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Jun
22

Work comp -The Innovation Prevention Industry

Workers’ comp is the Innovation Prevention Industry.

As I wrote years ago, many executives, risk managers, “thought leaders” and brokers decry the lack of innovation in workers’ comp – yet they are often the very reason innovation doesn’t happen.

There are a host of reasons – cultural, practical, financial, historical, structural – all hampering, if not outright preventing real innovation.

Fundamentally, work comp is hyper-conservative, hidebound and traditional. A few notes…

  • it’s almost entirely about musculoskeletal injuries – which haven’t changed for about a million years (no, that’s not hyperbole). Cause, treatment, and physical recovery are extremely well-understood – at least for those who want to understand.
  • it’s insurance – which by definition is risk-averse
  • it’s not important to the C-suite – work comp costs are a rounding error on corporate ledgers, account for <1% of US medical spend, and are steadily decreasing.

Structural problems  – starting with the RFP process – kill off innovation, starving it of light and energy before it can take root.

In most – but not all – cases, the RFP/vendor selection process is just stupid. The entire thing is intended to allow the committee to pick a vendor – to compare apples to apples by forcing respondents to tell how they will deliver a specific, detailed, highly-structured solution that precisely meets specs.

That’s fine – but what if you really need an orange?

Instead, the buyer should ask how each vendor will solve their problem, what they do differently, how they can deliver better results, and what the buyer must do to achieve break-through results.

Next – other barriers to innovation, and why you need to blow them up.


6 thoughts on “Work comp -The Innovation Prevention Industry”

  1. Joe you are right on the $$ as it pertains to the procurement / RFP process. At least in AZ buyers pigeon hole vendors by putting so many restraints on our proposals. There is just no room for innovation or creativity. They just ask and get more of the same. Discounts, discounts and then more discounts. Why can’t buyers just tell us their problem or need and let vendors respond. They would be surprised how creative and provoking we can get. MSK injury treatment is changing, improving with the use of telehealth, AI and early intervention to name a few innovations. Thanks for your insightful blog.

  2. The RFP process almost never asks for a solution to any issue. If the proposer identifies an issue and presents a solution, it won’t match the RFP which is often either a recycled version or written by the incumbent and/or RFP requestor. As the old saying goes, no one ever got fired for going with IBM even when there may be more cost-effective brilliant offerings available. It’s the 2% discount that reigns supreme or the already baked in solutions.

  3. Joe, this is so true. It is unfortunate that the industry creates barriers and is reluctant to change. There is far too much talk vs action. We need to create an environment that attracts new young talent that is eager for innovation and change. No one wants to hear “because this is the way we’ve always done it.” The RFP process is very outdated. Proposals should not be about who is the cheapest or better yet, can we create this on our own. Embrace change, support people who take risks to make the industry better and acknowledge that we are never too old to learn something new.

  4. The industry is focused on incremental internal efficiency and process improvement; outcome improvement is not rewarded (even the WCRI does not. measure it); for the industry to innovate it will need to more seriously embrace improvement in outcomes and pay more attention to real collaboration with the medical community

  5. As someone who has to labor through RFP’s as means to earn business, I agree with you here Joe. RFP’s lack the true essence of the request… outcomes. “What can you do for me to solve my problem?” I do not think most Risk Managers are equipped to identify that there is a problem, and moreover, a solution for it. Recycling RFP’s every 3 years yields the same results. Changing TPA’s is hard enough, but to sacrifice a solution you need because someone else is $500 cheaper is not the way to go. You get what you pay for.

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Joe Paduda is the principal of Health Strategy Associates

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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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