There’s no such thing as “sales”

The word connotes getting someone to buy your stuff, solution, or expertise – but the direction is all wrong. After making many mistakes in the sales process, I’m finally beginning to learn what works and what doesn’t; here’s a few takeaways that may be helpful to you.

This doesn’t work…

Salesman offers

Don’t think of it as selling to someone, rather it is get people to buy from you. A seemingly small semantic change makes all the difference, because the focus shifts from you to them.

People buy because they want or need the service or product.  Sure, a few may buy just because they want you to go away and leave them alone, but they won’t buy again and probably won’t like what you sold them.

They buy because you have something that solves their problem, obvious or not. That problem may be they can’t achieve their objectives using current provider networks, they need to expand into other regions but don’t have the infrastructure, their addressable market is shrinking and they need to find another source of revenue.

How many times have you actually figured out exactly what the buyer’s problem is? Not their employer’s problem, but the buyer’s? Because it’s not unusual to find out what works for the buyer is different from what you think is the best solution for their employer. 

When you approach selling from the buyer’s perspective, it forces a completely different focus. Here’s what I see as keys:

  • Ask questions.  Ask more questions. Then ask even more questions.
  • Until you are ready to close the deal, Do NOT talk about what your company does for more than 15 seconds. No one cares about your history, awards, building, number of employees, or mission.
  • People buy, companies don’t. Figure out what’s important to the buyer(s), and why. Don’t get caught up in the “but this is the best solution to your problem” trap; if the buyer believed that they would be writing the check.
  • Powerpoint (and other types of) presentations are too often a crutch, take way too much time to prepare, and are rarely helpful. Avoid them until you can present a buyer-specific solution.
  • Do not present your solution UNTIL the buyer has helped you design a solution that s/he believes is the best answer.

There’s a lot more to this, but I’ll leave you with this: when the buyer is talking you should be listening really hard, and when you are talking, you should be asking questions.

Be this guy…


Monday catch-up

Lots has been happening, here are a few items that caught my attention.

WCRI’s been diving deep into hospital reimbursement. This is an issue I’ve been tracking closely – and I’d suggest you should too. I see hospital/facility costs and utilization as a major cost driver; hear from Carol Telles in a webinar Thursday January 18 at 1 eastern.

As we’ve noted here previously, work comp payers would do well to pay close attention to facility reimbursement and utilization; expect work comp, auto, and other P&C lines to become even more attractive to hospitals seeking revenues and margins.

Healthcare spending inflation actually slowed significantly last yearAn analysis by Kaiser Health News indicates trend in 2016 was 4.3 percent, higher than the overall 2.8 percent inflation rate, but a 1.5 point drop from 2015’s rate.  Notably, drug cost inflation was just above 1 percent (although that’s a lot higher than the double-digit drop we’ve seen in workers’ comp).

Key point – this slowdown in the rate of growth occurred after ACA implementation.  Not surprising that costs went up; we insured millions more people, most of which had pent-up demand for services they couldn’t get or couldn’t afford.

While costs continue to grow, life expectancy declines. We have the most expensive healthcare in the world – by far – yet our life expectancy has dropped two years in a row. As a result, we rank 26th out of 37 developed countries for life expectancy.

Here’s why – we’re paying hundreds of billions for low-value care…

An excellent piece on how to make analytics actually work from Harvard Business Review.  Key points:

  • attach an ROI to the analytics unit itself
  • hire experts from OUTSIDE your industry…

Enjoy your week.

Predictions for work comp in 2018, part 2

Following up on yesterday’s predictions, here’s the second five – in no particular order… cf

6.  Claims counts will bump up
In hurricane-ravaged Puerto Rico, Florida and Texas. Alas a lot of injuries and illnesses will go unreported as unscrupulous companies hire day laborers and don’t insure them, or, in Texas, where work comp isn’t required.

7. But frequency will continue to decline, and total claims will too.
because a) frequency almost always declines, and b) we are at or very close to full employment, so a growth in employment won’t counterbalance structural decreases in frequency.

