Nov
28

Bill Review Survey – Takeaway #2

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.

Note – I’ve received several anonymous comments/emails lately.  I’d remind commenters that anonymous comments on MCM posts are ignored, as are comments with fictitious email addresses.

You know who I am. I and my readers need to know who you are.

 

 


Nov
27

Work comp services: Specialize or Generalize?

WorkCompWire’s Leaders’ Speak column features a two-parter from Jack Bailey of Bailey Southwell.  He has worked on a lot of transactions in our space and knows a lot about deal-making.

Bailey’s point about the growing importance of technology, and specifically the need for accreditation around cyber-security is dead on. His other thoughts on the importance of execution and customer service are as well.

I do have a different perspective on one of his statements.

From WorkCompWire:

Trend Away from Monoline Vendors to Integrated Service Offerings: While this isn’t necessarily a new concept in the industry, payers increasingly emphasize the benefits of having multiple service lines handled by a single vendor in their contract decisions. As an example, see the below quote from the recent quarterly earnings call of publicly-traded industry vendor:

…singularly focused vendors are quickly becoming obsolete while payers recognize a greater efficiency and effectiveness of integrated services.

Two points here.

First, outside of the quote – which I’ll get to in a minute – I don’t see any supporting evidence for this assertion. OneCall is the best example of a diversified service provider, and we all know how that experiment has worked out.

It hasn’t.

In contrast, single-focused vendors such as bill review firm Conduent, physical medicine management company MedRisk (HSA consulting client), DME/Home Health provider HomeCare Connect, and PBMs (most of which focus almost entirely on pharmacy) are doing well. Conduent and MedRisk are the largest providers in their business sectors, HomeCare Connect is growing rapidly, and PBMs myMatrixx (HSA consulting client) and Optum now dominate the work comp pharmacy business.

There are many reasons for this – which I’ve explored in past posts in mind-numbing detail – but the core issue is the same as in any other industry – doing one thing really, really well is hard enough. Doing several things really well is damn near impossible.

As Bailey noted, payers are demanding excellence in execution and customer service, demands that have (with rare exceptions) not been met by diversified service providers.

Point two.  The quote in Bailey’s piece comes from CorVel’s CEO. 

Of course Clemons would say that integrated services are the bee’s knees;  CorVel’s business model is predicated on getting as many dollars from its customers as possible.

Supporting evidence for my contention that single-focus companies are doing well, and are very attractive to investors is everywhere.

For example, SUNZ’ purchase of case management company Ascential Care and Mitchell’s acquisition of physician adviser/peer review/IME firm MCN. Both Ascential and MCN were founder-owned and had narrowly-focused businesses; they weren’t diversified.

Then there’s Paradigm’s acquisition of Adva-Net for about $110 million, a transaction completed in the last month or so. Adva-Net was also founder-owned (with some venture capital as well) and narrowly-focused; it brings a network of pain management providers and facilities to the table.

This follows Paradigm’s purchase of Foresight Medical last year. As I said last September, “Foresight’s niche is narrow but important – the company’s core business is negotiating prices for implantable surgical devices.”

Finally, in all my conversations with larger work comp payers, the vast majority of buyers want best-in-class services – because their customers expect and demand it. SVPs of Claims, VPs of Medical Management, Chief Medical Officers – I’ve never heard one say “I’ll take mediocre service levels and results because working with one vendor makes my life easier and is less burden on my department.”

Yes, there are exceptions, primarily for smaller payers who don’t have the staff or resources to handle multiple relationships. In that case, the “multi-offering supplier” approach makes sense, and this can be an attractive niche, with vendors building attractive businesses around wide service offerings.

What does this mean for you?

Market segmentation is key; understand what your buyers’ problem is, and solve it. Larger payers want best-in-class, and many smaller payers are looking for simplicity.

