Dec
22

Wildly off-topic #11 – the Will to Fight

Last night, Ukraine President Volodymyr Zelenskyy spoke to both Houses of Congress, both parties, and all of us.  He spoke eloquently and passionately, describing the suffering of his people and their total commitment to defeating Russia and reclaiming all Ukrainian lands stolen by Putin.

What Zelenskyy knows – and I mean KNOWS – is the more Putin bombs Ukrainians, the stronger those Ukrainians become, and the more committed they are to seeing this through to Putin’s bitter end.

Net – Putin’s attack on civilian targets will strengthen Ukrainian resolve, not weaken it.

Here’s why.

I had long thought that the horrific bombing campaigns of World War II helped bring the war to a close by battering Germans and Japanese into submission. [full disclosure – my father was a machine gunner, bombardier, and armorer in the 8th Air Force in England during the second World War.]

Boy was I wrong.

Credible research indicates German production actually increased during the war; while it didn’t reach planned levels (which were likely overly optimistic) it did exceed pre-bombing campaign volumes. Research by the US Strategic Bombing Survey came to the opposite conclusion, however there’s a) big time confirmation bias and b) no evidence that the Survey captured civilian morale data.

Research conducted during Germany’s Blitz (aerial bombing) of UK cities concluded…

the Germans gained nothing from their investment in bombing British civilian targets as part of “The Blitz” (1940-41). Before “The Blitz”, they may not have been happy about having their air force destroyed by the Nazis, but they were also not eager to put their lives on the line to support a hereditary aristocracy that just over 20 years earlier had wasted a substantial portion of a generation of young men in a senseless war. However, as their homes were being destroy and their neighbors killed or wounded by German bombs, ordinary British men and women did not all rabidly support Churchill’s exhortation, “We shall never surrender“, but they continued to work, and they took action to ensure that essential services were provided when their official leaders failed to do so.

long as I get my cuppa tea, dearie…

TO be sure, this was NOT the whole story; there were many instances of looting, bigotry and finger-pointing, panic and social conflicts. That said, definitive research into civilian morale during the Blitz found the bombing produced:

a people who became actively committed to the project their leaders put before them, who cooperated with the drastic re-ordering of daily life that this entailed, and who, on the whole, did so in a spirit of stoical endurance that did not exclude good humour’. [emphasis added]

Further research on the impact of aerial bombing from 1917 to 1999 found:

(1) air power coercion attempts are more likely to work if they exploit military rather than civilian vulnerabilities, (2) the regime type of the target affects the chances of success, and (3) success is less likely if the attacker demands that the target change its leadership. Results show that coercion is more likely to work if the target’s military vulnerability is higher, but higher levels of civilian vulnerability have no effect on the chances of coercion success; that target regime type has no effect; and that success is less likely when the attacker demands the target change its leadership

In his book TRIBE, author Sebastian Junger details how people react to  having a common enemy, using examples from the Serb-Croat war’s effects on teenagers in Sarajevo and data on depression, anxiety, suicide among British citizens during the Blitz…the net is those issues declined rather significantly. Junger concludes that a common enemy draws people together, all working as one to defeat a single threat.

What does this mean for you?

Ukraine will win.

The more support we give them, the sooner this happens and the fewer Ukrainians will suffer and die. 

 


Dec
21

Wildly off-topic #10 – Manpower

It’s been four months since we talked about Ukraine, a period during which Russia put scores of thousands of poorly-equipped, pretty-much-untrained, and wholly incompetent civilian men into army uniforms (or facsimiles thereof) and fed them into the meat grinder that is Donetsk, Kherson, Bakhmut and surrounding areas.

With this result.

With things on the front lines pretty static, it’s time to think through the factors that will decide who wins. In layperson’s terms, I’d say there are three main drivers

People to do the fighting – today’s topic

Will to fight

Stuff to fight with

Yes, this is pretty basic, but stick with me here.

The “people” need to be found, trained, equipped, clothed, fed and led. These are all hard to do – especially in winter, in Ukraine, after 10 months of often-brutal combat dominated by death-by-artillery.

In addition to the usual recruiting efforts focused on patriotism and duty, Putin has resorted to two primary sources – poor men from far eastern Russia, many of whom don’t speak Russian, have never traveled outside their immediate area, are poorly educated and according to some reports not really interested in fighting.

