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Watch out for “innovation”

In any very mature industry – and workers’ comp is certainly that, certain truths are immutable. Scale, margin compression, consolidation are all inevitable – or at least two out of three are.

Innovation – mostly “small i” innovation – can and will help smaller entities compete with goliaths, and large companies maintain and even grow margins.

The innovations I’m speaking of are the tweaks, efficiencies, streamlined processes and smoother customer interactions that make vendors easier to work with. Front-line customers benefit from these small innovations, sometimes almost without noticing them.

  • What used to take two phone calls now is done automatically.
  • Medical services are scheduled, visits conducted, and progress reports prepared and delivered with no action by front-line customers needed
  • Bills that had to be reviewed line-by-line are now auto-qdjudicated, with only those lines or bills that qualify via a rules engine hitting the front-line person’s queue.
  • Medical services are automatically authorized, with relevant guideline language attached.
  • Medical service reports are auto-uploaded to the claim file, with only those issues needing attention highlighted for review.

What’s easy to lose track of is the purpose of automation and innovation. The primary purpose is NOT to make the vendor more efficient and reduce vendor costs; it should be to deliver better service to the end user, be they provider, patient, front-line customer.

Therein lies the trap. In a mad dash to strip out cost and improve “efficiency”, many service companiess don’t pay near enough attention – if they pay any attention at all – to how those changes affect the end-user.

For a while, those “improvements” will reduce costs and add to profits. Then, as front-line users suffer in voice-mail hell, or can’t find anyone to answer their questions, or have to ask for another password to enter a “portal” for the umpteenth time, revenues will start to decrease.

Instead, focus your innovation efforts on those that will make your end users happier, less stressed, and less busy.

Take work off their desk/workstand and put it on yours.

That’s innovation that delivers long-term results.




13 thoughts on “Watch out for “innovation””

  1. Joe – I typically try to get team members to think about innovation in three different categories. Optimization (mostly what you are describing above), Differentiation (things that make your offering unique compared to competitors), and Mittigation (things you do to close the gap when a competitor has a differentiator.). I agree that the lion share of innovation in our industry is focused on optimization. In the absence of any company truly differentiatiing itself there has not been a drive to invest in innovation in the other categories. The biggest risk to the longtime leaders in Workers Comp will come when an entity with enough market share has a valuable differentiator. This will happen with by a disruptive start-up getting traction (very hard to do in commercial insurance) or by one of the bigger players actually changing their game. You are 100% correct that the focus on optimization is a short term gain but eventually opens the door wider to someone focusing on a new value proposition. I applaud your efforts to keep this conversation going!

  2. Joe you hit the nail on the head here. The problems I have seen is that the smaller companies who have the vision and concepts lack the resources (mainly financial) to truly invest in bringing that innovation to life. Then on the opposite end of the spectrum, the goliath corps with the resources lack the vision or willingness to see the future and are too concerned with today’s bottom line to see tomorrow’s increased profit and client satisfaction by investing in themselves. There have been a few organizations in our industry on both sides vendor and carrier that I have seen successfully invest in developing their technology effectively to be on the forefront. They do what you suggest here, listen to their customers needs and build to make BOTH their process and their clients interaction more effective and efficient. We need more of this!!

  3. Joe – Thanks for today\’s post. Your expert commentaries on developments across the WC space always are insightful and valuable. Regarding innovative efficiencies and streamlined processes, among others are secure automated exchange of medical attachments, electronic physician and hospital billing, and tiered digital options for provider payments. It\’s good to see e-billing making steady progress driven by state regulations and competitive factors; however, it\’s somewhat baffling many comp payers small and large aren\’t yet embracing these other digital strategies, both of which dramatically expedite workflow. Although regulatory focus is lagging, end user digital interaction improvements like these seem so obvious. Thanks again, and keep on enlightening!

  4. Joe, thanks for bringing the issue of innovation in work comp up for discussion. I agree with your “purpose” of innovation. I disagree with your “small i” comment which seems to imply that there will be no “big I” Innovations in work comp.

    1. Dick
      I don’t know why you would make that assumption. In any event it is erroneous.

  5. Joe, here are examples of what I think is “big I” Innovation. What do you and your readers think?

    —Innovation that helps to select a “BETTER” MEDICAL PROVIDER than is currently selected for each injured worker. Better is when the selection is based on the injury itself and the expertise of the provider in diagnosing or treating that specific injury, as well as on patient satisfaction reviews of the provider – and not based on a vendor’s hidden margin or spread.

    —Innovation that speeds up medical appointments, CUTTING MANY DAYS out of the return-to-work period.

    —Innovation that provides REAL-TIME EXAM STATUS information to all your “end users,” saving them significant time and hassles.

    —Innovation that provides MEDICAL PRICE TRANSPARENCY to everyone in work comp, enabling intelligent healthcare purchasing for the diagnosis and treatment of injured workers.

    —Innovation that engages every injured employee with SMARTPHONE notifications and follow-up.

    —And probably the most important innovation of all: When medical network vendors OPENLY DISCLOSE with their clients how much of their income comes from sources outside their typical fees and charges.

    I believe that the “goliaths” are fearful of “big I” Innovation because it might reduce their profits (so they downplay it as “small i.”), but it is coming very soon, bringing better, faster, closer medical care to injured workers, with full transparency never seen before in work comp. The large network vendors will experience the “innovator’s dilemma”, just like in other industries. Providers, employees, employers and some payers will soon benefit greatly from the “big I.”

      1. Joe,
        It seems that you are modifying or deleting comments your readers are writing. That is unfortunate and if true, I will soon post on multiple other work comp sites all my comments and note which ones you had deleted from your site, plus I will invite others to do the same. Let’s let others decide why you might be doing this???

        1. Dick – Well, that’s one of the more…interesting threats I’ve received. Have at it!

    1. Dick – If you can’t figure out how to post a comment, that’s on you. I have not published many comments from many people – including you – promoting their services; As I’ve said here repeatedly, promotional comments are not allowed. Moreover, I am not interested in responding to your various and sundry requests for data, information, business model details etc.

      What you don’t seem to understand is MCM is not a forum for you to promote your flawed business model or use your superficial and fundamentally flawed understanding of how the real world works to question others. That’s not why I’ve put thousands of hours and dollars into MCM and 4500+ readers subscribe.

      For some reason you seem to want to antagonize and self-promote. Do it elsewhere.

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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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