 

 


Nov
26

Bill Review Survey – Takeaway Number One

The three top takeaways from HSA’s 2018 Survey of Bill Review in Workers’ Compensation and Auto are:

  1. It’s all about customer service
  2. Analytics are lacking
  3. Medata leads the pack

We’ll dive into customer service today, and discuss the other takeaways later this week.

From the Survey’s Executive Summary:

The importance of customer service cannot be overstated. At a time when the BR industry and payer community are looking at e-billing advancements, connectivity, and predictive analytics to make BR faster and more efficient, customer service rose to the top of the list when discussing or scoring the most important aspects of BR.

Whether we were asking “are bill review vendors differentiated?”, “how important is customer service”, or how respondents ranked individual bill review vendors, customer service kept coming up. Whether respondents outsourced bill review or processed bills internally using a third-party application, whether their companies were large or small, operated in a single state or nation-wide, customer service and variations on that theme were pervasive.

For example, one may well think bill review is a commoditized business, where vendors compete on price and relationships. Fully 2/3rds of the 30 respondents believe bill review vendors are differentiated, primarily by responsiveness, customer service, and a sense of partnership.

Stepping back, this is not surprising.

In any commoditized market, the customer who believes they are being listened to, serviced promptly and competently, that their vendor/partner really cares about the relationship and is always looking to add value, will view that vendor as a partner – a key differentiator.

In non-commoditized businesses, buyers don’t care nearly as much about customer service. Think Apple; people stand in line for hours if not days to buy their latest tech because it can do all this innovative stuff, has a really great camera and screen, can store a gabillion photos…(and many of us love to show off our latest toys to jealous friends). And often that tech has bugs and costs a fortune and shatters when you drop it and battery life sucks and it is obsolete in months… (Disclosure – I’m an iPhone, Mac Air, and Mac desktop user…but I’ve never camped out at a Store)

Or Tesla.  Costs a mint, one has to wait months to get the car you want, software can be buggy, getting service is a pain in the neck, charging is NOT easy or simple or readily available in many places…Yet lots of people buy Teslas.

I know, there are deep psychological/emotional reasons we humans want to own iPhones and Teslas. That doesn’t negate the key point here – people buying highly differentiated products don’t care about customer service.

Service can be THE differentiator in a commoditized business.  

Tomorrow, data analytics.

What does this mean for you?

Much of workers’ comp – claims, medical management, insurance, related services – is pretty much commoditized. I would argue  – and the research clearly indicates – that differentiation is not only possible, but critical to your company’s survival and success.


Nov
20

Customer Service, part 2

Well, who knew a holiday week post on customer service would be so popular?

It appears we struck a nerve there, perhaps driven as much by universal frustration with big “service” companies as anything else.

To that point, here’s an example of a huge business that completely misses the point.

This summer American Airlines allowed flight attendants to give little things to passengers upset about delays or other problems. Frequent flyer miles, drink coupons, seat upgrades, stuff that didn’t cost AA anything but made angry passengers feel that AA cared about the problems the airline caused.

Then, some genius at HQ decided this was a bad idea.

This from Forbes:

Every time some bright young marketing executive tried to make American (or some other airline) more responsive, and more quickly responsive to passengers’ dissatisfaction by empowering front-line workers to offer some form of compensation, the bean counters back at headquarters quickly noticed that the cost of such empowerment escalated rapidly. The result, alas, always has been the dramatic reduction or elimination of front-line workers’ authority to solve customer service issues at the point of contact.

Instead of fixing the problem, the corporate knuckleheads tried to deal with the fallout – but stopped when it cost too much. 

This is exactly what killed US manufacturing, autos, and many other businesses. At the end of their assembly lines, GM, Ford, and Chrysler diverted many just-built cars with manufacturing defects to another mini-factory.

Auto worker using hammers to straighten a hood on a just-built car…

There, very skilled and very expensive workers diagnosed and fixed cars that had just been built. These guys are yesterday’s American Airlines flight attendants, tasked with fixing problems caused by management.