Prisoners who, in exchange for a release from jail, agree to enter the army, often in mercenary units set up by the Wagner Group make up a large portion of the new recruits.

Reports from these new “soldiers” indicate they are mostly cannon fodder, placed on the front line to be killed by Ukrainian forces while the regular Russian army sites in relatively safe trenches in the rear.

This is typical (from Ukrayinska Pravda)

Quote from Agafonov: “We were dumped into the forest and ordered to entrench; we had only three shovels for the battalion, and there was no support at all. We entrenched as best we could, and in the morning the [Ukrainian] attack started. [Ukrainian forces used] artillery, Grad MLRS, mortars and copters; we were just shot.

What is disturbing is the lack of information about casualties and replacements in the Armed Forces of Ukraine (AFU). After way too much time spent searching the interwebs I was unable to find any credible data on recent losses, replacements, or changes in AFU manpower.

It’s highly likely that Russia has more men, even after both sides have suffered horrendous losses. (while there are women in both countries’ armed forces, men make up the vast majority of the fighting forces) It’s also clear that many new Ukrainian recruits are not exactly fully trained.

However, 5 weeks training by professional soldiers in Britain is a lot better than a few days with minimal training on how to actually shoot, load, and clean a rifle, bandage a wound, use a radio, read a map, and recognize a Russian or Ukrainian fighter jet.

Oh, and the UK and other European countries supporting the training give every trainee “combat clothing, body armour and ear defence, waterproofs and sleeping bags plus a fully stocked individual first aid kit and extreme cold weather kits…”

(for more on this I suggest you review multiple sources, as this will enable you to question each of them and arrive at your own conclusions…  War on the Rocks, Phillips Payson O’Brien, Institute for the Study of War are three I’ve found useful)

Tomorrow – the will to fight.


Dec
9

Solving “problems” by making bigger ones

Leave it to some misguided folks in the California legislature to come up with solutions to non-problems, solutions that will do more harm than good.

That’s just what AB1127 does…shortening the time period for employers to determine the compensability of claims, a change which will lead to – among other problems – more initial denials and less time for injured workers to receive medical care while their employer researches the claim. Further, AB1127 appears to allow for penalties of up to $50,000 for claims that are “unreasonably rejected” by the employer – but the bill a) doesn’t define what constitutes an “unreasonable rejection” and b) doesn’t exclude claims that are already closed.

That last is pretty bizarre – then again the entire thing is a mishmash of unfounded assumptions and poorly conceived “solutions” that will add litigation expense while doing little to improve the lives of injured workers.

One of the major problems is the timeframe to investigate some claims is shortened – but much of what happens during that investigation is beyond the control of the employer/adjuster.

As a result, payers facing down a deadline may have to issue a provisional denial if they can’t get evaluations scheduled, obtain medical records or med-legal reports or those records and reports are incomplete.

There’s a lot to unpack here – the fine folks at CWCI have provided a detailed analysis of AB1127 here – free to members and at nominal cost for others.

What does this mean for you?

How this benefits injured workers is a mystery indeed, how it benefits applicant attorneys is crystal clear.


Nov
28

Happy Monday – for my American readers, hope your holiday was most excellent.

here’s good stuff you might have missed…

WCRI is hosting a no-cost webinar on Behavioral Health in Workers’ Compensation Thursday Dec 15 at 2 pm eastern. The webinar will discus their recent primer on BH in WC (available here for download)

The good folks at NCCI published their latest take on work comp industry financials...suffice it to say the party continues…although it may be getting close to ending.

courtesy NCCI

The final countrywide analysis of 2021 results shows:

      • WC Calendar Year 2021 private carrier net written premium (NWP) increased from 2020 by 0.5% to $38.2 billion
      • The WC Calendar Year 2021 private carrier combined ratio was 87.2%, and the operating gain was 23.7%

Meanwhile early data makes 2022 look even better; direct written premiums were up almost 10% over 2021, while the loss ratio for the first two quarters of 2022 is even lower (!!!) then 2021 (no figures cited).

Unpacking this –

  • If 2022 numbers hold up 2022 will be the tenth year in a row profits exceeded the historical average…
  • And the sixth consecutive year the operating margin was above 20%
  • Oh, and this all happened while rates decreased every year since 2014

My take…insurers are still enormously profitable because rate declines aren’t accurately accounting for the opioid hangover.

