Feb
23

Good news Friday!

Here’s stuff to brighten your day…

Our cities and rural areas are getting safer.

Overall crime rates have dropped – a lot...

unless you own a Kia or Hyundai.

 

Murder rates are dropping as well

Net – safer cities and towns.

Inflation???

Business owners’ consensus view is inflation will remain near 2 percent...this from the Atlanta Fed.

Healthier people!

2 Medicaid items of note

North Carolina is expanding Medicaid – terrific news for poorer folks in the Tar Heel State. Great news for the 346,000 residents who now can actually get healthcare.

In some states, Medicaid is expanding coverage to include housing and nutrition, a major step towards improving the health of Medicaid recipients.  What I love about this is research indicates housing and food stability enable people to a) get healthier, b) focus on school and work (hard to study or work when you are hungry and living on the streets).

Kudos to the Trump Administration for jump-starting CMS’ investment in social determinants.

CMS’ move is just the latest that recognizes the critical importance of stable housing and reliable nutrition. From WaPo:

social determinants of health — essentially, the conditions in which people live — have an enormous bearing on well-being. Medical care, studies have shown, accounts for only 20 percent of the difference in patients’ health, while social risk factors are responsible for half to 80 percent.

And it’s not just Medicaid…

Last year, the National Committee for Quality Assurance, which evaluates health plans and medical practitioners, updated a data tool used by 90 percent of health plans, requiring them to report whether they have assessed patients for shortages of housing, transportation and food.

See you in Boston March 5 – 6 for WCRI…it’s sold out BUT there is a waiting list… click on the link to sign up.

 


Feb
22

A.I.: The Basics

AI is all over healthcare, from assisting in diagnosis to evaluating new medicines, from allocating resources to triage. Sure, there’s enormous potential – there’s also big risks. At last fall’s National Work Comp conference AI was all over the exhibit floor….in recent surveys HSA has conducted we have seen a dramatic rise in AI-related comments.

What’s apparent from our conversations with industry execs is this: AI is…in the eye of the beholder.

While industry folks talk about AI’s potential, they readily acknowledge their understanding is superficial at best.

I asked Jay Stith, the brains behind HSA’s analytical work – he’s also worked extensively with AI applications in his work with HSA and on the national scale for disaster prediction and preparation – to give you, dear readers, a very brief overview of what AI is, how it “works” and where it might be useful.

At its core AI represents the culmination of efforts to infuse machines with human-like cognitive functions. The engine driving AI’s transformative power is machine learning – a discipline enabling algorithms to learn from data patterns. This not only facilitates automation but also empowers AI systems to continuously enhance their performance, making them dynamic and adaptable to evolving challenges.

This potential doesn’t come without cost. Once you decide to pursue AI, launching a competent AI system requires a lot of work:

• Determining what problem you want AI to address,
• acquiring the resources (money and infrastructure) ,
• earning management and staff buy-in,
• acquiring the talent to develop AI,
• assessing/cleaning up/revising the data used to “train” AI
• developing metrics to evaluate the AI’s output
• building the AI model/tool/program/etc. structure,
• adequately training the AI, and
• then…the dreaded implementation phase.

All while navigating the tricky ethical considerations associated with AI (privacy, ownership, algorithmic bias, hallucinations, and employee displacement) and the looming threat of increases/changes in regulations.



That said…safely navigating the path will lead to much improved productivity, clinical outcomes, and lower costs for all.

More specifically, stakeholders believe AI in worker’s comp can be very beneficial throughout the workflow –from the basics like increasing speed and accuracy across the board all the way to enhancing predictive analytic capabilities and most, if not everything, in-between.

What does this mean for you?

The potential is huge but be mindful of the arduous process to get there.


Feb
20

Rural hospitals – and healthcare – are in deep trouble.

With the unwinding of Medicaid post-COVID emergency, rural healthcare is falling deeper into financial trouble.

Consulting form Chartis just published their review of rural healthcare…among the findings

The unwinding issue is exacerbating problems in states that failed to expand Medicaid…the vast majority of which are those with the most hospitals in financial distress.  Simply put – they have to deliver way more healthcare to people without health insurance.

FromChartis:

Across the 10 remaining non-expansion states (Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming), the percentage of facilities with a negative operating margin increased year-over-year from 51% to 55%. These states are home to more than 600 rural hospitals…Several of these states are among the most severely affected by hospital closures and a loss of access to care.