Clearly senior management didn’t understand that if they spent the time and energy and dollars to do it right the first time, they wouldn’t have to a) fix problems with cars they just built, and b) deal with pissed-off customers.

Yes, it takes that time and energy and dollars. But the results are measured in customers kept, service problems eliminated, and extra costs avoided.

Or, you can just wait for your businesses’ version of Honda to come in and eat your lunch.

What does this mean for you?

Find out what your customers want, and do it right the first time. They will love you and reward you for it.

 

 

 

 


Nov
19

It’s all about customer service

HSA’s third Survey of Bill Review in Workers’ Comp and Auto is done – final editing is in process and we’ll have the report out shortly. There’s one key takeaway – it’s all about customer service.

We will dig into the details next week, but first a couple thoughts about “customer service.”

The core of customer service is this: the customer wants to feel valued, that they are important to the seller. There are two basic ways of achieving that – thru organizational policy and by individual employee actions.

I fly American Airlines a lot, and almost exclusively. I’ve long figured that it’s best to have some “status” with an airline because something bad will inevitably happen and when it does you need some stature to get any help at all. In general, that works out. But of late, the “value” of my loyalty has dropped considerably. While I’m still piling up the miles, American seems to have made the corporate decision that it is now “Too Big To Care.”

AA is the world’s largest airline, flies everywhere, and probably thinks it can do what it pleases and we’ll just have to deal with it.

Verizon has a similar Too Big to Care perspective. As the dominant wireless carrier, they are all about maximizing revenue from each customer, and in my experience give their service staff little leeway to fix problems or come up with creative solutions.

USAA has long had a reputation as the best personal lines insurer, but of late it’s customer focus seems to have been shoved aside in favor of snappy TV ads during football games. You have to put your dollars somewhere, and it’s cool to be an exec in a company your neighbors see on the tube.

These three organizations are surveying me all the time about service, about how smiley the flight attendants are, how fast they answered the phone, whether I was happy or not with the encounter with customer service.

Wrong questions.

These are questions intended to rate, reward, and penalize the folks on the phone, at the counter, at the airport. Instead, the should be asking customers what upset them about the service or how they change their policies to do better.

Because most times it’s not the person, it’s the policy.

For example – Dumb corporate edicts about closing flight doors 10 minutes before “departure” time may help on-time performance stats, but they piss off late arriving customers. The bigwigs are missing the point – who cares about on-time performance if you can’t get on the damn plane?

What these companies are missing is understanding that people care about how they are treated as individuals, which means these huge organizations have to give their service people the leeway, training, and flexibility to solve the customer’s problem.

And this isn’t apologizing and offering to rebook on another flight sometime in the next couple of days in seats by the rear restroom. It is keeping the plane’s doors open, or giving a credit when a customer misreads a confusing policy or doesn’t exactly comply with a process designed to make the seller’s workflow easier.

So, what does this all have to do with bill review?

These three companies are all Too Big To Care.

With consolidation increasing in work comp, it’s possible some vendors may get Too Big To Care.  In fact, it’s likely. 

That opens up opportunities for others, for companies that understand what patients, providers, employers want and need, and give their front-line staff the ability to deliver on those wants and needs.

What does this mean for you?

Customer service starts with understanding that customers want to feel like you care. It’s a ton of work to figure this out, but the rewards are long, stable, and profitable customer relationships.


Nov
16

HWR’s up and ready

Thanks to Lisa Lines of The Medical Care Blog, the best of the health policy blog-o-sphere is ready for your reading.

Medicare’s hospital readmission program, pharma-sponsored dark money going to political campaigns, and the major technology-driven progress that’s beginning to drive big improvements are all worth your study.

Thanks Lisa!

 


Nov
14

Some ill-informed but perhaps well-intentioned people opine that all we need to do to solve the healthcare cost problem is unleash the free market.

