Integrated services vs Choice – how do you want to buy work comp medical management services?

A prominent issue for many work comp payer execs is the continued consolidation in the medical management space; as the big get huge, there are fewer and fewer choices for payers to turn to.

The big, multi-product/multi-service companies tout the benefits of buying everything from them; cheaper, better coordination among various services, easier for adjusters, easier to connect IT systems.

Their competitors offering one or a couple different services have a different view.  Their position is a narrow, “hedgehog” focus allows them to be the best-in-breed.  Because they  only do one or two things, they are really, really good at those one or two things.

That’s the vendor viewpoint – but what about buyers?

My sense is buyers generally come down on the “choice” side.  That is, they don’t want to get everything – or even just one service – exclusively from one vendor.  Not that they don’t see the benefits of single-sourcing services – they clearly understand the potential for lower administrative burdens, less hassle for all their staff, fewer IT connections, and perhaps lower pricing.

As one of my coaches told me years ago, “son, you’ve got potential.  That means you haven’t done anything yet.”

Therein lies the issue – or more accurately, one of the core issues with the integrated/comprehensive approach.

To date, it just hasn’t delivered lower costs, lower hassle, better outcomes.

But even if it does, many payers will be leery of single-sourcing.  The concerns include:

  • complacency on the part of the vendor
  • difficult to break up and move the business
  • lack of control over referral processes
  • desire to give front-line staff control over specific service decisions e.g. IME
  • potentially mis-matched priorities and incentives

Each of these deserves its own post, but you get the drift – in one word, payers don’t like to lose “control”.  That happened years ago when Coventry bought Concentra, and payers have not forgotten what that felt like.

I spoke with a very experienced, very knowledgeable work comp executive recently; she said it well: “we tried the integrated approach years ago, and we saw how well that worked…it didn’t.”

What does this mean for you?

That’s not to say a work comp services company can’t deliver on the promises of integrated, comprehensive services. Like all young athletes, they do have “potential“.

5 thoughts on “Integrated services vs Choice – how do you want to buy work comp medical management services?

  1. The same goes for the actual claims administration function(s). Consolidation of claims management with ancillary services, flat rate ‘region non-specific’ pricing and regionalized ‘work from home’ adjusting has not led to increased efficiencies, decreased loss costs nor better outcomes for those for whom the claims people are supposed to serve…the injured/recovering workers.

  2. Every pendulum swing eventually slows before switching direction. If payers truly and want value and ‘choice’ then that’s what they’ll get. Just ask and you shall no longer be deceived….

  3. Thank you for your post Joe. Allow me to comment with an admittedly self-serving remark: The work that many vendors do is complex and tough. There is great benefit from focus, scale and proven competency. Many a large integrated managed-care company has tried their hand at IMEs, medical review services and other services on top of a growing menu of items. They are effective in ‘selling’ this to some of their large clients often at the upper levels who hope for the best. Then the people on the ground, typically claims managers find that execution falls seriously short; their new vendor that they are at times compelled to use, lacks the network, speed and general oversight that focused enterprises have. In other words, they were over-promised. In the end reason prevails after being burned on costly claims and they return to the fold of proven vendors.

    By and large clients in the claims management space are smart and focused themselves. They have a small number of services that they rely upon to help make their lives easier and are essential in doing their job. They are capable of selecting a la carte providers based upon quality parameters. Metrics matter in the end. Vendor managers should decide what is important and judge vendors on those factors. Allow and encourage competition rather than protected silos and you can determine best of class, and keep all vendors on their toes in the process.

    Brian L. Grant MD
    President and Medical Director
    Medical Consultants Network

  4. I have worked as a case manager at both a national bundled and a regional unbundled type of case management company. While I believe you can obtain excellent case management services from a large national case management company, you do not necessarily receive consistent services across all territories, nor is it easy to individualize services to specific territories and your needs as the employer or claims handler. When you are tied to a specific company as part of your bundled services, then you have little options to rectify this type of issue.

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