[A CWCI report addressed this issue; my informed opinion is claims without opioids are much less costly, therefore the continued drop in opioid prescriptions is driving lower claims costs…actuaries develop rates based on historical data – which is not keeping up with what’s actually happening.]

Former Labor Secretary Robert Reich believes organizations aren’t valuing workers correctly…Reich notes workers are considered “costs” instead of assets, a mis-characterization that leads to all manner of bad executive decisions.

Key line –

“increasingly, corporations aren’t just production systems. They’re systems for directing the know-howknow-whatknow-where, and know-why of the people who work within them.”

Hat tip to a very good friend for the head’s up.

What does this mean for you?

  1. It’s great to see behavioral health get more exposure – it is a key driver of recovery.

  2. Actuaries use historical data to project the future; execs should factor in what’s really happening to understand where things are heading.

Nov
7

The core issue – the anti-Americans.

Those who continue to deny the results of the 2020 elections are anti-American; they seek to reject any result they don’t like. That is incredibly dangerous and a threat to our Republic.

Across more than 60 cases in 12 states, final rulings in every court case – including every one overseen by Trump-appointed judges – rejected allegations of fraud and confirmed the results of the election. 

If you care about democracy, you need to know which candidates are election deniers – or more accurately anti-American.

here’s just a few…

To find election deniers running for office in your state; just click on this link, then your state to identify those who refuse to accept the will of the people.

Need more info?

Trump’s own Presidential Advisory Commission on Election Integrity disbanded having discovered nothing.

The Heritage Foundation Election Fraud Database has compiled every instance of any kind of voter fraud it could find since 1982. It contains 1,296 incidents, a minuscule percentage of the votes cast.

study of results in three states where all voters are mailed actual ballots, a practice some allege to be rife with fraud, found just 372 possible cases of illegal voting of 14.6 million cast in the 2016 and 2018 general elections — 0.0025 percent.


Oct
5

You have to go

to comp laude.

It’s unlike any other work comp conference – it is focused on what people and organizations are doing right, the right way – and the impact that has on the people we serve – injured workers.

There are some pretty emotional moments…injured workers sharing their stories about horrific accidents and their months if not years of recovery. One came from Brance Tully, a young man of eighteen who fell through a skylight two years ago – when he was 16.

After dozens of surgeries, untold hours of therapy and what could have only been an incredibly painful and seemingly-interminable journey, he is back at work. He called his adjuster the day he returned to be met with incredulity – justifiably so.

That was just one. Injured workers recovered from shootings, fires, vehicle accidents, falls and all manner of accidents.

There are several other reasons to attend:

  • plenty of time to connect and network
  • solid attendee list with folks from large employers, payers, and other buyers
  • terrific location – the Pasea Hotel is pretty nice.

Kudos to Yvonne Guibert – a dear friend and colleague, and the best marketer in workers comp – for making this happen. Shout out to GB and Greg McKenna – his engagement with the “stories” folks are remarkable.


Sep
29

One Call’s credit rating – nerd alert

Fielded several calls and emails yesterday re the Moody’s credit review of One Call…while always (ok, mostly) happy to talk, rather than answering the same questions multiple times I’ll lay my thoughts out here.

These are in no particular order…

A colleague noted the possibility of a recession might affect One Call’s credit worthiness as a recession would affect employment – thus reducing claims.

Well, not exactly..

I’ve written extensively on how economic ups and downs impact workers’ comp; posts are here. Here’s a quick summary..

At the early stage of a recession, employees who get hurt are less likely to file a workers’ comp claim. While we don’t know why that happens, research suggests it’s because workers are concerned their bosses will eliminate their job while they are out on disability, and they’ll have no job to return to.

graph courtesy NCCI

As the recession deepens, frequency tends to bump up as employees realize their jobs are in real jeopardy.  Claims increase as a result, and it is tougher to find re-employment opportunities for workers ready to resume some level of work. This extends to part-time or other limited duty work that is essential to recovery and return to full duty. So, duration increases too.

In the final stages, as the economy recovers frequency appears to accelerate. Employers put older, less-safe equipment back on line, require workers to put in big overtime hours, hire temps who have minimal training on safety, and the pace of work picks up speed. The result – more injuries.