The percentage of America’s rural hospitals operating in the red jumped from 43% to 50% in the last 12 months.

418 rural hospitals are “vulnerable to closure” according to a new, expanded
statistical analysis.

Healthcare deserts are a huge problem for rural America, especially in areas with lots of extractive industries (mining, energy, agriculture. Workers in those industries are much more likely to suffer severe occupational injuries, injuries that benefit greatly from care delivered in the “golden hour”.

What does this mean for you?

Not expanding Medicaid is killing rural healthcare.


Feb
16

Good news Friday…

In our ongoing effort to maintain or possibly even improve our collective sanity in these increasingly bizarre times, here’s some good news to start your weekend.

Jobs

Earlier this week I did a talk for the Montana Self-Insureds…researching to prep for the talk I came across this:

Recall a couple years ago Congress passed and President Biden signed the bipartisan Inflation Reduction Act into law.

The result – hundreds of thousands of very good-paying jobs in every state.

Plus, better roads, safer bridges, more efficient and safer airports, cleaner water, lower drug costs for seniors…Good news indeed!

Employment

This from the Economist…

At the end of last year jobless rates were, respectively, 5.2% for black Americans and 3.7% for white people—equalling the narrowest gap on record.

And…

image: the economist

Even more striking are shifting tides in labour-force participation. About 63% of black Americans are now deemed to be either in work or searching for jobs, more than the 62% level for white Americans—an inversion of the pattern seen in previous decades.

My take – Median wages for workers identifying as Black are at a historic high – which is good news indeed.

Yet…there’s still a long way to go. No time to rest on those laurels folks!

Bipartisan!

Gotta love it when our elected representatives work together…Lost in the news cycle was this – Senate Republicans and Democrats worked together to pass a much-needed foreign aid bill. Tough call for members on both sides of the aisle, and kudos to them for setting aside politics and “but I don’t like xxx” for the good of our country.

A hopeful sign indeed.

What does this mean for you?

Even in these days when it seems we are increasingly divided…we can work together – even when we don’t agree on everything.

When we do good things happen.


Feb
8

Drug prices and the power of consensus.

We Americans pay much more for drugs than anyone else.

Those very high prices are a major contributor to increasing health insurance premiums and Federal and state budgets.

Across the political spectrum, Americans support more government regulation of drug pricing.

Good news is Medicare is now actively negotiating drug prices with manufacturers. That will save patients and taxpayers billions of dollars.

What does this mean for you?

When we agree on what is the right thing to do we get things done.

And will save families and taxpayers lots of money.


Feb
5

Predictions for healthcare in 2024

Some of you know Jay Stith – he’s been working with HSA for half a decade now, heading up data analytics and research. Jay’s brilliant, has a great dry wit, and most of all very insightful.

He sees stuff – others – including me – don’t.

So, I asked Jay to make his predictions for healthcare in 2024…lest the work comp folks stop reading here, remember workers’ comp is the flea on the tail of the healthcare elephant.

Outside of employment, the biggest single factor affecting workers’ comp is healthcare – hands down.

  1. Hospital/ Health System M&A will ramp up in a big way leading to even more consolidation around the country.
    1. M&A dropped dramatically during COVID so there is an element of catch-up on top of a rapidly changing healthcare industry, financially distressed hospitals/health systems offering themselves as prime takeover candidates, and potentially dropping interest rates all point toward high levels of M&A activity.
  2. And…Facility fees will continue to be the elephant stomping around the room. Remaining high and potentially going higher all while limited efforts are made to curtail them.
    1. A next step to prediction #1 – as consolidation often means high prices. Little activity has occurred to combat facility fees so far and with sexier issues like AI monopolizing meetings I don’t see meaningful action broadly coming.
  3. Staffing shortages will keep already high labor costs high – looking at nurses in particular.
      1. The thousands of physicians and nurses entering the workforce lags the number of physicians who are retiring or simply exiting the industry. This decline coupled with the aging US population is exacerbating the already critical problem. We are, and have been, under-supplied with nurses across the healthcare landscape and between structural issues like not enough nurse education faculty and the median age of nurses >50 this issue is unlikely to change.
  4. Human-caused climate change will disrupt even more businesses with policy progress being slow and insufficient.
    1. We don’t know what we don’t know – climate-related problems are impacting a wide range of business and employee needs. In addition to the obvious employee-injury issues associated with climate change, disruptions to care access, employee-personal-life problems (e.g. damage to home), and climate migration make climate-associated changes more difficult to model and properly account for.
    2. As if we needed more proof, here’s what’s happening in California..
  5. The AI arms race will continue with companies everywhere announcing new AI tools for various business segments BUT true internal buy-in will still be far away as the tools will underwhelm managers dreams for headache-reduction.
    1. Managers are dreaming about the volume of tasks that AI will be able to effectively handle in a fraction of the time while producing higher quality work than their current teams. As companies learn how difficult properly training an AI tool is and how much time/resources are required to make even marginal gains, people will get frustrated about having over-promised and/or having to deal with poorly functioning AI tools – e.g. a bad chatbot or an internal system lacking proper training on a costly outlier situation.
    2. AI and technology improvements will dominate the headlines and capex allocations BUT customer service will remain more correlated to client satisfaction.
    3. Healthcare and insurance have changed a lot over the decades but as technology has gotten fancier and the industry more complex, high quality customer service has remained the top-rated factor when assessing a successful vendor-client relationship… and it will not change this year.