8. Work comp medical costs will increase slightly
On a per-claim basis, expect costs were slightly higher in 2017 than the previous year. Per-claim figures are the best measure, although total medical spend is helpful as well. Kathy Antonello will tell us at NCCI’s Annual Issues Symposium in May…

9. Innovative new approaches to financing work comp risk will emerge
Variations of peer-to-peer such as Lemonade, some enabled by blockchain technology, will gain a toehold in a few states. Don’t expect there to be a major move just yet as the regulatory, capital requirements, and distribution channels are going to adapt slowly. That said, there’s just too much opportunity to reduce costs inherent in the inefficient administrative processes in today’s workers’ comp system.

10. Payroll fraud incidents and other even more creative efforts to screw workers will increase
I’ll be looking at this in detail, but one quick take is the number of “contingent workers” in many industries has grown dramatically.  The biggest increases? farming, fishing forestry; logistics; personal care; protective service, education and training. The implications for comp are deep and broad; lower premiums, claiming incentives, fraud.

I know, there are implications aplenty for claims, occupational injury rates and the like.


Predictions for work comp in 2018

Good to be back at work – and ready to opine on what 2018 holds for work comp.  Here, in no particular order are my educated guesses, considered opinions, and wild-assed speculations.

  1. M&A  – specifically big deals – will increase.
    I expect we’ll see more very large transactions this year, mostly driven by strategic purchases of other companies. Work comp is a very mature industry, scale and size matter a lot, and that means getting bigger is key.  Expect to see several billion-dollar plus deals in the service sector.
  2. The market will stay soft.
    Claims frequency continues to decline, medical costs are pretty much under control, margins are healthy, and there’s still a lot of allocatable capital in the industry. Unless there’s some major  – as in huge – crisis I don’t expect a hardening of the work comp insurance market.
  3. Cost containment’s focus will shift to facilities and hospitals.
    Hospitals are increasingly vulnerable due to consolidation among payers, reductions in governmental program funding (thank you Trump Tax Bill), changes to Medicare reimbursement, and the systemic shift of care to lower-cost settings.  Facilities have already – and will continue to – look for revenues from payers less able to reduce reimbursement. That’s us, kids. Expect to see payers more closely analyzing facility costs, looking for solutions, and implementing programs focused on the issue.
  4. TPA growth will accelerate.
    Driven primarily by work comp insurers’ outsourcing. With a soft market, there’s little incentive for employers to self-insure, but the long-term decline in claims frequency is driving down insurer claim counts. Some insurers are making the strategic decision to shift claims to reduce fixed costs and capital investment requirements. Expect the big four TPAs to add significant new business from insurance companies and similar entities.
    ok…maybe not this much…
  5. Tele-everything will take off
    Tele-triage, -medicine, -rehab, etc is going to grow quickly. Expect lots of activity from companies big and small; Concentra, MedRisk (HSA client), CHC Telehealth, Coventry, Work Comp Trust of CT and others are pushing this care delivery model hard – as they should. Expect thousands of “visits” will logged by the end of 2018.

Tomorrow, I’ll finish up with the other five…

The greatest health “system” in the world

Is responsible for a two-year decline in life expectancy.

Make no mistake, the profit motive embedded in the US healthcare system is directly responsible for an unprecedented drop in life expectancy; opioid manufacturers’ and distributors’ focus on profits coupled with lax governmental oversight led to the opioid disaster.

So, 42,000 of your kids, neighbors, friends, relatives, co-workers died from opioids last year.

But fear not, the addiction treatment industry is riding to the rescue.  Funded by your insurance premiums and tax dollars, a plethora of “treatment” centers are popping up.  While some are excellent, many are nothing more than “treatment mills”, operations set up to suck as many dollars as possible from patients, taxpayers and insurers. Once the dollars run out, the patients are kicked to the curb.

