Improving Your Drug Testing ROI

State laws can result in significant savings. Determine whether the benefits are worth pursuing.

IN 2001, at an exotic animal ranch in Florida, a 550-pound crossbred Siberian tiger mauled to death a 49-year-old volunteer worker. According to the Associated Press, the worker was attempting to qualify for his own license to keep "big cats" when the tiger broke through a chain link, grabbed the worker by the neck, and pulled him to the ground. The official report of the incident said the man died in seconds of a broken neck.

An investigation by the Florida Fish and Wildlife Conservation Commission found "errors in judgment" by the worker led to the attack. The chief medical examiner confirmed marijuana was found in the dead man's urine.

The federal government reported in 2003 that nearly 20 million Americans 12 and older are "current" illicit drug users, and that three-quarters of adults who use drugs regularly are employed. Numerous studies over a period of many years have found that workers who use drugs tend not be very good employees. They cost more to employ than their non-using co-workers through lost productivity, increased accidents, medical expenses, theft, and incidents of workplace violence. And sometimes their impaired judgment has tragic results.

Unfortunately, substance abuse in the United States has not gone away. The need for employers to take proactive measures to avert the negative consequences of workplace drug and alcohol use is, perhaps, greater than ever, especially given economic conditions that make turning a profit ever more challenging.

For the past 20 years, drug testing of applicants and employees has proven to be an effective tool in deterring drug use and identifying people who need help. Of course, the benefits derived from drug testing come at a monetary cost to the employer. And for many employers, measuring a return on investment in drug testing is difficult because they don?t necessarily know what to measure it against. Most employers haven?t accurately identified their drug testing objectives so they can measure the impact of drug testing on those objectives.

In 2004, and for the foreseeable future, the ability to justify the dollars spent on drug testing will be critical as various departments within companies compete for budget dollars. Getting a clear picture of the return on investment in drug testing will be different from company to company. Much will depend on the cost factors you are trying to affect with drug testing, which can include any or all of the following:

  • Accidents
  • Worker's compensation claims and costs
  • Unemployment claims and costs
  • Health care costs
  • Employee theft
  • Shrinkage
  • Workplace violence
  • Absenteeism
  • Tardiness
  • Sluggish productivity
  • Employee morale
  • Employee retention and replacement costs

Estimating ROI
Absent specific details, you still can get a very good picture of your company's return on investment in drug testing. This involves determining how much substance abuse is costing your company and comparing that to the cost of drug testing. A model is provided here to help you determine your ROI. To help, we'll refer to two well-known and often-quoted annual reports on substance abuse.

First, we'll determine the annual cost of each substance-abusing employing with help from the U.S. Navy. In 1996, the Navy released the results of a study in which it determined the cost per drug-using employee each year is between $5,992 and $7,240. To arrive at these figures, the Navy attempted to measure the effect of substance abuse on productivity, including lost work time and the cost of replacing terminated workers. We'll use a dollar amount right in the middle of the Navy's range, or $6,600.

Next, we'll determine how many drug users are in your employ. For this, we'll refer to the National Survey on Drug Use and Health (NSDUH) that is conducted annually by the Substance Abuse and Mental Health Services Administration (SAMHSA) of the federal government. This report shows trends in illicit drug use and alcohol misuse.

According to the NSDUH, current employment status was highly correlated with rates of illicit drug use in 2002. Among adults 18 or older, 8.2 percent of those employed full time and 10.5 percent of part-time workers were current illicit drug users. The overall percentage, when combining the two groups together, is probably close to 10 percent of the adult workforce. This gives you a rough idea of how to estimate the percentage of your workforce that uses drugs.

Now, do the math using the model provided with this article. Multiply the percentage of drug users (10 percent) by the number of employees you have, then multiply that number by $6,600. For example, if your company has 500 employees, 10 percent would be 50 workers with a substance abuse problem. Multiply 50 times $6,600, and you find the annual cost of substance abuse at your company is $330,000. Subtract the amount you spend on drug testing from the cost of substance abuse and the remainder is your potential return on investment in drug testing.

A smart drug testing program will help you successfully avoid hiring new substance-abusing workers and identify current workers with drug problems. How well your program works will depend on how successful you are at getting the most out of drug testing.

Getting the Most Out of Drug Testing
There are things you can do to ensure you are achieving your drug testing objectives and getting the most out of drug testing. Following are five recommendations to consider, all of which are bound to improve your drug testing ROI. Each of the following comes with an action item to help you get the ball rolling.

