Insight, analysis & opinion from Joe Paduda


Good news Friday…

Well, in an effort to counter the stupidity that has infected some in Washington, I’ll do my best to find glimmers of good news to start your weekend.


Ukraine is making solid if not spectacular progress in its offensive…and the news that we are sending very capable missiles may help our allies speed things up. The missiles – known as ATACMS – are very elusive and pack a big punch. These are NOT the long range ATACMS…at least not yet.

Grain, shipping, and avoiding world hunger

Resilient Africa headed south to deliver grain

Most notably, Ukraine has figured out how to win the war at sea – without having any ships. This has enabled Ukraine to ship grain to Africa and other places , a huge help for people at high risk of starvation. Seven ships have passed through Ukraine’s “grain corridor” despite Russian threats to sink any and all ships.

Aging…or not.

Big medicine is spending gazillions on research to help us live longer. While that’s kind of a good thing, reality is most of what kills (excluding firearms, traffic accidents, and drugs) us is due to:

  • not enough exercise
  • not enough sleep
  • too much food
  • too much alcohol

So, the “good news” is if you commit to exercising (cardio and strength), sleep, a healthy diet and one drink per day, you won’t need to buy whatever Big Medicine is selling.

And you can use those dollars to buy books, go to concerts, visit your grandkids, and donate to worthy charities!

Lastly, Crime.

News from the FBI that its efforts to combat violent crime is yielding dividends.  From the FBI…The FBI, alongside its state and local law enforcement partners, executed over 4,000 arrests, over 2,500 drug seizures, over 1,600 weapons seized, and the dismantlement of over 50 violent organizations.

remember that when some knucklehead politician says he’s going to eliminate the FBI..

(note three family members worked for the FBI (two were special agents), one died in the line of service, so, yeah, I’m “biased”)




Medical debt is crushing Americans

One out of three adults has medical debt. 

For many, this has a major impact on daily life…

Medical debt can be a huge obstacle, preventing families from buying a home, purchasing or leasing a vehicle, even paying for college for their kids.

That’s because credit bureaus include medical debt in their scoring algorithms. 

Looks like that will be changing…

From the Vice President:

The Consumer Financial Protection Bureau will propose a new rule to make clear that medical debt cannot impact the credit scores of the American people.  Once this rule is final, it will mean, one, that

consumer credit reports will not include medical debt and, two, that

creditors will not be able to use medical debt to determine a person’s eligibility for credit. 

Almost 2/3rds of those with medical debt had insurance when they began treatment...a quarter of those had their claims denied.

What does this mean for you?

Help is on the way.


A gubmint shutdown and you

Joni Mitchell’s Big Yellow Taxi provides today’s lede…and for good reason. The handful of elected House members on the verge of shutting down the entire government claim no one will notice when the Feds are furloughed.


Here’s a very brief list…

  • Most inspections of hazardous waste sites and drinking water and chemical facilities would stop.

  • CMS will furlough non-essential workers, potentially delaying MSA processing

  • OSHA will shut down all but critical operations
  • FEMA has begun rationing its money, pausing about $1.5 billion in longer-term recovery projects to ensure it has enough cash on hand in the event of a major, deadly crisis

  • Workplace safety inspections would be reduced or, if the shutdown persists, potentially stop

  • New applications for Social Security will be delayed, affecting some claim settlement negotiations
  • In past shutdowns the E-Verify system (for employers to verify work status/eligibility) wasn’t operating, likely limiting new hiring
  • Major infrastructure projects would stop
  • The Community Health Center Fund (CHFC), which sends federal funding to health centers – could be halted, among others…patients would have to seek care elsewhere, further increasing the burden on hospitals.
  • Enrollment in clinical trials would be delayed or postponed
  • Grants for new clinical research would halt
  • Funding for Federal courts runs out October 13 (although some may be able to continue operating)
  • 10,000 kids would lose access to HeadStart  – and thousands of others would also lose daycare, impacting parents’ ability to work.

sources here, here, and here.

What does this mean for you?

After you’ve burned the place down, where will you live?


Leaving Las Vegas

Quick takeaways from National Work Comp…

Don’t know what total attendance was, but seemed somewhat less than in pre-COVID years. Exhibit hall corridors were pretty empty despite sessions located around the exhibits.

Newest thing du jour – AI...sessions on AI, vendors promoting various applications, attendees mentioning AI in conversations about claims, data interpretation, claim intake, you name it.

