What’s your company worth?

With investors once again looking to buy into the work comp service sector, owners are looking to figure out what their company is worth. Truth is, many work comp services companies are tough to value, in large part due to their “non-contractual customers.”

Revenues and profits from “non-contractual” customers are often discounted by potential buyers, who much prefer locked-in, guaranteed-price, long-term deals for their inherent predictability.

But that isn’t the way the real world works; often case management firms, IME companies, UR vendors and other service entities don’t have formal contracts with many of their customers. Instead, they provide a service, and send a bill to the claims adjuster. There may, or may not be an upfront understanding of the service’s price.

Claims payers like this because it doesn’t lock them into a vendor, while service companies are eager to work with payers and the contracting and price negotiation process can take a long time and yield little real benefit.

Which brings us to a conundrum – how does a seller or buyer value “non-contractual” revenue. Here are six ways to think about that – ways that might get you a higher price. (this is a summary; I strongly encourage you to read the Wharton article and listen to the podcast)

  • How many people have made a transaction, used our product or service sometime within the trailing 12 months?
  • How many people have made a repeat purchase, have engaged with us at least twice over that trailing 12 months?
  • Of all the people who made a transaction with us back in 2015, how many came back and did it again in 2016?
  • With all the purchases that we had today, what percent of them are from customers who did something with us in the previous year?
  • Of all the customers who bought with us, what percent were with us previously? Or of all the orders that were placed with us this year, what percent of them are by customers who have bought previously?
  • Of all the customers who have done anything with us in the past year, how many things did they do? How many purchases did they make or sell on?

I can hear you groaning – how can I figure this out? I don’t have time for this. We don’t have the data.

All likely true – however, if you don’t have time to value your business, you won’t know what it is worth to you.  You also won’t know where you should be investing, what customers drive what part of your profits, and what that means for your strategy going forward.

What does this mean for you?

Knowledge is the most valuable asset you have. It’s worth the time to obtain it.

 

HWR’s “alternative facts” edition is up and ready

errr. actually, it’s the Laurel and Hardy edition.  

Brad Wright brings us a terrifically readable synopsis of the latest writing from the bestest experts on health policy, work comp, regulations, and why there are lots of treatments that deal with symptoms, but few that actually cure disease.

Two not to miss are HWR maven Julie Ferguson’s piece on worker safety at a time of program defunding, and regulatory collapse, and the increasingly-brilliant Louise Norris’ fact-filled summary of the real story about the “collapse” of exchanges.

4 million jobs

may be gone when autonomous driving is fully implemented.

At an average salary of $33k, that’s $132 billion in wages that will disappear from payroll.

This from a report from the Center for Global Policy Solutions released last month – thanks to Insurance Journal for the heads’ up.

A quick primer – this contemplates “Level 5” autonomous driving – that is, the vehicle can handle every driving situation without human intervention.  Today, some vehicles have attained Level 4, which allows hands free driving in most situations such as highway and parking.

Some will scoff, citing regulatory hurdles, consumer reluctance, or just Luddism as reasons this will never happen.  Me?  I’d feel a lot safer if that dual semi trailer had Watson behind the wheel – and I’d be pretty happy to have a lot more time to work, read, call my mom, sister, and kids, text and blog while traveling from upstate New York to Boston, NYC, Philly, or Cleveland.

Implications abound.

  • more productivity for Americans
  • lower work comp premium for insurers
  • fewer injured workers
  • far fewer accidents = less need for replacement parts, less need for body shops, paint techs, wholesalers
  • less need for truck stops, mechanics, motels and restaurants (and these are in addition to the 4 million drivers)
  • lower work comp medical costs
  • way harder to re-employ transportation workers looking for employment
  • increased inequality as transportation is one of the few sectors with large numbers of relatively good-paying jobs.

What does this mean for you?

Denial is not a viable long-term option. Adaptation is.

Quick takes…

Crazy busy here at the intergalactic HQ of Health Strategy Associates, so I’ve been slacking on my blogging duties…

here’s what came across the virtual desktop of late.

Blockchain!

several articles of note – save them, file them, read them.  You WILL have to understand blockchain, and sooner than you might think.

Blockchain and the sharing economywhich will include insurance

What will blockchain mean for jobs? One expert says: “30–60% of jobs could be rendered redundant by the simple fact that people are able to share data securely with a common record.”