Their thinking seems to be that creative approaches and Adam Smith’s “invisible hand” will conquer the cost:quality:access conundrum.

That is wrong for several reasons.

First, no for-profit insurance company wants to “insure” a person with cancer, depression, heart disease, asthma. Nor do they want to keep insuring someone who gets sick.

That would be irrational and stupid, a bad business decision indeed.

Second, there has been ample time and much experimentation with various types of “free market” solutions – yet here we are. Family insurance premiums are close to $20,000 and come with sky-high deductibles, medical trend continues to climb, and big insurers are not jumping into markets.

The free marketers will argue that allowing people to buy skinny healthplans like those pushed by the Trump Administration that don’t cover stuff like drugs or pregnancy is the solution, that this keeps insurance costs down by eliminating coverage that’s “not needed”.

Funny thing about health insurance – no one can predict when they’ll find out they have Hepatitis C, have a motorcycle accident, or have an aneurism.

There’s another problem with the skinny plan idea – insurance requires the many subsidize the few. If healthy people aren’t in the regular insurance pool, costs for sick folks will go up a lot – and inevitably lead to insurance market death spirals where only the wealthiest people can afford insurance.

To be fair, free marketers will assert that this is exactly the problem – a big part of healthcare costs (e.g. maintenance drugs, child health, care for chronic conditions) shouldn’t be insured as they are not a classic “insurable risk”; somewhat unpredictable and random. That’s true. But it begs the question – most Americans can’t afford to pay for needed medical care without support from an insurer or third party.

Which leads us to the real problem – healthcare in this country is very much a profit driven business, and the companies and individuals making gazillions on healthcare are going to fight to the death to keep it that way.

As evidence, see California’s attempt to limit the profits of the dialysis industry. The big dialysis companies spent $111 million dollars to prevent this – which makes perfect sense. However, one needs to understand that almost all dialysis treatment is paid for by you, the taxpayer. And a big chunk of Californians’ tax dollars going to fatten up corporate profits – 3 billion dollars to be precise.

It’s not just dialysis.

Investment firms are buying up dermatology practices, and, according to some reports, encouraging providers to order lots of expensive and potentially unnecessary treatments.

I’m not blaming private equity firms – they are doing what they are supposed to do, generate big returns for their investors. (to be fair, I know several PE firms that are NOT like this – they believe in doing well by doing good.)

And they are very, very good at it.

Finally, Invisible Hand fans will argue that dialysis is the issue – if we get government out of the mix, then the consumer will force down the price.

Ha.

What does this mean for you?

Can you afford dialysis? Is it right for those who can’t afford it to die? Because that’s what the invisible hand would do – push many of us right into a long and painful death.

Note – friend and colleague Tom Lynch must’ve been thinking the same thoughts I have been, as his post is a data-rich, elegant and thoughtful discussion of single payer, and government’s role in healthcare. 

 


Nov
13

Tuesday catch-up

It’s been a very very busy time.

First, I’m pretty darn excited to note my alma mater’s football team goes into it’s match with Notre Dame ranked 12th in the nation. As a long-suffering Syracuse alum, this is territory we haven’t seen in decades.

Perhaps we’ll see Chris LeStage’s LSU Tigers in a Bowl Game???

OK, on to work.

The National Work Comp and Disability Conference is fast approaching. You can get a discounted registration here.

A bit further out on the schedule is WCRI’s annual confab – which will be in Phoenix AZ next February 28 – March 1.  You can get the details here. DO NOT WAIT to register; this always fills up so don’t procrastinate.

Next, a best-in-class work comp safety program is the product of a “great team” led by a very experienced and very competent leader. Joe Molloy at Northwell Health is innovative, focused on the right things, and committed to partnering with service suppliers. Joe’s team has reduced lost work days at a giant healthcare system by a third.