Nurse triage – just…stop. Far too many are touting nurse triage – almost all without a clue as to what exactly this is, why they want to do it, what a “nurse” is, and how this will improve things. More on this in a future post, but for now:

  • define nurse – do you need an RN? APRN? LPN? nursing assistant?
  • what expertise/training/experience does this “nurse” need? orthopedics? emergency medicine? trauma? behavioral health?
  • okay, so a new RN is on the phone with a person…exactly what value does this add? Be specific.
  • more to come.

Events – by all reports myMatrixx’ get together was really well attended...I didn’t get to any others as they were past my east-coast bedtime. I do miss the myMatrixx transportation services from years past :( (mM is a consulting client)

There was a beach party outside my window that prevented a lot of us form getting to sleep before 11. Mandalay Bay staff was far less than helpful, told me this was on me as I should have checked the event calendar before booking my room (WTF!) and offered to send housekeeping up with a couple earplugs…I will NEVER stay there again.

Optum’s dog party was a big hit – great idea, really smart marketing, and good buzz generator.

Provocative session addressed anxiety, suicide and depression – more on that later. Sobering and much needed. Really respect the speakers for sharing their views and personal experiences. Yvonne Guibert – you are an inspiration.  

Booth staff – STOP pitching your stuff. JUST STOP. Until you have a decent sense for what the person in front of you needs, wants, is challenged by, don’t say anything other than a one-sentence line about the service/product your company delivers. 

have an excellent weekend.


Vegas starts…

The annual gathering of the work comp tribes begins today – I’m reprising a post from a couple years ago on lessons I’ve learned…

1.  Realize you can’t be everywhere and do everything. Prioritize.

2.  Leave time for last-minute meetings and the inevitable chance encounters with old friends and colleagues.

3.  Unless you have a photographic memory, use your smartphone to take voice notes from each meeting – right after you’re done – or write down key points immediately.  Otherwise they’ll all run together and you’ll never remember what you committed to.

4.  Introduce yourself to a dozen people you’ve never met.  This business is all about relationships and networking, and no better place to do that than this conference.

5.  Wear comfortable shoes, get your exercise in, and be professional and polished.  It’s a long three days, and you’re always ‘on’.

Finally, in these day of YouTube, phone cameras, Twitter, Instachat and SnapGram, what you do is public knowledge.  That slick dance move or intense conversation with a private equity exec just might re-appear – to your dismay.

And beware the white man’s overbite!!!


Yelling into the void

I attended a New England Journal of Medicine webinar on value-based care yesterday…net is I heard a lot about “patient centric” care, “patient experience” and quality but precious little about functionality and patient-specific or patient-desired “outcomes.”

Except for a few tangential mentions by the Optum Medical Director, what patients actually want was not addressed at all.

This is a big miss.

Like so many other failing industries, healthcare is completely missing the point – which is delivering what the consumer wants. “Patient experience” is mostly was the office clean, the nurse nice, the floor quiet.

We are ignoring this at our peril…we are not asking what patients actually want from healthcare; NOT the processes and functions noted by one of the panelists but how patients define “healthy”, what they want to be able to do, what functionality is important to them, how they want to live their lives.

Healthcare is provider and process centric;  the entire industry has failed to address what consumers and employers want from healthcare.

Here’s hoping that healthcare figures this out faster than Detroit did.

What does this mean for you?

Healthplans and healthcare providers that figure this out will kick butt.



Medical inflation in work comp…

Isn’t a problem. In most states. Today.

That is the headline takeaway from WCRI’s presentation last week…

First a few key factors.

  • Drug spend is a much lower percentage of total medical today than it was a decade ago. I’m quite confident total drug spend in WC today is 40% lower than it was 15 years ago.
    • That equals a reduction of about $2 billion.
  • Facility costs continue to be the main driver of what inflation there is. Inpatient (IP) and outpatient (OP) hospital inflation averaged 2.5% annually from 2012 to 2022;
  • Facilities account for 53% of total medical spend – 26% of which is OP; 9% is ASCs (Ambulatory Surgical Centers)

The details…

the best way to think about medical spend is per claim…this accounts for changes in claim volume (which is driven by injury rate and total employment).

Leaving out COVID’s impact (see end note for details) medical costs have barely budged for more than a decade…up a paltry 2 percent per year. 

However…Facility costs are a big problem for all payers…exacerbated by massive consolidation in health systems which allows them to charge “facility fees” for services rendered in physicians offices and clinics. (what a scam…)

Work comp specifically…

National averages don’t mean much if you operate in states like Florida or Wisconsin, where poor controls on workers comp medical billing enable providers to hoover dollars out of employers’ and taxpayers’ pocket.

Of note, drug costs would likely be several hundred million dollars lower if it weren’t for the profiteers enabling physician dispensing.

What does this mean for you?

All costs are local…which means all cost management approaches must be as well.

