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Apr
21

What business are you in?

Hint – if you are a specialty network, you are NOT in the specialty network business…

Over the  last few weeks I’ve been talking with Rita Wilson of Tower MSA: Rita’s been attempting to educate me about the MSA world, a Herculean task to be sure.

What struck me about our conversation is Rita kept referring back to Tower’s purpose, which is claim settlement. From Tower’s website…

Tower focuses on the settlement of claims as we deliver measurably better Medicare Secondary Payer (MSP) compliance. We identify cost drivers and other barriers to closing claims, recommend and implement clinical interventions, and benchmark our performance against CMS responses [emphasis added]

Tower is not in the MSA business…it is in the claim settlement business.

Work comp payers don’t care about MSAs, they care about settling claims – once and for all.

By clearly defining Tower’s focus, the company speaks directly to the problem its clients and prospects are facing, demonstrating Tower knows what payers want and need.

Back to a specialty network…

NO ONE CARES ABOUT YOUR NETWORK.

What buyers care about is their combined ratio (if an insurer) or controlling costs and return to work (if a self-insured employer).

If you can directly show how your PT/imaging/DME/whatever network reduces combined ratios, controls costs and improves RTW, then AND ONLY THEN should you talk about HOW you do that.

What does this mean for you?

Be like Rita.


4 thoughts on “What business are you in?”

  1. Agreed, Joe. I think the challenge for the networks centers around having knowledge of the overall outcome of the claim, as well as how use of their services impacted the outcome. Most networks don’t appear to have sufficient claim data in terms of claim costs, including medical and indemnity, as well as expenses and total claim duration. This puts them in the position of guessing as to how their services are impacting claim outcomes. The networks need to find a way to demonstrate their value, either by working directly with their clients to access this data, or using a third party vendor’s data to perform this analysis. Until they do so, I think it’s going to continue to be a challenge for them to demonstrate their value in producing better claims outcomes for their clients.

    1. Excellent points Kim…I’d add that few network sales reps or marketing efforts focus on what’s important to their clients, rather its all about penetration and “savings”.

      We’ve been lamenting this for decades, and probably won’t stop any time soon.

      cheers Joe

  2. Joe, for a long time you’ve been spot on by pushing the community in various ways to answer that key question, “What business are you in.” And this latest blog continues that insight. Reading this piece I thought of who are information and data transmitters and receivers. Transmitters here are vendors, networks, etc. On a macro level you are correct to say to them that “What buyers care about is their combined ratio (if an insurer) or controlling costs and return to work (if a self-insured employer).” That may be true for some senior management and company actuarial analysts on the payor side. But too often those leaders fail to convey, nor do company compensation systems support, that level of sophistication to managers making the buy decisions on which vendors to use. This enables vendors to frequently make sales by promoting percent of savings type metrics rather than true impactful, meaningful outcomes you mentioned. The human nature bottom line is that more vendors won’t up their game until their customers up their game and become more demanding.

    1. Thanks for the note Marc – much appreciated.

      You are dead on with your observation that senior management isn’t doing its job.

      I think of this as a marketing/positioning challenge. That is, vendors need to communicate to senior management the value they bring so they don’t get spreadsheeted and can demonstrate how they help their clients meet their strategic objectives.

      Ideally this would be communicated to purchasing/procurement and business line management.

      Ideally…

      be well Joe

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Joe Paduda is the principal of Health Strategy Associates

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