Insight, analysis & opinion from Joe Paduda


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.


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.


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.


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.


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!


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.


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!


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.


Things to not do if you sell workers’ comp services

If you’re in the workers’ comp space, there are several things you should avoid at all costs.

  1. Do not talk about your service as innovative or cutting edge. Insurance people in general and work comp people in specific avoid innovation like the plague. Innovation is scary, risky, uncertain, and potentially career-damaging. While it might help improve results somewhere, it might also cause friction, upset employees, add stress and surprise folks.
    None of this is good.
  2. Do not focus on what’s good for the entire company.
    Counter-intuitive, right? Well, not at all. Organizations don’t make decisions. People make decisions. And – intros industry – those people mostly make decisions based on what makes them look good, more important, more successful – which may – or often may not – make the organization more successful.
    Example – buying healthcare based on how much of a discount you get off over-priced and often-unneeded services.
  3. Talk about what works in other industries.
    As a hugely insular, parochial, and navel-gazing industry, workers’ comp is not interested in how other payers address healthcare costs, healthcare quality, pricing, reimbursement, or evaluation thereof. Nope, worker’s comp is different, special, unique, and in a world unto itself.
  4. Suggest you have something that is materially better than what they are doing today.
    Absolutely not – because if you do, that implies what the prospective customer is doing is inadequate, ineffective, unproductive  – or all of the above. Nope, most buyers would much rather not know that they can improve.

What does this mean for you?

So, is all this tongue in cheek? Heck no. After three decades in the business, I am quite sure these faux pas are much more likely to lose you prospects and customers than increase sales.


Facility costs and quality – are you operating in the dark?

Probably yes.

Facilities account for between a third and half of work comp medical spend – and that share is increasing as health systems and hospitals consolidate.

Reality is there’s major variation between hospitals  – some are stupid expensive, others quite reasonable; some have crappy quality, others excellent quality.


Here’s a good one for our colleagues in Louisiana…two hospitals less than 15 miles apart, with VERY different costs and similar quality ratings.

Note costs are for MSK conditions…pretty relevant to workers’ comp.

So, you can send your injured workers to a VERY expensive facility  – Tulane – that does a handful of complex surgeries OR…

To a MUCH less expensive facility – Ochsner – that does 14 times more surgeries (practice makes perfect…)

Let’s add a CMS quality metric...for our friends in the Sunshine State, you can send injured workers here…

solid quality, and very reasonable pricing…

or…here (just a few miles away)

to a facility with a bottom-of-the rating by CMS and costs more than double its higher-quality neighbor.

These data are available from a few states and CMS (takes some digging); HSA also has developed a national tool enabling instant facility comparison across multiple quality, patient safety, and cost metrics – drop a comment below if you want info.

What does this mean for you?

Do you want to spend $98,000 at a  facility that does few procedures, or a quarter of that at a facility that does hundreds?




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.


Signs of the coming apocalypse

Medicare is slashing what it pays physicians, an annual event that – till now – was almost always rejected by Congress.

That will reduce old folks’ access to care, cut workers’ comp fee schedules, and likely lead to more provider consolidation. 

This from Becker’s:

In its 2024 Physician Fee Schedule Final Rule released Nov. 2, CMS reduced overall physician pay by 1.25% and updated the Medicare conversion factor to $32.74, a 3.4% decrease from last year.

Nope, a fix wasn’t in any of the “continuing resolutions” Congress passed last year and earlier in January (“CRs” are a stop-gap, emergency funding step more often seen in desperately poor banana republics than in the “greatest nation in the world.)

As a result, docs’ pay will be cut about 3 1/2%…and they are none too happy about it. (Read this for details on potential implications)

Okay that’s bad, right?

Not as bad as what’s coming.

Reminder – if Congress doesn’t pass a budget – in exactly one month – all Federal agenciesincluding Medicare, the VA, Defense, the FAA… face budget cuts. Weapons procurement, care for veterans, agriculture inspections, airplane safety inspections (this isn’t a problem, right??) are just a few.

Remember way back (as in two years ago) when Congress’ wait-till-the-last-minute-to-get-stuff-done made us all nuts…if we knew then how dysfunctional the House would be now we’d have been quite happy for what we did have.

Yep, Republicans in the House of Representatives’ refused to even vote on an immigration reform bill – THE hot issue in Washington and around the country – a bill that gave them everything they wanted.

House GOP – Yay, we finally got the soccer ball!  Let’s play! Wait…how do you play? I dunno…you know?  Nope – you? Nuh-uh…you? No clue…you? Uh…I thought it had pointy ends…Someone pick it up…NO way dude! Not me…

What does this mean for you?
To quote HL Mencken, you get the government you deserve, and you deserve to get it good and hard.

PS – Over the lastly 20 years I’ve written a lot about the incredibly screwed-up Medicare reimbursement  process…


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.


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.



Since the Supreme Court overturned the right to abortion, almost 60,000 women had rape-caused pregnancies – and live in states where they cannot get an abortion.

From the American Medical Association’s research:

In the 14 states that implemented total abortion bans following the Dobbs decision, we estimated that 519 981 completed rapes were associated with 64 565 pregnancies during the 4 to 18 months that bans were in effect (Table 2). Of these, an estimated 5586 rape-related pregnancies (9%) occurred in states with rape exceptions, and 58 979 (91%) in states with no exception, with 26 313 (45%) in Texas.

Notably, even in states that allegedly allow exceptions for rape or incest – e.g. Idaho – the AMA found NO abortions have occurred.


60,000 girls, teens, and women who were raped will have live or dead babies.

The psychological damage will be devastating for them, their loved ones, and their babies.

Make no mistake, the burden will fall on the least fortunate of us...almost everyone subscribed to MCM has healthcare; you and your daughters/wives can travel to states that allow abortion.

The vast majority of victims live in states that have crappy Medicaid coverage, so many/most won’t have coverage for/access to pre-natal care, ob/gyn services, labor and delivery, and infant/pediatric health.

Not to mention mental health.

The shameless hypocrisy of the “protect life” crowd in these states is overwhelming... forcing rape victims to have babies and not providing the women or the babies with healthcare is just…unthinkable.

The cost – in terms of destroyed lives and unfunded/uncovered healthcare expenses – is immeasurable.

What does this mean for you?





Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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