Here’s one example…

The schemes are many, with treatment mills paying body brokers to recruit addicts, false addresses to ensure insurance coverage, fake credentials for “clinicians” and huge bills for non-existent services.

The next time some uninformed individual starts babbling about the exceptionalism of the American healthcare “system”, stick this under his/her nose – we’re exceptional at creating addicts, killing people, lowering life expectancy, crushing souls, while making huge profits for investors legitimate and not.

What’s the solution? 

We pay more for healthcare than anyone else in the world, dollars that are diverted from education, job creation, infrastructure. Many of these dollars are well spent, but the opioid treadmill is just one example of waste and fraud.

A good start would be to much more aggressively prosecute the opioid shills and their buddies in the “treatment” business.  Long and hard jail time for the executives and investors would help prevent the next disaster, but the $209 million in lobbying dollars spent last year by the pharma and device industry makes that unlikely at best.

You get the government you deserve, and you deserve to get it good and hard. HL Mencken.



We haven’t seen anything yet.

Healthcare is changing really quickly and quite dramatically. Stuff we never would have thought of is happening every day.

  • A huge PBM is buying one of the largest health insurers in the world.
  • Provider consolidation is rapidly accelerating.
  • Many insurers are vertically integrating; they own thousands of providers, care-delivery locations, and are racing to build even more infrastructure.
  • Private insurers are pushing hard and fast into the Medicaid and Medicare markets.
  • Pharma is making gazillions in profits and driving medical costs higher: many employers are beginning to rebel.
  • The world is finally taking opioids seriously, while many fraudulent and sleazy people and companies are looking to profit from the crisis.
  • Medicare and Medicaid are facing major changes; the Trump Tax Bill is just the beginning of efforts to cut benefits and reimbursement.

The healthcare infrastructure of 2021 will look a lot different than it does today.

A couple things to think about.

  1.  While scale is critically important, the bigger the organization, the harder it is to anticipate and adapt to change. Huge health insurers and healthcare delivery systems must force their people to take risks and innovate – but most of these institutions are led by executives with little tolerance for failure. 
  2. The fee-for-service system is deeply entrenched in our entire industry. Provider practice patterns, sales rep incentive programs, provider marketing strategies, employer healthplan purchasing priorities, hospital financial systems, billing and reimbursement infrastructure, insurer business models all are fundamentally based on fee-for-service. Improving outcomes and reducing costs cannot happen without disrupting the very roots of our healthcare “system”.
  3. Our healthcare system is vastly inefficient – and that is precisely why tens of millions of Americans live off that system. Disrupting that system will cost hundreds of thousands of jobs.

What does this mean for you?

The winners will be those that understand where things are going.

There are two basic strategic options: those with a long-term view must become part of the disruption or short-termers will have to carve out a niche that’s sustainable over the near term.

This is the third option, which most will inadvertently pursue.  Business-as-usual folks will wake up one morning and find out they’re toast.

Workers’ comp is shrinking

In 2020, there will be 10 percent fewer claims than there are today.

In 2023, there will be 20 percent fewer. That’s about 1.2 million fewer claims.

excerpted from NCCI AIS 2017

The workers’ comp industry is shrinking, and while there may be bumps in frequency from time to time, the overall decline is inexorable.

There are immense implications, implications that I’m not sure enough of us are thinking through.  For example, fewer claims means the industry needs fewer adjusters, case managers, bill reviewers, UR staff, investigators.

It also means capital investments in technology have to account for the world that will exist when that new tech is up and running. Millions of dollars are at stake here; insurers (primarily) that chronically underinvest in IT have to evaluate whether there will be enough claims and premium to support their required internal rate of return.

HR staff are focused on trying to get young people into the business…how many new workers will a) want to work in a disappearing industry and b) really are needed?

A couple other things to consider:

  • regulators – if the business is shrinking, will regulatory staff and their work product decline?
  • provider interest in workers’ comp will likely drop, especially because Medicare and Medicaid are likely to grow in importance

I’d be remiss if I didn’t note that automation and artificial intelligence may actually accelerate the drop in frequency as large chunks of the blue-, pink-, and white-collar job market disappear when functions are handled by machines.

