Cost of Drug Testing

Back in 2004, an Ivy League MBA candidate working on their thesis emailed us and asked some pointed questions about workplace drug testing, including the costs involved.

We have published our interaction here in an attempt to answer these questions that others may also have.

► "Why is it necessary for employers to test for the illegal use of drugs?"
► "How much does employee drug testing cost a company today?"
► "How easy is it to cheat a drug test?"
► "Is there a drug testing cost/benefit payback to a company that drug tests employees?"

    (Read our answers to drug testing cost and the other questions directly below!)

-----Original Message-----
From: Adam [redacted]
Sent: Saturday, March 27, 2004 9:11 AM
To: Ed Poole
Subject: Corporate Drug Testing Cost and other questions

My name is Adam [last name redacted] and I am currently enrolled in the [name redacted] MBA program. I am doing a persuasive presentation on why it is necessary for corporations to test for the illegal use of drugs. I was hoping that you would be able to answer a few of my questions including one about drug testing cost:

Adam- Why is it necessary for corporations today to test for the illegal use of drugs?

OHS- There are three facts about illegal drugs that lead up to at least one very good reason, Adam:

(1) Today, just 'one' country - a country with only 'five' percent (5%) of the entire world's population - buys and consumes fully sixty percent (60%) of the entire world's supply of illicit drugs.

(2) That 'one' country is our United States.

(3) In the United States, 77% of all illicit drug users are EMPLOYED!

Therefore, drug testing cost is arguably more an "investment" in EMPLOYEE WORKPLACE SAFETY!

Adam- Can you give me a rough estimate of how much the drug testing cost is to test one applicant?

OHS- OHS, Inc. is a national company with drug testing clients in all 50 states. Our drug testing cost ranges between a low of $34 per drug test to a high of $42. The "volume" of testing done by the client annually is one variable which applies to drug testing cost. As with my competitors, a lower drug testing cost is offered to a company doing 5,000 to 10,000 or more tests annually than to a company doing only 50-100 drug tests or only 5-10 tests each year. Since we offer services in all 50 U.S. states, our cost for "specimen collection" at the clinic or other site we must use nearby the client's location(s) also impacts cost what we ultimately must charge. Those costs (the specimen collection, alone) vary around the country from as little as $8 to as much as $35, although the national average is likely about $15. Regardless, the collection price is always INCLUDED in any drug testing cost we quote.

Today, I estimate that average national drug testing cost overall is about $38 per test. 

(large corporations and medium-sized to very-small businesses included)

However, very large companies performing a very large volume of employee drug tests annually often enjoy a rate as low as $30 per test.

That includes cost of collection and lab analysis, but not necessarily the cost of optional Medical Review Officer (MRO) services which can add another $2-$3 per test to drug testing cost. So, drug testing cost has more than one variable. By federal law, MRO services are required of companies testing employees regulated by the U.S. Department of Transportation (USDOT- big rig truck drivers, airline pilots, oil/gas/pipeline workers, and so forth). In nine states, using an MRO is required by state law of all companies - including those that are not DOT regulated - if they drug test their employees.

Adam- I know that there are different types of tests (blood, urine, hair), which is most effective and what is the drug testing cost difference amongst them?

OHS- For the most part, forget blood. Blood is tested for illicit drugs only in extreme or unique cases (e.g., the tested individual is unconscious, due to an accident) and in some Court-ordered cases. During 2008, an estimated 55 million drug tests were performed in the United States on job applicants, existing employees who were randomly tested, employees who had or caused a workplace accident or injury, certain federal and state prisoners, certain parolees, recovering addicts, moms or dads who were drug tested by court-order as a result of child custody cases, et al. More than 95% of those 55 million drug tests were performed using urine specimens, not blood. Urine testing is favored over blood testing and hair testing primarily because of the drug testing cost differences.

Hair specimen drug testing cost is about $105-$125 per test nationally. This greatly increases overall drug testing cost but does offer some advantages over urine specimen testing.