What does this mean for you?

Consolidation = higher facility costs.

Staffing shortages = higher facility costs.

Human-caused climate change = BIG problem.

AI ≠ panacea.


Feb
2

Good news Friday – Crime is down!

If it bleeds…it leads.

That’s the mantra driving local news reporting, one that really distorts what’s ACTUALLY happening – which is in most cities crime has dropped – a lot. That includes violent crime.

According to the highly-regarded Council on Criminal Justice,

  • The number of homicides in the 30 study cities was 9% lower in the first half of 2023 than in the first half of 2022.
  • Robberies, burglaries and larcenies all decreased in the first half of 2023 compared to the first half of 2022.
  • Levels of nearly all offenses are lower, or barely changed in the first half of 2023 compared with the same period in 2022.

Notably, murder rates peaked 3+ years ago, under the previous administration and have dropped by half since then.

The one area where volumes have increased is in car theft…mostly due to big problems with Kias and Hyundai thefts which are up 1,000% since 2020. …it has gotten so bad police departments in multiple cities are giving away steering wheel locks to Kia and Hyundai owners…

In Milwaukee more than half of car thefts were Kias or Hyundais.

What does this mean for you?

Tell the fear mongers to stuff it.

And put a steering wheel lock on your Kia/Hyundai.


Jan
30

NCCI’s executive survey…what medical inflation??

A couple weeks back NCCI released information about its annual survey of work comp execs.  About 100 participated in the survey; some of the results were a bit surprising.

Execs were asked about their “concerns” re workers’ comp…frankly I found some of their concerns (financial health? rate adequacy? medical inflation?) puzzling at best.

Here’s a couple questions from my discussion with Damian England, Executive Director, Affiliate Services and Raji Chadarevian, Executive Director-Actuarial Research – and thanks tons to NCCI’s Cristine Pike for making this happen.

Where did the responses rank concerns?

Damian England, Executive Director, Affiliate Services – “While some carriers mentioned multiple concerns, roughly 40% of the responses were related to the financial health of the system and rate adequacy. About a quarter reflected the changing workforce, followed by medical inflation and the economy. Climate change and artificial intelligence were cited as emerging concerns.”

MCM – Rate adequacy concerns?

Damian England, Executive Director, Affiliate Services – Rate adequacy concerns are more of a global fear of the future and the unknown, amid a long-term trend of steady declines in loss costs/rates.  Although the industry in aggregate has seen nearly 10 consecutive years of underwriting profitability, not every carrier has same results or books of business; rather, individual carrier performance varies in many ways from the aggregate.  We also hear about changing underwriting cycles and whether we have the data necessary to recognize a turn in trends, as there is a recognition that recent trends will not last forever.

MCM – Why are they worried about medical costs – which are a non issue?

Raji Chadarevian, Executive Director-Actuarial Research (and all around good guy). – Medical cost drivers are not well understood; some are just looking at the overall medical price index, but medical cost drivers go beyond that. Changing medical practices, new medications, new ways to administer treatments and other transformations need to be considered. It is starting to resonate that some are understanding it is more complex…but there is a misconception in the industry that we look at health insurance rates and think that is representative of medical inflation – those rates [health insurance premiums] are going up but that is not medical inflation.