***If we are in a “recession” it’s a pretty weird one; employment continues to grow, employers are hiring anyone and everyone who applies, and there are more job listings than potential workers to fill them…not exactly what one expects in a recession***

Another suggested the current owners can “just give One Call more money” thereby alleviating cash flow worries.

That’s a possibility – but I’d suggest a pretty unlikely one.

The current owners took over One Call when it was on the brink of bankruptcy; if OC had gone down that route it would have made it less likely OC’s bondholders/lenders would recover all their funds. In my admittedly limited experience, credit investors are much less likely to send more cash to assets that are struggling than private equity investors. And PE firms aren’t exactly enthusiastic about bailouts.

One insightful question focused on whether OC has debt with variable interest rates; those of us with fixed rate mortgages are protected from rate increases while our friends and neighbors with variable rate mortgages are seeing pretty significant increases in their monthly payments.

nerd alert…

OC has several different debt vehicles/types/forms

The First Lien (think of this as your house mortgage) of $700M is Libor+550 Floor <.75 which means that when Libor moves so does their interest payments. Libor moves when the Fed moves so, away you go.

For example in the beginning of the year OC would have been paying the Floor and for September about 2.52%. With the recent Fed increase, that will be going up to over 3%.

Note that One Call may have bought financial instruments that protected it (either in whole or in part) from interest rate changes – these are known as hedges.

[if memory serves One Call also has to pay down principle every quarter to the tune of around $2.1 million; that’s pretty small potatoes for a $1 billion+ enterprise]

Finally word is One Call had recently been awarded new business from a large payer, and this would certainly benefit the company going forward.

This is definitely good news for OC and congratulations are due to the C-suite and sales team (as well as the behind the scene folks involved).

That said, work comp payers are notoriously risk-averse; its too early to tell if Moody’s announcement will give the new customer pause.

What does this mean for you?

This stuff is complicated and one has to be careful making assumptions (I continue to learn to question mine!)

note – if I got anything wrong or you have another view please comment below.


Sep
13

Wildly off-topic #9 – Russia’s military collapse

After seven months of brutal, grinding war, Russia’s military is nearing collapse.

The net – Russia is in deep trouble, so deep that its collapse may well lead to regime change. 

Ukraine has retaken over a thousand square miles of its territory in the past few days.  In the process it has captured hundreds of vehicles, Russian locomotives and rolling stock (freight cars etc), thousands of Russian soldiers, and untold quantities of ammunition and supplies.

First minutes after the liberation of Vovchansk by the Ukrainian defenders; Russian flag comes down, Ukrainian goes up.

you gotta watch this video of a Ukrainian farmer…he’s complaining there are dozens of abandoned Russian tanks but he doesn’t get to keep any…:(

You won’t find much support for that prediction (Russian military collapse) in your usual news feeds, but hear me out. (my past discussion of Russia’s invasion of Ukraine is here)

  1. Russia is running out of troops and there are reports it will NOT/cannot send any more to Ukraine.
    1. very scary thought – Putin may threaten to use tactical nuclear weapons
  2. Russia’s vaunted military turned out to be a paper tiger due to:
    1. lack of maintenance,
    2. poor training,
    3. very low morale,
    4. awful supply situation,
    5. terrible lack of communication security
  3. Western support (except for Germany, which has been pretty damn unhelpful) and commitment to suffering through energy cutoffs has been critical to Ukrainian successes.
  4. US and other NATO nations are undoubtedly sharing intelligence from intercepted Russian signals, intelligence that ensures the Ukrainians know what Russia will do before their field officers do.
  5. Even if Russia goes to a full-scale mobilization to dramatically increase the size of its military, that won’t work because:
    1. it won’t happen in time to stop the ongoing destruction of its forces in Ukraine
    2. there aren’t enough experienced, veteran, capable officers and soldiers to train up the new recruits
    3. there isn’t equipment, vehicles, ammunition supplies, and a logistical infrastructure and capability to supply new troops and no ability to build/buy/manufacture and transport everything they need to fight.

The net – Russia is in deep trouble, so deep that its collapse may well lead to regime change. Meanwhile, Putin is celebrating the biggest Ferris Wheel in Europe…which promptly broke down a day after Putin’s speech.