This isn’t a bad thing. Fewer injuries and illnesses means fewer hurt people.

But it also means an industry that relies on addressing injuries is being forced to adapt.

What does this mean for you?

This is going to be painful indeed, especially for those people and companies that don’t think this through carefully and intelligently.

What’s happening with investments in work comp services?

The investment community’s interest in workers’ comp remains high. Not as high as it was a few years back when deals came almost every month, but high nonetheless. What’s different is the size of the investments we’re seeing – which isn’t a surprise.

As the industry consolidates, the companies in the sector get fewer and bigger – so the buyers these days tend to be either big “strategics” (companies in related businesses or in sectors that can create additional value via acquisition) or the relatively few very large private equity firms – many of which are already invested in the space.

We are also seeing wiser buyers.

Not smarter – almost all the people I’ve dealt with in private equity and investment banking are really intelligent – but many don’t have the wisdom that comes from experience in this space.

This wisdom comes from experience; some transactions haven’t quite worked out the way the investors thought, for reasons both predictable and not (OneCall, York, Bunchcare, MSC’s pharmacy business).  A few have worked out really well, but not because the core business idea and execution thereof was brilliant but rather because the owner found some other investment firm to buy the asset (OneCall Imaging, initial York transaction).

This is a good thing.

A few years ago pretty much any company in the work comp space was a hot commodity, which is why we ended up with some deals that weren’t “deals” at all. Today, buyers are a whole lot wiser, ask way better questions, dig way deeper into stuff that matters, and perhaps most significantly, spend a lot of time getting to know management. 

So, where are the opportunities these days?

  • Telemedicine. This is going to be a major disrupter, impacting case management, rehab, physician visits, and more things we haven’t thought of yet. Collateral impacts will include:
    • systems connectivity (sending, sorting, and indexing video),
    • regulatory catch-up (some states are a long way from being ready, others are the wild west, and most are trying to predict the future)
    • stakeholder roles – changing who provides what services when to which claimants
  • Outsourced claims. TPAs are going to do well.
  • Agile, service focused companies – Companies, many run by folks who sold their businesses a few years back, are focusing on traditional niche business sectors. These will be smaller transactions, but valuations will be solid.

What’s going to hold things up?

Owner expectations. Many of the owners I talk with have unrealistic expectations – they think their businesses are worth more than buyers will pay. That’s understandable; it’s also why we may see a hiatus as those expectations aren’t met, and sellers slowly acclimate to the idea that a 14x trailing earnings valuation isn’t going to happen for their company (which has decent but not great growth).

What does this mean for you?

Build your business around customer service, differentiate your brand, and you’ll do well.

MedRisk and Carlyle

Focus, customer service, and execution are the three reasons MedRisk has thrived over the last several years.

That’s what Carlyle bought into when they invested in the company in a transaction that will be announced today. This comes less than two years after TA Associates bought a minority stake in the company, one of the quickest “flips” in the workers’ comp services industry.

Disclosure – MedRisk is an HSA consulting client.

I could not be happier for Founder and Chair Shelley Boyce, CEO Mike Ryan, EVP Marketing Rommy Blum, COO Michelle Buckman, CFO Tom Weir, and CIO Vic Pytleski – the rest of the professionals at MedRisk – and the customers MedRisk serves. Great people built this company by focusing relentlessly on execution, sticking to the business they now dominate, and doing business the right way.

And they will continue doing exactly that.

MedRisk continues to innovate, building the industry’s first telerehab program (which is up and running under Mary O’Donoghue’s leadership). A home-built IT platform specific to the industry is making adjuster’s days easier, communications smoother, and patient scheduling a matter of a few hours.

Management is staying. An oft-heard mantra in private equity is “you’re investing in the management team”, and nowhere is this more true than in this transaction. You will see the same people doing the same great work for years to come.

