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What happened to the work comp Medical Director?

Late in 2011 I predicted medical directors would begin to assume more authority and responsibility as workers’ comp insurers/TPAs realized the significance of medical management.

Boy was I wrong.

My thinking was logical (I know, that was my first mistake); with medical expense totaling three-fifths of claims expense, the powers-that-be would realize that managing that medical expense required medical expertise.  Ergo, doctors (well, some doctors) should be heavily involved – in leadership roles – in managing that expense, setting policy, allocating resources, leading that effort.

Alas, with a few notable exceptions (Hartford, Broadspire), docs aren’t sitting in the big offices. Most are in high-level-but-primarily-supporting roles – advisers, conference speakers/representatives, in-house consultants, client and prospect presenters – while filling the traditional function of in-house medical expert addressing UR determinations and responding to claims queries.

That’s no knock – none at all – against the folks in the medical director role.  I know a few pretty well and others a bit; they are very knowledgeable, thoughtful, extremely capable, and way under-utilized.  That’s not to say they aren’t incredibly busy, but all too often they are busy doing things that, while necessary and important, aren’t the highest and best use of their expertise. More importantly, they aren’t setting policy and strategic direction for medical management – that remains the purview of business/claims folks.

Again, that’s not to say many claims folks are incompetent or unskilled or not capable.  That’s not my point.

My point is simply this – medical management is increasingly important, yet most workers’ comp payers’ claims operations are run by folks who grew up in an industry where indemnity was deemed (appropriately) more important. They know and understand that world very well, and are well-equipped to deal with claims in that environment.  Payer CEOs appear to view medical expertise as a supporting function.

The world has changed, dramatically. It is now 2013, yet medical management in workers’ comp is dominated by huge networks of deeply-discounted providers; results are measured by how much payers can squeeze out of providers on every bill (ignoring the services on that bill or how many bills come in) and how much margin their in-house “medical management” unit generates for the enterprise.  Moreover;

Outcomes are a sound bite with little meaning beyond RFP responses and conference Powerpoints.

Medical management directors are evaluated based on the totally-wrong-headed percentage of savings model.

Non-medically expert claims personnel are tasked with making critical decisions about medical services, decisions for which they are woefully unprepared and unqualified.

So, any surprise that medical costs are escalating, opioid use has reached epidemic proportions, back surgeries are far more prevalent in comp than other lines, utilization continues to increase, and loss ratios are way above 100%?

There’s another contributor to this situation – the hoary meme that doctors can’t manage or lead.  That is sooooo nineteen-nineties.

Fact is doctors are leading many organizations and business units within those organizations – and doing a damn good job.  Think Mayo, Lahey Clinic, Oregon (Governor is a physician), CDC, Wellpoint, Partners (Boston), United HealthGroup, McKesson Health Solutions, CVS/Caremark – and many others.  I know several workers’ comp medical directors that are more than capable of sitting in bigger chairs behind bigger desks, yet they aren’t.

Once again, we in the work comp world are stuck in the past.

What does this mean for you?

Those payers that recognize the critical importance of medical will be more successful than those that do not.  And that means putting medical directors in positions of authority and responsibility. 

4 thoughts on “What happened to the work comp Medical Director?”

  1. your comments are spot on. The subject matter expertise of medical directors, must be integrated with claims process expertise and it does not appear that will happen unless medical directors are given more say in the process.

  2. Joe, I’m alive and well at Midwest. :) And, you’re absolutely right. There are very capable physician executives/leaders out there. Many of them are not interested in workers’ compensation through lack of experience and because they feel they are unable to change the prevailing model of medical claims management (short-sighted decision making, discounts, vendor management and lip-service to outcomes and “quality networks”). The high-quality physician executives you speak of (those with MBAs, MMMs and leadership experience) can earn much more in hospitals, integrated delivery systems, group health and other industries than they can in WC (a further proof that they are not valued in WC). What is most disheartening is that there are fewer and fewer young physicians trained in occupational medicine and willing to serve in leadership roles, not only for payers, but also for provider organizations. I’m blessed that Midwest is a forward-thinking organization that gets it and has devoted a lot of resources to medical management. But, we are the exception, not the rule.

  3. You are so right. The medical portion of WC claims is trivialized operationally while medical costs soar. Much could be done with little effort and cost.

  4. Thank you Joe for bringing this to the surface. Your not so thinly veiled point that simply paying less for the same high volume and dubious quality of service is NOT the answer. Cost containment (I mean TRUE cost containment, not just blindly discounting the same old stuff) has been proven to be achievable by, among other things, using quality service providers throughout the system (not just physicians, but ALL service providers) in a timely manner. Incorporation of these principles in workers’ compensation would accelerate if service providers such as physicians were true leaders-stakeholders as opposed to “trusted advisors” (read “outsiders”).

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Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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