TRISTAR is a mid-tier national TPA, known for its work with employers and public entities. TRISTAR focused on workers’ comp for most of the time I’ve known the company, although of late it has grown its non-work comp services; Auto and liability now account for almost 30% of TRISTAR’s business.
I caught up with President Tom Veale via email, here’s our Q&A…
- MCM – there’s a lot of overlap in the companies’ target industries of ag and public entities; is TRISTAR looking to strengthen its presence in these markets?
Tom – We like both industries and have a significant presence in both, especially in the west.
- MCM – I noted the emphasis on geography; how does adding more business in California’s Central Valley tie into TRISTAR’s strategy?
Tom – The central valley is the breadbasket of America. We love doing business there. The Ross & Castillo firm gave us a great base to build from sixteen years ago.
- MCM – Re managed care offerings, what and how does RISICO managed care services add to TRISTAR’s capabilities?
Tom – Risico has a great team of case management and bill review professionals that will strengthen our team in California. They also have a team of network developers and managers who will significantly expand our capabilities. Total Managed Care will be integrated into TRISTAR Managed Care.
- MCM – You noted the cultural fit. Can you provide more color around that?
Tom – Bill and Steve built a company that operates like an extended family in many ways. They take care of each other and in doing so, take care of their clients injured workers. We strive to do the same at TRISTAR. Being privately held, both of us can make the long-term investments required in our industry today – not having to worry about quarterly earnings, borrowing covenants and the like.
We then got into a discussion of what’s happening with TPAs, which look to me to be one of the only sectors of the work comp industry that is growing.
Tom’s views on what’s happening with TPAs and why…
- I think WC TPAs are consolidating.
- The number of claims keeps dropping for most employers – and has for twenty years. Improved safety practices and automation are the two big culprits. A while ago you talked about the industry shrinking – I think it was 2 to 3% a year. We have seen that as our average client with stable operations has less new and less open claims today than five years ago.
- The increasing cost of operating a TPA is becoming painful for many. Real SOC1 and 2’s, carrier oversight, IT costs, staff costs lead the way. Your (and others) shining the light on some predatory TPA practices has been painful for many bad actors. The industry will be smaller, and hopefully better in the long run.
TRISTAR is a consolidator, and this latest transaction is strategically sensible. It adds depth in a key market sector and a key geographic area for TRISTAR, while also building TRISTAR’s internal managed care operation.
Tomorrow – other big doings in the TPA space.
What does this mean for you?
Watch what the smart people are doing.