More proof of the ongoing effort by health insurers to move the US to single payer…this insidious plan is bearing fruit as we just received new evidence of its effectiveness – Americans don’t like their health insurance.

According to a national survey by ACSI, consumers rank their satisfaction with health insurance as equal to airlines. “Health insurance satisfaction is flat after two years of gains, staying lowest in the Finance/Insurance sector” Ouch.

I find it increasingly likely we’ll have some form of single payer, perhaps Medicaid for all – within a decade.  Health insurers continue to piss off customers on a regular basis, can’t control health care cost increases, and are lousy at branding.

They do have gazillions of dollars which they will spend to kill MFA or any other version of single payer – and they are pretty darn good at the government lobbying thing.

That said, when things can no longer continue, they won’t.

What does this mean for you?

It’s not a question of “if” we end up with single payer, it’s a question of when.


Nov
9

Work comp claim counts – part 4

Two important data points hit the news this week, both worthy of your attention.

First, BLS data indicates private industry employers reported 47,000 fewer occupational injuries and illnesses in 2017 compared to the previous year, a decrease of about 1.7 percent.

The rate, or frequency of total reportable cases declined by 0.1 cases per 100 FTE. As we’ve reported in the past, BLS data does not precisely mirror work comp claims – but it’s very close.

(Note this does NOT include public sector employer data)

So, occupational injuries and illnesses, along with work comp claims frequency, both dropped last year.

Next, insurer CNA CEO Dino Robusto said this in CNA’s earnings call:

we’ve been seeing negative sort of mid single-digit frequency trends over the past several quarters, which is less negative than a year ago. Now, while we’ve seen some pockets, where frequency has increased, the negative frequency trend overall is still favorable to our long run trend assumptions, because we did not lower our long run frequency assumptions despite the actual frequency consistently more negative than our assumption. [emphasis added]

(thanks to SeekingAlpha for the transcript)

Recall the Hartford has seen an uptick in claims frequency of late, one their CEO opined is not unique to his company.

I checked on other major workers’ comp insurers, including the Travelers, and  AIG and did not find anything useful pertaining to frequency or claim counts.

So, what does this mean for you?

Watch your claim frequency carefully, especially in geographic areas and business sectors where hiring is very tough. It could be you’ll see an uptick in claims, due probably to compromises in hiring due to the tight labor market.


Nov
7

And the big winner of the 2018 midterms is…Medicaid.

Three deep red states voted to expand Medicaid, and a fourth voted in a Governor who will comply with her state’s 2017 referendum results and do the  same.

Four states; Montana, Utah, Nebraska, and Idaho, all consistently Republican – had Medicaid expansion on the ballot. Montana’s results are not yet final, but the measure passed in the other three states. [Montana had temporarily expanded Medicaid about two years ago; the vote was to decide whether or not to make expansion permanent.]

53 percent of Nebraskans voting checked the “expansion” box, despite strident requests from Gov Pete Ricketts (R) to vote NO. Utah passed the referendum by about the same margin, while Idahoans were even more supportive, with 62 percent voting in favor.

Departing Maine Gov Paul LePage refused to expand Medicaid even after more than 60 percent of voters demanded just that in a referendum last year. Gov. Elect Janet Mills has promised to begin expansion on day one of her term in office.

Montana might be a different story. Early returns indicate a $20 million anti-Medicaid campaign backed by the tobacco industry may have been effective. The measure would have increased the price on a host of tobacco products by $2 to cover the state’s costs.

Notably, hospital groups in each state were strong supporters of each initiative, as they have been in pretty much every state since the ACA was passed. I’d expect to see more states expanding Medicaid in the future in a replay of the original Medicaid roll-out from the mid-nineteen sixties.

With the rollout, rural hospitals and those with higher proportions of poorer patients are getting a financial lifeline, one that they sorely need.

What does this mean for you?

Medicaid expansion is inevitable, and that is good news for hospitals and decreases pressure to cost-shift to other payers.