Also, WC is a long tail business, so a small change in the inflation rate one year can mean a lot in terms of overall cost of claims – that is where some of the concern emanates from – what does it mean for a 20-30 year claim?  Furthermore, for LT claims it isn’t general medical inflation largely driven by physician and facility prices, rather, for claims that are beyond the critical treatment period, medical costs have more to do with the price of Rx, home health care, medical equipment. Prices for HHC and DME have gone up significantly in recent years.

Ok, couple things here.  And please, this is not meant to argue with Raji or Damien, rather to point out that work comp execs need to study up on medical issues and worry about REAL issues, not NON-issues.

  1. Rate adequacy is NOT AN ISSUE. Over the last decade rates have been too high – evidenced by continuing rates drops in almost all states over that period, accompanied by huge profits AND $14 billion in “excess” reserves.
  2. Medical inflation is NOT AN ISSUE. Over the last few years there have been no reports of significant increases in medical trend. None. Zippo, Zilch.
  3. Drug costs have been dropping for years – for lost time claims as well as med onlies.
  4. Claims with ultimate costs >$1 million account for – at most – 15% of total WC costs  – and a huge chunk of that is not medical, but indemnity expense. So, while I get some execs may be concerned about future costs, this feels more like catastrophizing than rational business thinking.
  5. Climate change – hard to believe that this was not one of the top concerns, but completely consistent with the industry’s ignorance of the issue. Talk to insurers, employers, and TPAs in Louisiana and California and they’ll regale you with the horrific and extremely expensive impacts of human-caused climate change.

What does this mean for you?

Execs are working about non-issues and willfully ignoring those that will have real and sustained impact on the industry.

 


Jan
18

Hospitals are…

a) in desperate financial shape, on the verge of bankruptcy…

b) doing quite well thank you, enjoying very healthy profits…

c) both.

The answer is…C.

For-profits – HCA, Tenet et al are doing great, while (most/many) not-for-profits are really struggling, with some on the verge of/going into bankruptcy.

Why?

Very briefly, for-profits (there’s lots of nuance here, but generally);

  • don’t take Medicaid patients,
  • have very strong orthopedic and cardiac surgery practices which are very profitable;
  • do their best to avoid/transfer/not care for the uninsured.

Not-for-profits…

  • include inner-city and rural facilities that must take Medicaid and
  • serve as primary care providers for the indigent and uninsured and
  • deliver lots of babies and provide general med/surgical services which are marginally profitable

What does this mean for you?

Hospitals of all types are looking to maximize revenue, especially from very profitable payer types.

Is that you?

 

 


Jan
15

What’s REALLY going on with inflation?

A couple subscribers have been pushing back on my take on inflation; essentially their position is that “real people” (as opposed to “fake people”?) are suffering from pocketbook issues, issues that I do not understand.

Well…lets – very briefly – dig into “pocketbook” issues.

First, here’s the latest Consumer Price Index figures from last month courtesy of the US Labor Department…this looks at price changes from December 2022.

But that’s just one year…looking further back, food prices have indeed increased a lot  – almost 20%. – since 2019.

Some food producers claim inflation is the driver, forcing them to increase prices to keep up with inflation,

But there’s solid evidence many food companies are just jacking up your prices to jack up their profits.

This from NYT

  • PepsiCoprices for its drinks and chips were up 17 percent in the latest quarter … its third-quarter profit grew more than 20 percent.
  • Coca-Cola reported profit up 14 percent from a year earlier, thanks in large part to price increases.
  • Chipotle Mexican Grill’s prices are now nearly 15 percent higher than a year earlier, reported $257.1 million in profit… up nearly 26 percent…

From BonAppetit

From TIME:

  • Conagra Brands—one of the largest consumer packaged goods companies in the U.S.—announced that it had posted a nearly 60% year-over-year profit increase between December 2022 and February 2023. The Chicago-based company, which makes a long list of grocery staples including Chef Boyardee, Hunt’s, Slim Jim, Reddi-wip, and Marie Callender’s frozen meals, reported a net income of $342 million, up from $219 million in the same quarter a year prior.
  • Tyson Foods, the largest meat company in the U.S., more than doubled its profits between the first quarters of 2021 and 2022.
  • remember the huge price jump for eggs? According to TIME, “Cal-Maine Foods, the largest egg producer in the U.S., reported that its revenue doubled and profit surged 718% [in Q1 2023] because of higher egg prices.”

What does this mean for you?

If you’re going to point fingers, make sure you know who to point at.