absenteeism may be reduced by company medical programs but to a small company the costs of maintaining health services as out of proportion to the visible benefits. Although intensive safety control applied to companies with high injury rates does appear to reduce downtime, lower insurance premiums and workers' compensation levies, and improve morale, it is doubtful that small businesses that perceive themselves as low in risk to begin with can be motivated to institute expensive in-house programs except when these are used as benefits to attract exceptionally talented employees.

Costs must therefore be kept as low as practicable when marketing to small business. One approach to reducing the costs to small business of providing occupational health services has been used in Durham (in the United Kingdom), where a sliding fee scale has been applied based on plant size. Under this system, larger employers partly subsidize the cost of services to smaller employers in the same industrial park. This has been successful at least in part because the impetus for establishing the facility came from the local employers themselves.

There exists a severe shortage of the skilled professionals in occupational health and safety who are available to supply services to small business. Four specific measures to overcome this problem can be considered:

  1. Increased training in occupational safety and health in medical school level and expanded postgraduate continuing medical education in occupational medicine in order to increase the expertise of practicing primary care physicians. This measure is not likely to be sufficient because few small business are in a position to retain physicians for corporation-sponsored health services and medical services alone are not enough.
  2. Provision of clinic-based occupational safety and health services serving many employers.
  3. Expanded use of nonphysician health professionals, particularly nurse practitioners.
  4. Simplification of procedures such that health hazard surveillance may be performed inexpensively by lay personnel using a check list and standardized medical examination appropriate to a particular hazard may be performed by a physician untrained in occupational medicine.

For such firms another model of service is required, such as occupational health services serving multiple employers. On a small scale, outpatient clinical services for small business have been provided for decades by private practitioners and more recently by group practices. These services have been largely inconspicuous, however, since they constituted only a small part of the activities of such practices.

In some countries, including Sweden and the province of Quebec in Canada, occupational health services for small business (and some large industries at low risk) are provided by the public sector through community-based facilities. Often, there are community health clinics that also provide personal health care but in Sweden, especially, a separate and effective network of occupational health centers exists to provide both preventive and acute care. In other countries, the private sector takes this role, although it is often very much neglected. In Finland, which has an extensive network of municipal health centres offering occupational health services, employers still obtain most services from private facilities. There is a place to be considered for encouraging health facilities in the private sector to examine their activities in occupational health care. Some of the apparent advantages of the private sector in taking the lead are listed in Table 3.1 and compared to those of the public sector. Essentially, they boil down to the ability of the private sector to move fast, to raise its own capital, and to adapt quickly to changing circumstances. Even the best managed public network of facilities must follow policies and priorities that reduce its local


Table 3.1.  System Incentives Predict Characteristics of Health Care Models
			Private Sector Approach	   Public Sector Approach

Model of operation	Entrepreneurial		   Bureaucracy
Incentive		Economic		   Political
Capital investment	Private capital		   Public funding
Speed of development	Depends on incentives--	   Deliberately paced
			may be very rapid
Adaptability		Rapid			   Slow
Coverage		Uneven			   Even
Quality assurance	High variable		   Minimal

adaptability and speed of response. On the other hand, the public sector clearly is better able to ensure a consistent standard of service and compliance with publicly-determined policies and priorities. The private sector enjoys one overwhelming advantage: it is already there and needs only to be redirected rather than invented. This redirection may take the form of providing continuing education to the sole practitioner or the few practitioners in a small town or of encouraging the establishment of new facilities, either free-standing or attached to existing hospitals or medical groups. The private sector provides most occupational health services to small business in the United States. Indeed, there are so few models of publicly-sponsored services providing direct care in the U.S. that the public sector can be ignored for all practical purposes in the next chapter. In Canada, however, publicly-sponsored and supported services are an important component of the system in many provinces.

Further Reading

Buchan RM. Delivery health services to small industry in Colorado. Occupational Health and Safety. September 1979; 48(6):42-45.

Charleswater Associates, Inc. The Impact on Small Business Concerns of Government Regulations that Force Technological Change: Final Report. Washington DC, Government Printing Office, Small Business Administration Contract No. SBA 2098-PRA-75, September 1975.

Fallows J. American Industry - What ails it, how to save it. The Atlantic September 1980, n.v. (246):35-50.

Hittig EH. Is safety really worth it? Inc. Oct. 1980; 2:65-66.

How defining "small" became big deal for SBA. Inc. July 1980; 2(7):20.

How large can the small firm be? Nation's Business May

Howe W, Gibson W, Wiggett IJ. Organizing a group occupational health service in County Durham. Journal of the Society of Occupational Medicine 1983; 33:88-92.

Kusnetz S, Hutchison MK, eds. A Guide to the Work-Relatedness of Disease. Rockville MD, National Institute for Occupational Safety and Health, 1979, DHEW (NIOSH) publication No. 79-116, pp. 1-20.

MacKinnon B. Work-related injuries and illnesses: small employers, 1977-1985. Edmonton, Alberta Community and Occupational Health, 1987.

National Institute for Occupational Safety and Health, Development of Clinic-based Occupational Safety and Health Programs for Small Business: Proceedings of a conference held 1-3 May 1977, Cincinnati OH, Washington DC, U.S. Government Printing Office, 1977.

Ryan EJ. Occupational health services to small business - current approaches. In Occupational Safety and Health Symposia (Proceedings of the 38th American Medical Association Annual Congress on Occupational Health, Tucson, 14-16 September 1978). Cincinnati OH, National Institute of Occupational Safety and Health, 1979, pp. 111-115.

SBA proposes "simpler" size standards for aid. Inc. May 1980; 2(5):24,26.

Small Business Health and Safety Guide for Chemical Waste Disposal. Cincinnati, American Conference of Government Industrial Hygienists, 1985.

Stewart M. What we must do to speed growth for small business. Inc. Sept. 1980; 2(9):18-23.

Strasser AL: Occupational medicine in small industry. Occup Health Safety 1980; 49:19-21.

Supplemental Data System. Occupational Injuries and Illnesses, California. Washington DC, U.S. Dept. of Labor, Bureau of Labor Statistics, 1978. National Technical Information Service accession number PB-288 432.

White House Commission on Small Business. Excerpts from the Report to the President. Inc. July 1980; 2(7):22.