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Work comp services: the wholesale sale and the retail sale

There’s a lot of confusion on the part of some execs new to the work comp space about what it takes to generate revenue from work comp payers. I’ll leave aside the obvious answers such as: build a great product or service; deliver great customer service; find an unmet need and meet it; build relationships and value them and the like.

No, this is about the wholesale sale vs the retail sale.

RFPs come out from TPAs and insurers requesting all manner of services, requiring all kinds of assurances and guarantees and specific service agreements, along with a price that would render many a vendor bankrupt (alert – slight exaggeration).  After all the proposal wordsmithing and presenting and negotiating and schmoozing and conceding and guaranteeing is done, the successful vendor thinks they are going to get all the ancillary/IME/network/case management/etc. business from MultiHuge InsCo (MHIC); accountants start projecting revenues and profits, sales reps commissions, and owners earnings multiples.

A year later, only a fraction of the dearly-won revenue has appeared, and the accountants, owners, sales reps are all bewildered.

They forgot about the retail sale.

Long-term work comp services people know that the big national contract is just a “license to hunt”, that the signature is just the start of the real heavy lifting.  This involves finding out how the REAL decision makers – the front-line folks – work, what they want and don’t want, like and don’t like, how they are evaluated, assessed, and bounced, what’s important to their bosses, how their IT systems and applications and security works and interfaces/doesn’t interface with the vendor’s systems/apps/security. Sure, every vendor thinks about this and works at it, but relatively few really work it.

There can also be conflict, obvious or not, between the execs at MHIC and what is important to them, and the field folks who deal with the actual work day in and day out.  The managed care folks likely get evaluated based on network penetration, some usually not-terribly-meaningful savings metric(s), perhaps a few outcomes, and the reduction in administrative fees or costs or ALAE.

The field folks have quite a few other priorities – claim opening, reserving, case closure rates, litigation, state compliance, communications standards, documentation, diary compliance; the list is big and gets bigger every day.

For services vendors to translate that national contract to actual revenue, account management, implementation, and IT staff have to thoroughly understand the IT, claims handling, and operating environment then, usually with little support from the payer, come up with a plan to make the adjuster/case manager’s job easier by using the vendor’s services.

That’s a very heavy lift.

What does this mean for you?

Success comes from taking work off the adjuster/case manager’s desk.  


3 thoughts on “Work comp services: the wholesale sale and the retail sale”

  1. Great post Joe. I’m always surprised how many people still don’t truly understand the adjusters world; whether that be vendors or even those that sit in the C suite.

  2. Well said, Joe. They really are the ultimate client for almost all of the managed care services provided to the market place and they play a far greater role in the overall decision-making regarding the vendors used than most people realize. If you can’t please the front-line folks, you’ll be fighting an uphill battle the entire time.

  3. Completely agree with this post. No matter what ‘solution’ a vendor may have, if it creates more grief for the adjuster it won’t last long or it may be resented. ‘Can’t help but think of the TV show “Undercover Boss” when it comes to C-suite executives who could benefit from experiencing the ways that vendors impact the claims management process. That would be a very courageous and impressive thing to do…

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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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