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Acquisitions and takeaways therefrom, Part 2

Yesterday we dove into the Paradigm-HomeCare Connect transaction and opined on the whats and whys. Today the TRISTAR-Risico deal is up for discussion.


TRISTAR is a mid-tier national TPA, known for its work with employers and public entities. TRISTAR focused on workers’ comp for most of the time I’ve known the company, although of late it has grown its non-work comp services; Auto and liability now account for almost 30% of TRISTAR’s business.


I caught up with President Tom Veale via email, here’s our Q&A…

  1. MCM – there’s a lot of overlap in the companies’ target industries of ag and public entities; is TRISTAR looking to strengthen its presence in these markets?
    Tom – We like both industries and have a significant presence in both, especially in the west.
  2. MCM – I noted the emphasis on geography; how does adding more business in California’s Central Valley tie into TRISTAR’s strategy?
    Tom – The central valley is the breadbasket of America.  We love doing business there.  The Ross & Castillo firm gave us a great base to build from sixteen years ago.
  3. MCM – Re managed care offerings, what and how does RISICO managed care services add to TRISTAR’s capabilities?
    Tom – Risico has a great team of case management and bill review professionals that will strengthen our team in California.  They also have a team of network developers and managers who will significantly expand our capabilities.  Total Managed Care will be integrated into TRISTAR Managed Care.
  4. MCM – You noted the cultural fit.  Can you provide more color around that?
    Tom – Bill and Steve built a company that operates like an extended family in many ways.  They take care of each other and in doing so, take care of their clients injured workers.  We strive to do the same at TRISTAR.  Being privately held, both of us can make the long-term investments required in our industry today – not having to worry about quarterly earnings, borrowing covenants and the like.

We then got into a discussion of what’s happening with TPAs, which look to me to be one of the only sectors of the work comp industry that is growing.

Tom’s views on what’s happening with TPAs and why…

  • I think WC TPAs are consolidating.
  • The number of claims keeps dropping for most employers – and has for twenty years. Improved safety practices and automation are the two big culprits. A while ago you talked about the industry shrinking – I think it was 2 to 3% a year. We have seen that as our average client with stable operations has less new and less open claims today than five years ago.
  • The increasing cost of operating a TPA is becoming painful for many. Real SOC1 and 2’s, carrier oversight, IT costs, staff costs lead the way. Your (and others) shining the light on some predatory TPA practices has been painful for many bad actors. The industry will be smaller, and hopefully better in the long run.

The net

TRISTAR is a consolidator, and this latest transaction is strategically sensible. It adds depth in a key market sector and a key geographic area for TRISTAR, while also building TRISTAR’s internal managed care operation.

Tomorrow – other big doings in the TPA space.

What does this mean for you?

Watch what the smart people are doing. 

4 thoughts on “Acquisitions and takeaways therefrom, Part 2”

  1. I was with you here until Tom used the word “culprits” to describe the reasons claim frequency has been dropping for 20 years. He chose a word that suggests the lower claims #s us a bad thing. It can only be a bad thing if you are basing your assessment on dollars to be gained. Surely, improved safety, fewer injuries in the workorce, lower costs to employers are all good outcomes to be celebrated. It does likely mean there are less dollars for Tom and his company to go after unless they take over other existing companies. As you’ve pointed out countless times, the wc comp market is shrinking and becoming less attractive as a revenue generator. As someone who works directly with injured workers, their employers and their healthcare providers, I only see upsides being derived from Tom’s culprits, or what I would call reasons. Tom showed his real motivation with his word choice. Understandable, he’s running a for-profit business, but let’s not pretend he’s interested in what really happens to workers and employer costs. Tom would prefer less safety, more injuries….that would make it easier to sell his service line and enlarge his profits.

    1. Hi Mary – thanks for the note; I have a somewhat different perspective.

      Please allow me to explain.

      Your business, my business, Tom’s business…the business of many of my readers is driven by occupational injuries and illnesses. I’d suggest we all earn some part of our income from injuries. That does not make what we do a bad thing, nor does it say anything about the motivations of Tom, myself, or anyone else. You can find fault with Tom’s wording, but I don’t think it is fair to say you know what a person’s motivation is based on one word.

      A slightly different perspective – Tom employs hundreds of people who have families and buy houses and school supplies and pay taxes and on and on. Tom and all the other Toms out there can’t employ those people and pay them if there aren’t injured workers. So, I can understand if he views lower claims as a problem – because it is – for him and his employees and their families.

      be well – Joe

      1. Thank you for your thoughts. I read your blog regularly and often share them with others in my org because you are able to articulate the share of wc in the bigger picture well, generally. The organization I work for is a wc payer but our success is measured by fewer injury claims filed (a proxy for safety success), lower costs/claim and higher/faster return to work (proxies for lower injury severity, better and faster access to quality medical care and less time offf work). All of these ultimately lead to lower premiums for employers which makes them more competitive within their industries. Our perspective is a bit different.

        1. Thanks for the note Mary.

          I appreciate your thoughtful response. I’d suggest that effective TPAs – and effective management of the TPA – should focus on most of the same metrics you cite.

          be well – Joe

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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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