How an investment firm can own a physician dispensing company and a work comp program administrator.
Not if you are one of NSM’s insurance companies or insureds.
ABRY – which now controls NSM, also owns Automated Healthcare Solutions, the physician dispensing “technology” company that makes big dollars by sucking dollars out of work comp carriers, employers, and taxpayers.
So, if you’re ABRY, what’s going thru your corporate mind? You know – better than perhaps anyone in the country – how lucrative the doc dispensing business is (that may be a key reason ABRY has held on to AHCS for 6 years, way longer than most investors hold on to companies).
And you know the dollars are coming (mostly) from workers’ comp – which means insurers, employers, taxpayers. And you know that all credible research indicates physician dispensing increases medical and indemnity costs – plus the higher cost per pill inherent in the doc dispensing model.
Now you own a controlling interest in a company that – and this is important – administers worker’s comp programs but does not insure those programs.
So help me understand why this is not inherently a conflict of interest. As an owner, ABRY makes money when AHCS makes money from workers’ comp payors, but does not lose money when a company it owns pays AHCS’ bills.
I reached out to ABRY’s Brent Stone and NSM CEO Geof Mckernan early this morning in an effort to get their perspectives. Here’s what I asked Mr Mckernan:
Given that NSM’s insureds and carriers expect NSM to effectively manage their workers’ compensation programs, how does that square with the business model of AHCS, which is based on generating the highest possible fees for physician dispensed drugs?
There is a conflict of interest inherent in owning a company that manages workers’ comp claims and one that profits by generating the highest possible revenues from workers’ comp claims. How will this be addressed by NSM?
- How will NSM work to mitigate the additional costs including extended disability duration and medical expenses inherent in physician dispensing?
- Will ABRY keep AHCS and NSM entirely separate from an investment management perspective?
- When conflicts arise between AHCS seeking reimbursement and NSM’s claims function (both internal and via YorkRSG), how will those conflicts be addressed?
- Given the well-documented problems inherent in physician dispensing, how will NSM assure it’s carriers and insureds it is taking all possible steps to mitigate those risks?
I’ll keep you posted if I hear anything…
and thanks to WorkCompCentral for the tip!