Coventry was wasted no time. Just a month after the company signed an (essentially) exclusive deal to market Aetna’s workers comp network, a deal that eliminated its last major competitor, it is seeking price increases from many customers.
A (very informal) survey of large and medium-sized WC payers over the last two weeks revealed a consistent pattern. Not only is Coventry looking to raise network access fees for renewing customers, it is also trying to get current customers to re-negotiate existing contracts. The company’s representatives cite several reasons for this strategy.
1. The new combination of AWCA, First Health, and Concentra/Focus delivers significantly better network penetration and savings (albeit on a per-bill basis) than FH and Focus alone.
2. The new arrangement has required Coventry to make significant investments in its bill review platform, investments that have to be recouped.
3. Coventry now has to share revenues with Aetna (on the AWCA network states).
Unstated but obvious is the most important rationale – as the Coventry combo is the last big WC network standing, national WC payers have no other options. Yes, CorVel does have a national network, but none of the payers surveyed consider it a serious option.
Several early adopters did note that the new Coventry network has significantly increased network savings (again, that’s on a savings per bill basis; it is too early to tell if there will be equivalent reductions in medical costs) and penetration. That’s no surprise, as the combination of the three networks should include every living and most dead providers.
Coventry Dale Wolf has been quite clear about his intentions – he is looking for the WC division to grow by double digits for the foreseeable future. There are two ways to do this – sell new customers and raise prices. The first is unlikely, as between Coventry, Concentra, and Aetna they already served most of the large and medium-sized payers.
That leaves price increases, which not only increase top line revenue, but also jack up profits.
What does this mean for you?
Monopolistic power is good. If you’re the monopoly.
What does this mean for the large employer who are looking for quality medical care for their employee under a work comp program, verses cheap care for the employee under a discounted network? I do not know the temperature of the nation as a whole, but I do know the temp. of the provider community in the stated of Florida and they are refusing to accept work comp. patients at a 20% discount. This is especially true for specialty providers such as: Neurosurgeons, Spinal Surgeons, Dermatologist, and Allergy Specialist, who we already have an almost impossible time getting them to even look in the direction of a work comp case. What good did it do for the state of Florida to increase the provider fee schedule, if greedy network providers are only looking to line their pockets with money that was supposed to improve the quality of medical care provided in the State of Florida Work Comp Program. The outrage I feel for this type of greedy behavior runs deep because I know the Coventry networks of the world refuse to credential and add a provider to their network, regardless of how exceptional a provider may be in their field of practice. If they had any interest in improving the quality of medical care provided through their network it seems to me they would be willing to bite the bullet in a few places to get the quality provider they say they are willing to provide.
I don’t understand the comments regarding there are no other options for WC PPO networks. There are several national networks including Prime Health Services, IHP, Beechstreet and others. Many of these are a mix of direct and regional lease networks. I think the comments here are way to quick to dismiss other networks that have millions of dollars invested in them as they are competing in the marketplace.
Coventry’s Work Comp Strategy. Well. That didn’t take long! A Monopoly? Sure they have significant marketshare – but let’s not go quite to that length. I think there is a great opportunity for PPO networks in the work comp space because of the moves that Coventry and Aetna are making. If I were them, I probably would make the same move. But people have to wonder. There ARE other PPO networks in the marketplace. These are good solid networks that are continuing to grow. Payors should check out the likes of Prime Health and Interplan. I don’t think those organizations are ready to roll over and die.
Whoever wants to keep pushing Coventry go ahead, keep it up. We’ll just work out in the marketplace and keep bringing in new clients to these other networks. I think that’s it is a little narrow minded to think that they’re the only option.
I hope payors will do a little more checking into what and who are out there. I know there are good network choices willing to offer great coverage, solid savings and superior service to folks that have been with these large networks for so long.