One of the more intriguing findings from our third Survey of Bill Review in Work Comp and Auto pertains to data analytics.
Multiple questions probed into respondents’ utilization of data analytics. The questions ranged from the state of their data management program through the relationship between the future of BR and data analytics. In our 2012 Survey, numerous respondents stressed the importance of data analytics, data quality, data management, etc. But despite that emphasis six years ago, respondents seemed to have made little progress employing data analytics packages and integrating data analytics into BR and vice versa.
From the Survey Report (to be released in early December):
A surprisingly low number of organizations have invested significant resources into data analytics. Only a handful of respondents report that their organization has acquired, sorted, and leveraged data sufficiently enough to begin building predictive modeling or provider profiles.
That’s not to say payers haven’t built data warehouses or aren’t developing analytics capabilities. In fact, “Every large and medium sized respondent said their organization aggregated and transferred bill review data to a data warehouse for analysis.” Rather, most are still in that data modeling development and construction phase; using that data to build models, profiles, and gain deeper understanding is still a ways off.
More narrowly, half of respondents who process their own bills internally tied a data analytics package to their BR product (a more limited approach than combining BR data with data from other sources such as pharmacy, claims, medical management, first notice, and external data sources) while only 6% of those who outsource bill processing used a data package with their BR.
This dichotomy isn’t surprising as external users are generally much smaller organizations.
To get even more specific, fewer than 20% of respondents mentioned building predictive models and in most cases respondents said data was compartmentalized and only used for particular departments such as finance.
We asked what was the greatest unmet opportunity in bill review; Only 10% of respondents specifically noted the importance of data analytics going forward. And, just 20% of respondents said that a higher level of data analytics would be the future of BR.
Considering the value added that accurate data analytics can provide on virtually all BR functions – not to mention the entire claims function, loss ratios, and financial results – and that a vast majority of respondents are not fully linking BR and data analytics, these results indicate significant opportunity.
Thanks to the 30 professionals who participated in the Survey, we have a clear picture of where the industry is today, and what they are looking for from vendors/partners tomorrow.
The respondents hail from all around the country, from insurers, state funds, TPAs, and large employers. Very large to very small, from national in scope to a single-state focus, these experts gave freely of their time and expertise and for that we are grateful indeed.
What does this mean for you?
The opportunity is clear.
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These findings of relatively low penetration of data analytics in bill review ar consistent with the findings of the Workers Compensation Benchmarking Study, which over five years has heard from over 1,500 claims professionals. A similar low penetration rate exists with date warehousing.
Good post and I look forward to the complete report. I think the consolidation within the industry has changed the focus from investing in the technologies that can provide a better product, to a focus on the economics and margins.
Thanks for the note Skip – I agree there’s been a stronger focus on the P&L implications. My take is this is great for the short term but misses the strategic import of turning data into actionable information.
that said, as work comp is nowhere on any CFO’s list of pain points these days, we’re probably stuck here until the next “crisis”.
Joe – I’m curious as to whether or not you received any info pertaining to liability indemnification on the part of bill review companies back to the carriers/claims processors. Will there be any appetite for the marketplace to demand innovation in analytics management without risk? In short, what market forces do you see pushing bill review companies to invest in these types of needed improvements instead of just assuming more risk and fighting over accuracy of output? – Thanks for a great daily read!
Hello Benjamin – thanks for the question and kind words.
If I understand your question, I don’t see this as a risky endeavor. There isn’t much in the way of liability exposure for bill review firms – or others involved in analytics as long as they stick to that and don’t adopt a business model along the lines of “the data says this, you should do that, and we’ll accept liability for any potential issues.”
The BR business is hyper-competitive, so perhaps one or more of the players will see the opportunity inherent in analytics and make the required investment.
A big part of any business is differentiation. As I noted in the first post on this, customer service seems to be the primary one. I’d suggest firms that do something more strategic will also benefit by separating themselves from their competitors.