JobLock

The sharing economy depends on the ability of entrepreneurs to leave big employers with good healthplans. If ACA is repealed and/or individual insurance markets tighten up, the gig economy is going to get slammed.  “Job lock” is real; this from HealthAffairs

Without the ACA, there will be fewer Howards who start their own businesses, resulting in fewer jobs. That’s why anyone who tells you that the ACA is a “job killer” is flat wrong.

Drugs

Express Scripts’ new work comp drug trend report is out – key highlights are:

  • drug spend is down 7.6%
  • opioid utilization is down 11.1%

What this means – work comp PBMs and payers’ efforts to reduce opioid over-utilization are paying off, and this is excellent news for patients and employers alike.

HOWEVER, with half of all patients receiving at least one script for opioids, we’ve still a long way to go.  No vacations folks, now’s the time to keep a relentless focus on reducing opioid usage – especially for patients who’ve been on these drugs for months.

Truth is, some patients demand specific drugs, and it’s difficult for docs to convince them otherwise. And, it’s notoriously difficult to get physicians to change their habits...they are human after all.

Hawaii’s legislature is considering legislation to limit physician dispensing.  Thank goodness the Clifford Yees of the world seem to be sidelined – at least for the moment.

Back tomorrow to a deeper dive into a key issue…

10% of claims = 60% of costs

At the Hartford, 10 percent of work comp claims with psychosocial issues account for 60 percent of costs.

It’s not that claims with psych issues are inherently much more problematic, or difficult, or costly, or “bad”; but they are when these issues aren’t addressed early and effectively. We’ve long understood that – and the industry has invested tens of millions in predictive analytics, modeling, and early identification.

The challenge has been – what to do about those claims?

Friend and colleague Tom Lynch has developed the only network I’m aware of with providers trained in addressing work comp patients’ psychological issues.  Tom’s been in the work comp business for about 40 years, so he knows delivering the right care AND ease of use for adjusters are keys to success for any service provider.

Historically, patients with psych issues aren’t identified early, and the “treatment” that is delivered can take months with little demonstrated progress. There are many reasons for this – but on the provider side, a basic issue is few psych providers know anything about workers’ comp, and many patients are treated for months with little evidence of any substantive progress.

Work Comp Psych Net is currently operating in New Jersey, and delivering remarkable outcomes for patients and payers.  I caught up with Tom a while ago to hear more about the problem and how Psych Net addresses psychosocial issues. (I have no financial or legal relationship with Tom or any of his businesses, including Psych Net).

WCPN is comprised of over 50 psychologists covering the entire state trained in workers’ comp who understand the unique issues inherent in comp.  These providers use a single electronic scheduling and medical record system which streamlines data collection, Quality Assurance, and reporting.  Access and ease of use is critical for both providers and claims staff, a requirement long understood but often poorly addressed.

Today, WCPN is contracted with several payers and actively scheduling patients. To date, on average an initial appointment is scheduled within 27 minutes, with initial reports received by the claims adjuster within 5 days of the visit.

Initial results are promising, with 70% of patients back to work on modified duty within 7 sessions and the other 30% back to work after 11 sessions.

 

Unlike the typical “let’s get as big a discount as we can” reimbursement model, WCPN’s financial value lies in resolving the claims quickly and for the long term.

“We are asking providers to do more but in a lot less time” is how Tom put it. While WCPN’s per-visit fees may be higher than the deep discount model there are far fewer sessions. “We commit to complete treatment within 12 sessions unless extraordinary issues are presented, then we have to present information to the adjuster as to why it needs to go longer.”

What does this mean for you?

Early identification of patients with psych issues + treatment by work-comp trained providers = much better results for patients – and way lower costs for employers.

 

New OSHA Administrator – big changes are coming

The Trump Administration’s pick to lead OSHA will push the President’s deregulation agenda far and deep as he shifts OSHA to a more “business friendly” focus. According to Administrator-designee A. Prelle Pfuelle,  the watchword will be “compliance assistance” instead of enforcement.