There is one major change; now that MedRisk is in the Carlyle portfolio, the company’s access to capital is greatly expanded. How and where that capital might be deployed is to be seen.

What is crystal clear is this: MedRisk will be a buyer, not a seller.



How’d I do on my 2017 workers’ comp predictions?

Every year I dance the danger line, coming up with predictions for the upcoming year. And every year I hold myself accountable, reporting to you, loyal reader, exactly how those predictions worked out.

Clearly not a self-portrait; I could never grow that facial hair…

So here’s this year’s results…

(predictions are here)

  1. Premiums will rise as employment and wages continue to grow.
    It’s a yesRates continue to decline, but hourly wages have been ticking up for over a year now, and employment has been trending up for over 60 months. So, the combination has overcome the drop in rates. For now…
  2. Medical costs will remain flat or close to it.
    Not according to NCCI – at least not for last year in NCCI states. Medical costs increased 5 percent last year. California is not an NCCI state; trend was up 6 points last year. So, got that one wrong.
  3. Frequency will continue to decline.
    Because it always does. On average, by 3.6 percent a year.
    That means there will be about 10 percent fewer claims in three years, 20% fewer in six.
  4. Insurers will double down on efforts to reduce administrative expenses.
    Frequency’s down, investment returns are dropping, and medical costs pretty much under control; premium rates are headed lower as well. So, insurers have continued their efforts to slash admin costs by outsourcing more claims to TPAs (contacts in the TPA business indicate that’s their biggest source of growth).
  5. More payers will move their claims adjusters to home offices.
    No news on this – so I’ll count this as a no.  If you know of moves, let me know.
  6. Winners will focus on execution.
    . MedRisk [HSA consulting client] has taken the top spot in physical medicine management from competitor OneCall by out-executing OC. PBMs that deliver seamless customer service, lower drug costs and reduced opioid spend are winning; myMatrixx is perhaps the best example. Kaiser Permanente on the Job is another example; K-PoJ is delivering better results for patients and employers by doing what KP does so well – focusing on what patients need, not what creates billing opportunities. And BWC Ohio has made amazing progress in reducing unnecessary opioid use – by developing and implementing a comprehensive, careful approach.
  7. Telemedicine is coming fast
    Yes indeed.  Coventry, MedRisk (HSA consulting client), CHC Telehealth (Mitchell has helped fund CHC), Kura, and other entrants were all over the NWCDC. MedRisk’s telerehab program is up and running, and case management firms are moving quickly.
    Unlike other “innovations”, tele-services is going to change everything.
    8.  Mitchell will continue to add work comp services businesses via acquisition.
    Yes –
    Unimed and PMOA are additions this year, adding breadth to both the UR and PBM businesses. I’d expect more in the future – although there are fewer businesses to buy that fit well with the company’s strategy.
    9. Drug cost decreases will flatten out somewhat, while reductions in opioid spend will continue to increase.
    Well, I got this one partially – but pretty badly – wrong. Costs dropped by double digits, led by a 13.6 percent decline in opioids.  And I’m supposed to know a lot about this business…sheesh.
    10. More value-based payment pilots will hit work comp.
    That’s a really easy prediction, so I’ll quantify it – there will be more than five new pilots or program seeking to deliver care via bundled payments or similar mechanisms that will start in 2017.
    Well, except for K-PoJ I can’t find any evidence that this happened – and in fact in a post a few months after my 2017 predictions, I backtracked bigtime on this prediction. Any new news on this is welcomed.
    11. Bonus pick – more consolidation in case management
    As frequency and severity continue to slide, field case management businesses are going to have to find new revenues from new services they can offer to current clients/cases and get more revenue from current cases.
    Argh…haven’t seen much evidence of this – perhaps because there’s already been a lot of consolidation.

The net – I got 4.5 wrong out of 11.  Ouch.

I’m hoping to do a LOT better with next year’s prognostications.