Review your drug testing objectives. You must understand why you are drug testing before you can truly measure its effectiveness. Is it to improve productivity or employee morale? Reduce accidents and the cost of worker's compensation claims? Enhance your public image? Drug testing can positively affect all of those areas and many others besides. Your reasons for drug testing will help you decide how, when, and whom you will test.

Action Item. Assemble a task force to discuss the following:
1. The level of substance abuse at your company.
2. The impact substance abuse is having on the company.
3. The specific cost factors affected by substance abuse.
4. How drug testing can affect each cost factor.

Include a cross-section of employees in this task force, entry level workers to supervisors and executives. Instruct the task force to be as specific as possible without necessarily mentioning names. Be prepared with information relative to lost time accidents, worker's compensation claims and costs, employee health care costs, shrinkage estimates, trends in theft and violence, etc. As issues are brought up, you'll be able to attach real cost figures to them and the group will get a clearer picture of what substance abuse is costing the company.

The goal should be to come away with a list of specific areas that your drug testing program can positively affect.

Update your policy to accurately reflect your objectives. Your drug testing policy is the cornerstone of your drug testing program. It identifies your objectives and how you will achieve them. It must be comprehensive, user friendly, and completely up to date with all applicable state and federal drug testing laws.

Action Item: Review your policy from start to finish and develop a written evaluation of its strengths and weaknesses. Review all applicable laws and update the policy to reflect regulations in the states where you conduct business.

In particular, ensure that how, when, and whom you drug test reflects your objectives. For example, if your primary objective is to improve the company's public image, you don't need to conduct random testing of all your workers; a simple pre-employment program with ample public notification will accomplish your objective.

If you want to reduce accidents and control worker's comp costs, consider post-accident testing and perhaps random testing of safety-sensitive workers. You'll also want to check with your state's worker's compensation board to determine whether your state offers premium discounts to employers that drug test. If your state does, find out how to qualify for the discounts and model your policy to fit those requirements.

Take advantage of state laws that encourage drug testing. Did you know some states offer worker's comp premium discounts of 5 percent or more to certain companies that meet state drug testing requirements? Some states offer legal protections from some lawsuits when employers act in "good faith" upon the results of drug tests that are conducted in accordance with state guidelines.

Other states allow employers to move to deny worker's compensation and/or unemployment compensation benefits to fired workers whose injuries and dismissals were directly related to (or may have been related to) substance abuse by that individual.

Action Item: These laws can result in significant savings. Consult with your company attorney or a drug testing expert to determine whether your company qualifies for the benefits of any of these laws. Determine whether the benefits are worth pursuing. If so, make the necessary changes to your drug testing program to reflect the requirements of the law.

Consider rapid result testing. For many years, the majority of employers have conducted drug testing through laboratories. This process requires the collection of a urine specimen, typically administered by a professional collector at a facility outside the workplace; overnight shipping of that specimen to a laboratory; and an analysis of the specimen. If the initial test is positive, further analysis and review then take place. All in all, the process can take one to two days or longer, but it has been the tried-and-true method of most employers that drug test.

Today, however, there are alternatives worth considering. Chief among them is the use of rapid result testing devices (a/k/a on-site, instant, or point-of-collection devices) that provide initial screen results comparable to those produced by laboratories. The big difference, of course, is evident in the name: The results are available rapidly, within minutes of when the collection occurs.

The advantages are many. A rapid result allows you to make faster hiring and disciplinary decisions. Rapid tests conducted on site eliminate the downtime associated with sending individuals to off-site collection facilities. Rapid tests conducted by company personnel also eliminate the need for professional collectors.

Rapid testing fits the needs of many companies, but it may not be for all companies. Individual circumstances, as well as applicable state laws, should be taken into consideration. Most states permit the use of rapid testing at least in limited circumstances, as long as positive results are confirmed at a laboratory and all other legal requirements are met. The U.S. Department of Transportation does not currently permit the use of rapid result devices in compliance with its mandated testing programs, but that may change in the near future.

Action Item: Call your current drug testing provider and inquire about the availability of rapid result devices. Most labs now offer these devices in conjunction with confirmation testing. You also can purchase these devices direct from the manufacturer at competitive rates. Look for FDA-approved devices from a reputable manufacturer that offers free 24-hour technical support and training and can answer your legal questions. Not all rapid devices are as good as others; ask to see independent, scientific data to support all accuracy claims. Also, ask for court case summaries specific to the device you are considering or your vendor sells.