Reports indicate the new Administrator, a former lobbyist for the mining industry, will provide “leadership to curtail funding for enforcement, rescind rules under deregulatory orders, and drop defense of regulations facing legal challenges.” The mining industry has been actively applauding initial moves by President Trump to revoke, rescind, or withdraw several regulations and enforcement actions; Pfuelle may have been instrumental in those early actions.

Pfuelle’s past experience includes stints working as a manager in a diamond mining firm in South Africa, labor relations in Liberia’s oil industry, workplace safety officer in the Pakistani ship-breaking association and most recently lobbyist for the Oklahoma natural gas industry.

The White House’s press release noted Pfuelle’s “extensive international experience in a variety of international industries will help America compete with other countries…getting rid of employment-killing regulations will help our economic recovery…”

In an interview after his appointment was announced, Pfuelle was quoted on a number of topics, including return to work. Responding to a reporter’s question about the employer’s role, Pfuelle said:

“OSHA will work to support President Trump’s efforts to make America Great Again wherever we can. If you think about it, a worker injured on the job opens up a job for another worker…so I’m not sure why we want to push employers so hard to rehire injured workers when there are many great Americans who are looking for work…”

In the White House’ announcement of Pfuelle’s appointment, President Trump said:  “I’ve known Prelle for decades; he helped me find the best diamond for my first wife.  We’ve stayed in close contact, and I was impressed with how he handled the the accident at the Anglo-American Corporation’s Vaal Reefs Mine….while there was some loss of life, he got the mine operating again very quickly…”

According to the reports cited above, first up – after confirmation – is a move to scale back injury reporting requirements.

Speaking about the new electronic reporting requirements Pfuelle opined:

“Employers know when their workers get hurt, and it is their responsibility to make sure they tell us about those situations.  But they have a lot of other things that take up a lot of time, so we can’t and shouldn’t expect reporting to be on the top of their list. As long as they let us know in a reasonable time, that’s fine.”

 

Pfuelle will have to divest his holdings prior to assuming the Administrator position, although, under new rules just released by President Trump’s Office of Ethics, he may choose instead to place them in a “blind trust” directed by his wife Blythe, the daughter of the founder of the Anglo-American Lead Mining company.

Friday catch-up

I can’t remember a busier and more portentous week in healthcare in the last thirty years.

Last few weeks, in fact.  A lot happened in the rest of the world while we (at least us wonks) were obsessing over the latest news from Capitol Hill. Here are some of the highlights

When hospitals are going thru inspections by their accrediting agency, fewer patients die. That’s the finding of a study published in JAMA.  (thanks Steve Feinberg MD!) While the percentage reduction was small, the impact was not – if the lower rate prevailed for an entire year across all hospitals, 3,500 fewer Medicare beneficiaries would die – and likely thousands more younger folk. Why?

I’d suggest the Hawthorne Effect is at play: A researcher hypothesized the decrease may be more diligence.

“when docs are being monitored, the focus and attention placed on clinical care goes up. I’d say it was figuring out the diagnosis and matching the treatment correctly, because you’ve been a little more thoughtful.”

Telemedicine prices are going up – from less than $35 per consult in 2009 to around $43 these days.  That’s one of the findings from a research report authored by IBISWorld’s Anna Son.  More details on this in a future post.

The American Chronic Pain Association has just published the updated 2017 ACPA Resource Guide to Chronic Pain Management: An Integrated Guide to Medical, Interventional, Behavioral, Pharmacologic and Rehabilitation Therapies. Another shout-out to Dr Feinberg, Lead Author.

A piece I missed a few weeks back had this striking datapoint – fully 10 percent of claims at the Hartford had at least one psychosocial issue – those claims accounted for 60 percent of claims costs – and claims processes aren’t set up to identify these early on. This from friend and colleague Tom Lynch:

“It takes way too long for adjusters, nurses, and case managers to come to the conclusion that something is going on there. It has been the last thing they look at, and by the time they see it, it’s an iceberg straight ahead and they are about to hit it.”

I’ve been talking about the huge problem of opioids combined with benzos aka sedative hypnotics for some time now.  Mitchell Pharmacy Solutions’ Mitch Freeman PharmD. sent me the latest FDA blackbox warning – and reminded me that this is a much bigger issue than that involving combinations of opioids and certain antidepressants.

Finally, good friend and colleague Sandy Blunt of Medata did his usual incredibly competent assessment of a report, and drew some startling – and terrifying – conclusions.