Metaphor, anyone?

What does this mean for you?

Hang in there.  Ukraine deserves your support.


Sep
9

If only Florida was like California

If only Florida (‘s commitment to patient safety and responsible prescribing and good workers’ comp medical care) was like California.

But…no.

The Sunshine State’s work comp regulators and legislators don’t seem to care about patient safety or employer/taxpayer costs – at least not when it comes to drugs.

 

If they did, payers wouldn’t have to:

  • pay an upcharge for physician-dispensed drugs,
  • argue that physicians aren’t pharmacists (yes, really),
  • argue that drugs dispensed by physicians should be evaluated for patient safety

Kudos to myMatrixx for weighing in on this and attempting to get insurers and employers involved. Alas if history is any indication, the vast majority of insurers won’t.

Neither will most employers.

I get workers’ comp premiums will continue to decline, leaving fewer and fewer dollars for administrative tasks, like, you know, government affairs.

I get workers’ comp is hugely profitable.

I also get that this will change – and when it does those insurers will be looking for nickels in the couch cushions – nickels (and dimes and dollars) they ignored when things were going great.

Right now, payers and employers need to weigh in and tell Florida regulators that Physicians are NOT pharmacies – and therefore patients don’t get to pick a physician to be their pharmacy.

This is a major patient safety issue; physician-dispensed drugs aren’t subject to many of the electronic edits that pharmacy-dispensed drugs are.

So, physicians are almost certainly giving patients drugs that:

  • duplicate patients’ other scripts
  • conflict with patients’ other scripts
  • aren’t appropriate for that patient.

What does this mean for you.

Fight your own battles. I’m not going to do it for you.

From a post way back in 2014…

There is NO reason, no rationale, no logic behind docs dispensing drugs to workers comp claimants.  

Proponents claim it is better care, leading to speedier recovery and lower costs.

We long suspected the opposite is true; that is, claimants getting drugs from docs get more treatment, incur higher medical costs, are out of work longer and run up bigger claim costs than claimants with the exact same injury who don’t get pills from their physicians.

Thanks to CWCI, we know that’s the real impact of doc dispensing.

Now, we know even more – we know that dispensing docs prescribe more opioids for longer times, thereby increasing the risk of addiction and drug diversion and overdoses and death.  Thanks to a research paper authored by Johns Hopkins University Medical School and Accident Fund, there’s clear and convincing proof that doc dispensing is a highly risky, very dangerous, and very expensive proposition.

Here is the money quote:

“we found 39% higher medical costs, 27% higher indemnity costs, and 34% higher frequency of lost-time days associated with physician-dispensed versus pharmacy-dispensed medication. We found even more striking differences related to physician-dispensed opioids versus pharmacy dispensed opioids. The effect was nearly doubled and revealed 78% higher medical costs, 57% higher indemnity costs, and 85% higher frequency of lost-time days associated with physician-dispensed versus pharmacy-dispensed medication. [emphasis added]


Sep
7

Work Comp Pharmacy Week – #2

Yesterday we kicked off Workers’ comp pharmacy week with a quick review of WCRI’s latest research.

Today we’ll focus on our annual Survey of Pharmacy Benefit Management in Workers’ Compensation. We’ve been doing this for (gulp!) 19 years, and I’m (belatedly) ready to begin the 2022 Survey. Past public versions of the Survey are available here; there’s no cost and no registration necessary.

Respondents receive a more detailed version to reflect their contribution to the effort.

Top takeaways from last year’s report included:

  • Total work comp drug spend for 2020 was about $3 billion, or about 10% of total medical spend.
    • The percentage decrease from 2019 to 2020 was 12.3%
  • That’s down from $4.8 billion a decade ago.
  • Opioid spend declined 19.3% from 2019 to 2020; Opioids accounted for 17% of total drug spend across all respondents.
  • Pharmacy management remains important despite these decreases, primarily due to respondents’ view that drugs have a disproportionate influence on claim outcomes and disability duration.

Over the next few days we’ll be reaching out to past participants; if you are a payer and would like to participate in the Survey (and get the detailed report) please leave a comment below with your contact information (it won’t be published).

All responses are confidential, are only used in the aggregate or are de-identified to protect confidentiality.