COVID…medical costs for claims during COVID were down 10% – decreases in utilization and price drove this with utilization the main driver. Not surprising…during COVID no one wanted to go to any healthcare facility for anything not essential.

This was totally predictable...


Good news Friday…Build America, Buy America

You may not have heard of the Build America, Buy America Act…here’s why it is good news indeed for US manufacturing and construction – and employment.

BABA lays out requirements for US content in federally funded infrastructure projects, requirements that specify how much Made in the USA content is needed to qualify for Federal funding.  

BABA impacts at a minimum,

  • the structures, facilities, and equipment for roads, highways, and bridges;
  • public transportation;
  • dams, ports, harbors, and other maritime facilities;
  • intercity passenger and freight railroads;
  • freight and intermodal facilities; airports;
  • water systems, including drinking water and wastewater systems;
  • electrical transmission facilities and systems;
  • utilities;
  • broadband infrastructure; and buildings and real property; and
  • structures, facilities, and equipment that generate, transport, and distribute energy including EV charging.

All iron and steel must be produced in the US…all manufactured products must have at least 55% minimum Made in the USA content, all construction materials must be “produced in the US” AND manufacturing processes must take place within the US.

per capita funding

Building trades welcomed the new guidance, with Nevada, West Virginia, Mississippi,  Louisiana, Wyoming and Tennessee among the states that will benefit  from new hiring and vastly improved: 

  • roads,
  • bridges, 
  • wildfire protection, 
  • electricity transmission, and
  • broadband.

Check out your state’s funding here.

What does this mean for you?

Better roads, schools, broadband; more good jobs; and more workers’ comp premiums and claims. 


Mergers, acquisitions, and reasons therefore

M&A activity in the world of workers’ comp services has been somewhat quiet of late, although there’s been some under-the-radar activity that – taken together – shows consolidation continues.

That’s no surprise…workers’ comp is a classic mature industry with all the attributes thereof. Scale is key, margins are tight, cost-cutting is constant, and funds for innovation scarce.

Here’s a quick roundup of recent activity from various sources…

Sedgwick is rumored to be doing a re-capitalization, another word for current investors cashing out a chunk of their equity. In my view TPAs are one of the very   few workers’ comp service sectors that have growth opportunity, so terms may be favorable. However, interest rates are still a drag (recaps almost always involve taking on a lot of debt) and of late private equity (PE) investors seem really hesitant to close on deals.

Of note, WC is just one of the insurance lines handled by the giant TPA – those other lines are in rough shape (more on that in a future post). I don’t know whether P&C carriers will be more or less interested in outsourcing work to TPAs for non-WC lines, but those calculations will undoubtedly weigh on potential investors’ enthusiasm for a Sedgwick transaction.

Ametros inhabits another sector that could be quite promising – handling funds from claims settlements. One of the extremely few companies that really gets marketing (which is NOT sales support or writing proposals), Ametros is rumored to be in the final stages of a sale/recap. While I like the company and the sector, reality is major growth is really dependent on what CMS does – or doesn’t do – re Medicare Set-Asides. CMS’ continued lack of a coherent, consistent, and clear policy on if/when MSAs are required for what lines of insurance is nonsensical, frustrating, and a disservice to we taxpayers.

Enlyte/Mitchell/Genex just completed the acquisition of Therapy Direct, a rather small PT management firm. Expect TD to be fully absorbed into Enlyte subsidiary Apricus with most functions assumed by Apricus’ current staff. Unfortunately, that’s just the way these things work; Enlyte gets a few more millions of revenue and reduces costs by cutting expenses. Classic mature industry growth…buying revenue to grow top-line. 

Lastly, any potential transactions for One Call are likely on hold pending resolution or conclusion of various legal issues involving current investors; word is some are suing others.

There are a couple others in various stages…will wait and see if things progress or not.

What does this mean for you?

In a highly mature industry, it’s

Scale. Efficiency. Differentiation. Service. 




Scary stuff…COVID death details

A just-released study found striking differences in death rates from COVID based on political party affiliation.

The study reviewed “538,159 deaths in individuals aged 25 years and up in Florida and Ohio between March 2020 and December 2021…”

more from JAMA

“Between March 2020 and December 2021, excess death rates were 2.8 percentage points (15%) higher for Republican voters compared with Democratic voters…(Table)….political party affiliation became a substantial factor only after COVID-19 vaccines were available to all adults in the US.”

After April 1, 2021, when all adults were eligible for vaccines in Florida and Ohio, this gap widened…with excess deaths among Republican voters 43% higher than among Democratic voters.

(you can get a higher resolution view here)

What does this mean for you?

Take a step back and consider how it came to this. 


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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