I am still stuck on the math from an article early this year (“A Charleston Gazette-Mail investigation found drug wholesalers shipped 780 million hydrocodone and oxycodone pills to West Virginia in six years, a period when 1,728 people statewide fatally overdosed.”). The math is staggering on averages. How can anyone with a straight face say they could only recommend a 0.001% suspicion rate to the DEA. 

If the WV state avg pop from Census data during this time was about 1.84m and 780m pills were consumed over six years then each and every man, woman, and child in WV statistically consumed 1.36 pills a week –every citizen, every week of the year, for six years without ceasing. If we consider that 20% of the population was under 18 and adjust our data to exclude this group, then each and every man and woman 18 and up in WV had 1.7 pills a week. 

Even more disturbing is that this was just (“JUST”) for hydrocodone and oxycodone pills and did not include drugs such as codeine, fentanyl, hydromorphone, meperidine, methadone, or morphine …

This from the Gazette-Mail article:

Between 2007 and 2012 — when McKesson, Cardinal Health and AmerisourceBergen collectively shipped 423 million pain pills to West Virginia, according to DEA data analyzed by the Gazette-Mail — the companies earned a combined $17 billion in net income.

Over the past four years, the CEOs of McKesson, Cardinal Health and AmerisourceBergen collectively received salaries and other compensation of more than $450 million.

In 2015, McKesson’s CEO collected compensation worth $89 million — more money than what 2,000 West Virginia families combined earned on average. [emphasis added]

McKesson Corp CEO John Hammergren tees off on the 17th hole during the first round of the Pebble Beach National Pro-Am golf tournament in Pebble Beach, California, February 12, 2015. REUTERS/Michael Fiala (UNITED STATES – Tags: BUSINESS SPORT GOLF)

Thank you, for-profit healthcare system!

Telemedicine – a primer

It’s among the hottest topics in work comp these days.

Telemedicine will be one of – if not the – most disruptive force in workers’ compensation medical care. Companies such as CHC Telehealth, Go2Care, and AmericanWell are moving rapidly, adopting different business models in an effort to gain first mover advantage.

Looking for a broader perspective, I recently had the chance to interview Jonathan Linkous, CEO of the American Telemedicine Association. Here’s what he had to say…

MCM – What service types/specialties are embracing telemedicine most rapidly?  Why those?

JL – It covers the gamut from primary care to urgent care, but there are some popular specialties – mental health, behavioral health, neurology – stroke care, ICU/CCU. Dermatology is one of the earlier adopters and radiology via remote reading of images has become a standard in the industry

The greatest increase in the number of services has been via consultations with online providers, Intensive Care monitoring either continuously or in evening hours (30% of ICU beds are hooked up to remote monitoring) and remote monitoring of chronic care.

Slower adopters include surgery, although that is changing with some robotics and oversight/proctoring from specialists from a distance

[Telemedicine is now being used for] Initial or follow-up visits with providers. Online consults are growing quite significantly with 1.2 million services delivered to 750,000 members in 2016. Possible stroke victims are being assessed by neurologists remotely today.

In terms of the largest number of people served, the top specialty is radiology where 7 – 10 million pictures are read remotely followed by cardiology with remote monitoring.

MCM – Which payer types are currently involved in telemedicine?

JL – The fastest adoption is by employers and private payers, then Medicaid, then Medicare. [Reimbursement is a driver, as value-based organizations aren’t concerned with billing per service but rather with delivering optimal outcome they see telemedicine as a way to deliver care faster to key patient populations]. The easiest way for providers using telemedicine to get reimbursed is by value-based care and not FFS; it is harder to get it paid for by FFS as need to justify the usage.

MCM – What states or regions appear to be early adopters?  Why those?

JL – Telemedicine started out in rural healthcare [and was] funded by the federal government; today it is urban as that’s where people are. California, AZ, MD have all been early adopters and enablers; in general states are more supportive than Medicare. The VA has been very supportive, as have other governmental payer programs [excluding Medicare].

MCM – What obstacles exist and how are they being addressed?

