On the off chance that an entity that owns a workers’ comp PPO ever thinks about selling it, here are a few things one may want to consider.
- Who owns the provider contracts?
If the provider contracts are tied to a group health insurer/health plan, then that’s how they get leverage with providers to get discounts for work comp care. - What happens to the provider contracts if the group health plan sells the network?
Over time, the contracts’ value will deteriorate, and that “time” may not be very long. As contracts come up for renewal, the discounts offered by providers will decrease if not disappear. - But what if the group health insurer/plan agrees to continue to manage the contracts?
Sounds good in a contract, but won’t work out in practice. The health plan’s provider relations staff will be evaluated on their ability to get contracts at acceptable rates for the health plan’s core products – group health, individual health, Medicare and perhaps Medicaid. About 98% of medical dollars are spent by those payers, leaving about 2% for work comp.
Where would you spend your time?
There’s obviously a lot more to this, but I’m swamped and you are too.
This isn’t idle speculation. I was directly involved in a deal wherein a large national group health plan sold a work comp network, contractually agreeing to maintain the contracts for a time certain. Things were fine for a year and in some states a bit longer, but the deterioration of both effective discounts and network size then accelerated rapidly.
What does this mean for you?
If you’re selling, don’t commit to things you can’t deliver.
If you’re buying, caveat emptor.