Hair can indicate drug-use (can be "effective") as far back as 90 days. Most drugs are detectable in urine for only 1-4 days; exceptions are marijuana and less-so, PCP. "Greater accuracy" is not an issue with either hair or urine specimen analysis, though a few detractors will disagree. Hair advocates claim that "more" positives are discovered through hair testing. I would agree in large part because hair results can go back further than the 1-4 days available through urine testing. However, when considering blood or hair follicle testing cost, companies overwhelming choose the lower drug testing cost of urine specimen testing.

In any case, the most effective type testing program is "random" testing (the immediate testing of an individual with zero advance notice given). Random testing should be done continuously, throughout the entire year. The "fear of getting caught" is by far the very best deterrent to drug-use in the workplace!

Adam- How easy is it to cheat on a test (drink something) that will allow an applicant to pass, even though they recently took drugs?

OHS- The companies that sell the stuff that claims to help you cheat also claim 100% success. I highly doubt it.

Laboratories disagree too, countering that advances in lab analysis have enabled them to detect most if not all such attempts.

Further, most of these products that are ingested as an attempt to cheat require measured consumption at numerous intervals of time over a 24-48 hour period prior to providing the urine specimen for testing. Therefore, "random" (zero notice given) testing greatly hinders if not virtually eliminates any cheating success through "drinking something". Whatever is consumed has zero time to then cause any demonstrable change in an individual's system/urine, and therefore will not "change" the results of a drug test.

Adam- Are there studies that display the percentage decrease in worker output if they are on drugs?

OHS- There are have been many such studies, from different sources including government agencies, university studies, and non-profit organizations. All of them independently come up with quite similar findings of workplace drug-users being "35%" or "33%" or "30%" less productive...also resulting in poorer quality production of company's products or services, and greater frequency of accidents, more injuries, plus damaged-lost-stolen company equipment and supplies.

It is especially tragic that drug users at work who steal from their company also tend to steal from their fellow employees- their co-workers! Why? They steal to help "supplement" the cost of their drugs not offset by their employer's wages. They also tend to "recruit" other employees and try to "deal" drugs to them at a profit for that same reason.

Drug users will always deny at least some of the foregoing, claiming that they actually can work better, longer, and are "sharper" at work due to their workplace drug-use. They're wrong of course, and simply in denial. Mind-altering drugs (legitimately prescribed or illicit) are called "mind-altering" for very good reason.

Adam- I basically want to provide a cost/benefit analysis on drug testing cost and provide a payback. If you can get back to me at your convenience I would really appreciate it. Again thanks for your help. Adam

OHS- Fine, a drug testing cost versus benefit analysis is a great and enlightening exercise. As our example, let's use a company with 50 employees. (You can later project this up or down against a company with only "10" employees or with 1,000, 10,000, or 100,000 employees.)

Using "50" employees as the number in our sample company, assume a 20% annual attrition rate (resigned/fired/retired) and new hires replacing them. That totals 10 pre-employment tests for the year. Industry standard for testing "randomly" is to use a "test rate" of 50% of the total number of employees. So, in this 50 employees scenario, that would add another 25 random tests scheduled annually.

Given the above example, there would be a total of 35 pre-employment and random tests (10+25) performed for the company annually. Finally, then assume the "possibility" that another 2 drug tests annually need to be ordered as "post-accident" and another 3 tests need to be ordered each year due to "reasonable suspicion" of employee drug-use while on the job. (Or, shuffle the numbers back or forth. The point is for this scenario, "assume" another "5" drug tests annually combined, either for that first reason or second).

Thus, to incorporate a solid and very highly effective, year-around Drug-Free Workplace program, we are now at "40" total drug tests done annually for our sample company with 50 employees. At $38 per test, that means the company is investing $1,520 per year or less than $130.00 a month for what would be - I assure you - a highly effective Drug-Free Workplace program. It will more than enough repay the company in savings of fewer employee sick days, fewer employee injuries (on and off the job), less lost, broken, or stolen company equipment, and so on!