JL – Resistance by provider community and HC in general as this is typically a slow adopting industry; that’s dissipating of late. Providers need CMS to move more quickly with this for Medicare. Some state medical boards have been slow in developing practice guidelines. There are licensure issues, and crossing state lines is a complex issue; we need to get that addressed. Regulatory complexity is a burden. The ATA is working on pathways for communities and state medical boards which will get resolved before licensure.

Ancillary professions eg psych, nursing, and physical therapy, are moving faster to resolve licensure issues than medical societies. PT groups are working on interstate compacts now to enable state-to-state reciprocity. [This is likely due in large part to the nature of ancillary practice, as these providers] practice under guidance of a physician. Of course, it is easier to do telemedicine within a state but payment is another issue due to FFS and other requirements. Telemedicine is [as much about] expanding relationships with patients and not just reducing office visits. Telemedicine providers can document findings and notes in a chart and have a record of that as opposed to some of the issues inherent in an office visit such as a “white coat” issue. Parkinsons groups have embraced TM as its hard to get out and see a doc. Specialists are far away and telemedicine can improve access, so patient groups are advocating for TM.

MCM – What is an example of a successful workflow – patient identification, enrollment, delivery, reporting/documentation, billing ?

JL – Key to success is integration. [Originally telemedicine was televideo, now on a desktop or laptop or even phone. He has seen conferences where docs show up and see patients during a meeting.] There has also been an improvement in workflow as electronic records integration is key. This hasn’t been a requirement but can be a huge help if you have robust EMR system that is portable and interoperable – we are a ways from that.

MCM – Does telemedicine support vertically-integrated health systems or is it more an independent practice driver?

JL – Both. Mayo uses e-Consult where for some patients considering a procedure or with a diagnosis, Mayo sends their records go to another Mayo provider perhaps in a different state to do second opinion remotely. Local hospitals can tie into Mayo to differentiate, to take advantage of Mayo providers’ expertise and brand strength. Private practices can use this to expand their practice if they have strong capabilities via patient portal with video consults etc. Some alliances are forming among independent practices in cities to enable providers in different groups to work together.

MCM – What is happening with reimbursement and what does the future hold?

JL – The market sees value. At the federal level it is just a matter of time. [I see a] 5 year timeframe where we are past tipping point to value based care, lots of healthcare systems are looking at these care systems and when the value-based:FFS balance shifts to 50:50 it will flip their business plans which will drive more TM. DoD, Prisons, IHS, others are embracing this – Medicare is last of holdouts.

Anyone interested in diving deep into telehealth can attend the association’s conference…

It’s about healthcare costs, NOT insurance premiums

What’s missing from the debate about AHCA and ACA is any discussion about what’s making premiums so damn expensive.  We are arguing over what we pay, not what we’re paying for.

That makes zero sense.

AHCA makes older folks pay more, and lets younger people pay less for health insurance. But it’s a zero-sum game; all of us are going to pay, we’re just arguing over who pays how much.

That’s not to say ACA was much better at “bending the cost curve”. Most real efforts (excepting Medicare physician reimbursement changes) were taken off the table during the negotiation process, so we were left with ACOs, medical homes, outcomes research, and “death panels” instead of:

  • federal drug price negotiation,
  • re-importation of meds from Canada,
  • requirements that new procedures demonstrate higher efficacy and lower cost,
  • stringent controls on medical devices, and
  • publication of prices and outcomes by provider.

ACA was – and is – an attempt to get insurers to compete for customers by lowering the cost of care. Some – Centene, Molina, Fidelis, and a few others – are succeeding, but the big commercial plans are mostly failing, resorting to hoary old “cost containment” techniques such as higher deductibles and copays instead of real innovation and effective branding and marketing.

This is especially striking as healthcare outcomes in the US are pretty awful, and research clearly proves spending more on physician care does NOT produce better outcomes. In fact, all credible research indicates the US lags well behind other developed countries in terms of health outcomes.

Link between health spending and life expectancy_ US is an outlier – Our World In Data

We pay more – a lot more – for health care than other countries.

So, here’s the solution – but one our politicians won’t pursue because they can’t afford to piss off the healthcare lobbying industry.

Cut what we pay for medical care, drugs, facilities and other services, and reduce the volume of services we pay for.

What does this mean for you?

Medical care drives premiums, and if we don’t deal with medical care, we’ll never control what you and I pay for insurance and taxes.