Consider alternative testing specimens. Employers not only have their choice of lab-based or rapid result urine testing, they also can choose between oral fluid, hair, and even sweat testing devices. A lot of homework is required when switching from urine to an alternative specimen, but it may be worth the effort.

Oral fluid testing represents a great potential cost-saving alternative for employers who find urine collections either impractical or too costly. Oral fluid collections are typically so easy to conduct there is rarely a need for the services or costs of professional collectors. Collections in the workplace do not require private quarters such as restrooms, and collectors and donors may be of the same gender without concerns about privacy.

And, remember, oral fluid testing can be conducted using rapid result devices or samples can be collected at the workplace and shipped to a lab for analysis.

Hair testing is yet another option to consider. It has been around for several years. Its supporters like it because the window of detection is longer than urine and oral fluids--between one week after use to about 90 days, compared to three to four days for urine and eight to 24 hours for oral fluids (detection times vary by drug and other factors).

Sweat testing via sweat patches represents yet another alternative to urine. Its use is very new to the workplace, but it may be worth investigating.

The use of an alternative specimen may be appropriate in specific circumstances; for example, hair testing for a pre-employment screen or oral fluid testing in a post-accident scenario. An employer may want to consider combining urine testing with one or more alternative specimen methods to maximize effectiveness of the company's program.

Action Item: Consult with your current drug testing provider about the availability of alternative specimen testing. Conduct some research and begin gathering information about the various products that are available. Again, look for reputable dealers who will back up their products. Talk to the manufacturers you like best to see whether you can purchase directly.

Because oral fluid, hair, and sweat testing in the workplace is relatively new in the past three to five years, some states do not permit their use for all testing circumstances. Check state laws that apply to your company. Be aware rapid result oral fluid devices do not typically have FDA approval, so the quality of the scientific data you get from your provider is critical. Also, ensure your laboratory will conduct confirmation testing of oral fluid and hair samples, in particular; not all do.


STEP 1: Multiply the number of employees at your company by the percentage you think have a substance abuse problem; then multiply that number by the average cost per year for each drug abuser on your payroll to determine the cost of substance at your company.

_______________ % of your workforce that uses drugs (national average is approximately 10%, but use whatever figure your feel best fits your workforce) multiplied by the total number of employees at your company

X (Multiplied by)

_______________ Average cost per year for each drug abuser in your employment (national average is $6,600)


$______________ Cost of substance abuse at your company

STEP 2: Subtract the total amount that you pay for drug testing each year from the answer you just got calculating the cost of substance abuse at your company.

_______________ Cost of substance abuse at your company

_ (Minus)

_______________ Cost of drug testing at your company


$_______________ This figure represents your return on investment in drug testing.

Choosing an On-Site Testing Device

Today there are dozens of name-brand devices on the market, but there is an extremely wide gap in quality between the best of these products and most of the rest. For this reason, I recommend that employers considering on-site testing look for the following qualifications from a potential vendor:

  • A device with approval by the U.S. Food & Drug Administration
  • A history of proven performance
  • Ample independent, scientific data to support all claims, especially accuracy claims
  • Training for test administrators direct from the manufacturer
  • Technical support available seven days a week, 24 hours a day
  • A successful legal history
  • Legal support to answer questions and assist in legal challenges
  • A reputation in the industry of providing good customer service
  • A device that discourages tampering and adulteration (i.e., with a test profile outside the cup, a built-in temperature strip, etc.)
  • A device with easy-to-read results that are available within five minutes and can be read for at least an hour or two
  • References of clients with real experience using their device in a variety of everyday circumstances.

What matters most to employers is how drug abuse negatively affects their bottom line. Drug testing can significantly offset much of the encroachment of substance abuse on a company's profitability. While it costs dollars to maintain a drug testing program, those costs typically are absorbed several times over in the savings realized when companies avoid hiring drug users in the first place through pre-employment testing and identify drug users already on the payroll through post-accident, reasonable suspicion, and random testing.

Make a point to review why you drug test in the first place and ensure your policy accurately reflects your objectives by testing the right people at the right times. And, where advantageous, implement rapid result testing and/or consider an alternative specimen such as oral fluid, hair, or sweat to ensure the best possible program.

Know what substance abuse is costing your company and make a point of reviewing your drug testing program at least annually to make sure you're still getting the most out of drug testing with a healthy return on investment.

This article originally appeared in the April 2004 issue of Occupational Health & Safety.

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