Let me define what I mean by, "highly effective":

In the first 3-4 months of newly-instituted random drug testing of their employees, every company can normally anticipate (i.e., "expect") drug "positive" rates of at least 4-6% to as high as 22%. That's "initially".

If it is a "construction" company, it would not at all be unusual that the initially-performed positive rate will be as high as 18%-22% of all existing employees who get first-time tested. And, if it is a "restaurant", they could anticipate a positive rate perhaps as high as 12-16%. Yes, it is fact: these two industries (construction and food services) rank as number one and number two in overall employee workplace drug-abuse. That is per actual stats determined by national labs which do 6-7 millions of employee drug tests annually. On the other hand, when randomly testing employees at a secretarial service word-processing firm or a department store, the anticipated "initial" positive rate might be as low as 4-6%. That, too, is a fact of employee drug testing stats.  Yet, that's still too high because it can still cost the employer a ton of money!

When I assert that the Drug-Free Workplace program as in the above scenario of a company of 50 (or "10", or 1,000 or 10,000) will result in a "very highly effective" Drug-Free Workplace, I mean exactly this:

By the end of the first full year - at latest - the rate of employee drug "positives" coming back on the lab reports will drop by 50% to as much as 80%. Drug positive rates of 22% will drop to as little as 4-5% and positive rates of 4-5% will drop to as low as 1%. That's "first year" improvement. Further, such dramatic improvement will certainly be at the very least "maintained" - if not bettered - in year two and subsequent years as long as the a drug testing program such as I described above remains steadfastly in place throughout the year. That means maintaining pre-employment AND random AND reasonable suspicion AND post-accident drug testing all-year long!

WHY is that?  It's because of two very strong incentives ongoing (random, reasonable suspicion) drug testing instills in the average person: (1) fear of getting caught and (2) fear of losing the income the job represents.

What happens to those employees that DO continue to use though, and get caught "positive"? They get fired and go to work at some other company that does NOT drug test. What about new employees replacing them?

Well, most individuals who "do" drugs don't even apply for an opening at a company that advertises in the local paper's Help Wanted section it is a "Drug-Free Workplace"! Given the chance for a good job at a company that drug tests employees and any job at one that does NOT drug test its employees, drug-users will almost always apply at the latter company!

Exceptions to that practice include drug-users who go "off" drugs for a few days before job interviewing, trying to get their system clean before taking a "pre-employment" drug test. And these "exceptions" (drug-users that pass a pre-employment drug test) are one of the primary reasons that "random" testing and "reasonable suspicion" testing and "post-accident" testing are all absolutely essential elements in developing and maintaining a very highly effective Drug-Free Workplace.)

Soon, the company that once had 50 employees that included perhaps a half-dozen or more people who "did" drugs in their workplace and perhaps even "dealt" drugs in their workplace becomes a "Drug-Free Workplace". The result? Company production increases and quality of products and services improve...sick days are fewer, injuries decrease, the number of Workers' Comp claims get reduced, the company's Workers' Comp and health insurance premiums stabilize, company equipment and supplies stop being lost, damaged, or disappearing as frequently.

There's even more reward than that. A sometimes not considered wonderful additional benefit to the now Drug-Free Workplace Company comes with all of this, too: overall employee morale improves dramatically!

Why? Because, those employees who do not do drugs usually know "which" employees do. Most people do not want to be "squealers", so they usually do not turn fellow employees in to the boss. Instead, a Drug-Free Workplace Program does it for them!

Adam, is the above persuasive enough for your MBA presentation?

I do hope the above information will help you. If it gets you your MBA, then please have them send me one, too!

My very best wishes to you for great success with your presentation!

Ed Poole
Wishing you good health and personal safety always,

Edward W. Poole
OHS Health & Safety Services, Inc.
d.b.a., Health Tests Direct
3303 Harbor Boulevard, Suite G-2
Costa Mesa, California 92626 USA

949.764.9301 ext. 205 1.800.456.4.OHS (647)
Fax: 949.764.9306

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