Most times I’m right, sometimes I’m not – at least that’s what I want to believe.
I’ll let you be the judge – here’s how I did on my predictions for 2018.
A lifetime ago here’s what I said would happen in 2018.
BTW I’m writing this from an airport – jeez I can’t stand Christmas Muzak. Ugh…
- M&A – specifically big deals – will increase.
I expect we’ll see more very large transactions this year, mostly driven by strategic purchases of other companies. Work comp is a very mature industry, scale and size matter a lot, and that means getting bigger is key. Expect to see several billion-dollar plus deals in the service sector.
Verdict – correct – The big ones – Paradigm, Genex, Sedgwick plus Adva-Net, MCN, and Ascential Care make this a yes.
- The (work comp insurance) market will stay soft.
Claims frequency continues to decline, medical costs are pretty much under control, margins are healthy, and there’s still a lot of allocatable capital in the industry. Unless there’s some major – as in huge – crisis I don’t expect a hardening of the work comp insurance market.
Verdict – correct. Prices have been coming down along with rates. WC is a bit of anomaly, as other P&C lines have seen slight price bumps.
- Cost containment’s focus will shift to facilities and hospitals.
Hospitals are increasingly vulnerable due to consolidation among payers, reductions in governmental program funding (thank you Trump Tax Bill), changes to Medicare reimbursement, and the systemic shift of care to lower-cost settings. Facilities have already – and will continue to – look for revenues from payers less able to reduce reimbursement. That’s us, kids. Expect to see payers more closely analyzing facility costs, looking for solutions, and implementing programs focused on the issue.
Verdict – not really. Payers aren’t paying near enough attention to hospital and facility costs. Yes there are some good efforts in place… That said, the deterioration of WC PPO discounts along with what can only be described as complacency on the part of many payers makes this the fastest growing – and least controlled – part of the claims dollar.
Time to get off the couch folks.
- TPA growth will accelerate.
Driven primarily by work comp insurers’ outsourcing. With a soft market, there’s little incentive for employers to self-insure, but the long-term decline in claims frequency is driving down insurer claim counts. Some insurers are making the strategic decision to shift claims to reduce fixed costs and capital investment requirements. Expect the big four TPAs to add significant new business from insurance companies and similar entities.
Verdict – correct. I’m hearing insurer share of TPA business is up to about 15% for most, and growing. That growth will continue (see predictions for next year).
- Tele-everything will take off
Tele-triage, -medicine, -rehab, etc is going to grow quickly. Expect lots of activity from companies big and small; Concentra, MedRisk (HSA client), CHC Telehealth, Coventry, Work Comp Trust of CT and others are pushing this care delivery model hard – as they should. Expect thousands of “visits” will logged by the end of 2018.Verdict – correct, with a minor disclaimer. Growth has not been as rapid as many thought – but it is still pretty significant. More and more announcements are coming pretty much every week, and I’m hearing some of the bigger entities out there are finally getting significant traction in rehab, triage, and primary care for low-acuity conditions.
Later this week – the second 5.