Innovation in workers’ comp doesn’t exist

REAL innovation in workers’ comp is rare indeed – which is completely understandable, and unfortunate indeed.  As the rest of the world embraces automation, artificial intelligence, and disruptive technology, we rely on old approaches, systems, processes and tools that are relics of the pre-internet days.

Yes, only in work comp would our version of the Mad Men be able to fit in seamlessly if dropped into today’s workplace.

Sure there are many differences, but these are from outside work comp; after they figured out push-button phones and men got their heads smacked for harassing women, it would be business pretty much as usual, albeit with flat screens instead of typewriters and paper files.

Innovation does exist – I’ll cite a couple examples tomorrow, examples notable as much for their rarity as for their potential impact.

What’s deeply troubling for an industry struggling to adapt and evolve, we have a culture that values stability, safety, and tradition and actively avoids anything that seems even remotely risky.  I’ve spoken with many executives, risk managers, front-line staff and brokers who decry the lack of innovation in workers’ comp – yet they are often the very reason innovation doesn’t happen.

Some will argue that they do innovate – and in a couple instances they may be right. But those are rare indeed, as most in workers’ comp conflate “innovation” with incremental improvement.

Everyone wants to be the second – or even better, the third – to try something.  They want someone else to do it first, to figure out what works and what doesn’t, to take the risk. God forbid they ask permission to try something that turns out to not work as well as it was supposed to, or doesn’t work at all.

What our industry is missing is that people and companies learn far more from failures than from successes.  Just like sports teams take lessons from defeats to change what they do, to adapt and evolve, industries and companies get better faster when they screw up.

One of our daughters works for a huge tech firm; her account is a giant application provider. They just invested well over ten million dollars on a new system/technology that may or may not work. The approach seems to be – “we have to try it, if it fails, we’ll learn a  lot, and if it works, we’re way ahead of the competition…”

Can you imagine anyone in workers’ comp doing this?

Maybe once – then they’d get fired.

Because we don’t understand the difference between “failing” and “failure”.

I see this happen all over workers’ comp.  Giant insurers and TPAs force their vendors to develop systems, programs, technology, knowing that they have no risk because if it fails, the TPA/insurer is fine. What they miss is the real, and long-lasting damage they do to their “vendors” – and every other vendor.  Far too often, suppliers build systems and technology at the behest of payers, only to be told “we need you to tweak this and change that…oh and can you integrate with this other system…uh, let’s think about a pilot…jeez, just doesn’t seem to be exactly what we need…let’s put it on the backburner for now…”

Vendors have been burned so many times many are (quietly) refusing to do anything new or different, because they’re going to get screwed.

I’m not solely blaming big payers – this is industry wide, due to the pervasive culture that prizes stability and safety over innovation and insight. 

That’s great for today, but the implications are frightening indeed.

The worker-employer relationship is fundamentally changing.

Where work happens is rapidly changing.

What workers “do” is changing even faster.

And here we sit, waiting for the other guy/gal to try something so we don’t “fail”.

What does this mean for you?

  1.  This is a primary reason our industry attracts few A players.
  2.  Change will be forced on us from outside if we don’t change first – and we will NOT like it.
  3. This industry is incredibly vulnerable to disruption from outside forces.

19 thoughts on “Innovation in workers’ comp doesn’t exist

  1. Amen! Second or third would be nice. In my experience the tipping point for adapting innovations is somewhere beyond that.

  2. Joe,

    Thank you for articulating the blind spot that way too many people in this industry fail to recognize!

    To be risk/innovation-adverse at this moment in time is the most predictable (and sad) form of human denial.

    Such a mentality, especially from the C-suite level, is a guaranteed death sentence! One should not discount the impact of emerging technologies or diminishing the capabilities of new “outside” competitors who embrace an exponential outlook on change.

    The rules have changed and Joe has rightfully pulled the fire alarm! 5-years from now will be NOTHING like today…even in WC.

    Even if you are on the verge of retirement, please step-up and get the ball rolling for the next generation of leaders. Your legacy will be that of someone who could see above the trees…bravo! Maybe you will even save an entire company from itself!

  3. Joe – really appreciate this article. I left Work Comp a year ago frustrated in spite of the innovative success of the company I founded and the innovation role I held at one of the largest industry players. Even when there is a commitment to innovation the fall back position is to invest in innovation that optimizes how things are already done. There has been an industry wide resistance to innovation that disrupts the status quo. Geoffrey Moore recently has a post on why innovation outside the Silicon Valley atmosphere is a difficult proposition in any industry for much the same reason – there has not been a willingness to improve through change. We’ve talked about this in person a couple different times. I am excited to see you bringing this out in your blog and look forward to the follow up posts.

  4. Joe, you are right-on! There are great opportunities in front of us and yet……. we sit and wait until someone steps up! Change is difficult, but it can be so rewarding for all involved! If you looked at some innovative companies, and thought….what if….. I challenge you to look further and step outside your comfort zone to reap the benefits. I personally have 4 kids, 3 in college and 1 who graduated….. they are turning to industries that are current and cutting edge. What will entice the next generation to enter work comp? Think big and you will be amazed with the results! Jill Allen

  5. You are absolutely correct. As someone nearing retirement I actually this is the best time for me to support innovation – I have much less risk than younger professionals.

  6. Your insights are clear and this is one of your finest posts (and there have been so many superb posts). This industry must embrace innovation – including: how we approach the person who is injured or ill, best practices and technologies.

  7. I agree with you 100% and I have this conversation daily with WC TPA/Carriers but they have “this is the process we’ve used for years mentality”. As our aging insurance workforce retires; we need to attract millennials as they now make up the largest share of the workforce. They’re “digital natives” and have grown up in a world of digital technology. Without this necessary innovation in the WC industry, not to be too dramatic but I envision scenes from the TV series, “Life After People” with empty desks filling the WC landscape in the years to come.

  8. This article makes no sense, just a series of open-ended statements. What are the innovations you suggest should be implemented? FTR, I am an attorney in Arizona and I have been representing injured workers for about 30 years

    • Joel
      Welcome to mcm. You misunderstand the post. It describes why there isn’t innovation and is not intended to list what should be happening.

      • Joe, I did reread your piece and the only thing I noticed is, at the beginning, you mentioned use of the internet. There are huge privacy issues when medical and Legal Information, including documents, are transmitted electronically without encryption or other security systems in place. It is rare that I am able to receive copies of medical records by email attachments, and there are some attorneys for insurance carriers who absolutely refuse even to send correspondence by facsimile, transmitting only by hard mail. It is utterly ridiculous, but until there is some overall change in the system it is just going to continue. FTR, when I had my own practice I was 95% paperless, with the only paper what I received externally – my work product was all digital and transmitted by electronic facsimile or email, so I know it can be done

        • Joel – I didn’t intend the post to be a list of innovations the work comp industry should be pursuing, rather to describe why there is so little real innovation in workers’ comp.
          As to the use of electronic means to communicate, most of the provider – payer communications I’m familiar with are hipaa compliant even though that isn’t required in work comp.

          • Wow, that is not even close to being accurate, that WC evidence and information is not protected by HIPAA. The only exclusion or exception is communication with the insurance carrier or TPA, but the records otherwise remain confidential and privileged and protected from disclosure under HIPAA, disclosure that is not necessary to administration of the case

          • 45 CFR 164.512(l)
            The HIPAA Privacy Rule does not apply to entities that are either workers’ compensation insurers, workers’ compensation administrative agencies, or employers, except to the extent they may otherwise be covered entities.

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