May
17

Great news on the economy…

The labor market stays strong, inflation is slowing, and the stock market continues to boom. 

One economist noted “the April report put a soft landing and 2024 rate cut back in investors’ sights…”

That’s about as good as it gets…but just the latest in a long string of economic improvements over the last three years.

About that 401(k)…

Folks with 401(k)s are enjoying a big jump in account value – Bank of America reported the average account increased 17%

Protecting consumers

This week the Supreme Court rejected the payday loan industry’s latest legal attempt to block consumer protections. The Consumer Financial Protection Board was created after the 2008 financial crisis to regulate predatory lending, mortgages, car loans and other consumer finance.

With this ruling, expect the CFPB to push for rapid adoption of consumer protections including:

Ukraine

Lastly, our allies in Ukraine are FINALLY getting the support they desperately need…and using it to great effect. Earlier this week several jets and buildings  at a key Russian Air Base in Crimea were destroyed.

photo credit CNN

More on what’s happening there next week.

What does this mean for you? 

  • fatter retirement accounts, 
  • lower inflation,
  • and a smackdown of predatory lenders.

 


May
15

A Workers’ Comp Quiz

Workers comp is:

a) hugely profitable,

b) way over-priced,

c) even more profitable than it looks,

d) by far the most profitable P&C insurance line,

e) NOT suffering from medical cost increases,

f) a highly mature industry with all the attributes thereof,

g) shrinking as claim frequency continues the 20-year trend averaging -3.4%

h) the financial savior of multi-line carriers, and/or

i) all of the above.

The answer is…i.

NCCI’s Annual Issues Symposium provided a deep dive into the industry’s financials…and the industry is swimming in a lake of profits.

With a net combined ratio of 86%, WC is HUGELY profitable…especially when one considers the industry is over-reserved to the tune of…$18 BILLION.ut wait…when you add investment income, private carriers pre-tax operating profits are a whopping 23%.

Which means premiums are still far too high, employers are still paying far too much for WC insurance, and insurers are sitting on $18 billion that should be returned to policyholders.

This despite ongoing premium rate reductions…in every state.

Oh, and medical inflation is LESS than overall inflation – at a paltry 2%.

Amidst all this sunshine and rainbows, there’s one troubling trend…facility costs.

Specifically ASCs and outpatient, which is the only category showing an increase in share of medical spend. 

As CompPharma has reported drug spend has been trending down for years – and now accounts for just 7% of total WC medical spend – down from 12% in 2012.

The full AIS report is here …

What does this mean for you?

Employers – lower rates – MUCH lower rates.

And BIG dividends if your carrier is a mutual.

Insurers – invest those profits in technology NOW. Workers’ comp – and the P&C industry as a whole – is waaaay behind in tech. NOW is the time to invest – because…

this will not last.

 


May
13

Research indicates state abortion bans will deprive residents of healthcare. Newly minted MDs are avoiding states with restrictive abortion policies, as are physicians seeking advanced training in OB/GYN and primary care.

AAMC-sponsored research found there are fewer applications for residency and more advanced training in states with abortion limits. These are the physicians who deliver a lot of care to folks in the hospital and outpatient facilities.

Implications – untrained physicians and reduced access to healthcare.

From FierceHealthcare:

physicians without adequate abortion training may not be able to manage miscarriages, ectopic pregnancies, or potential complications such as infection or hemorrhaging that could stem from pregnancy loss…

“The geographic misalignment between where the needs are and where people are choosing to go is really problematic,” she said. “We don’t need people further concentrating in urban areas where there’s already good access.”

What does this mean for you?

Poor people will suffer, not-poor people will be able to access care.

Remind me…is this how a great country treats its least fortunate?


May
10

Lots of really good stuff to end your week…

the Economy…

remains quite good with 175,000 new jobs last month. This was not as many in previous months…

BUT it looks increasingly like (From NYT) “the exuberance of the last two years might be settling into a more sustainable rhythm”.

Stock markets jumped (the Dow is up 723 (!!!) points this week), interest rates declined modestly,

Seniors’ lower drug costs…

Insulin prices are capped at $35 per month, a major reduction from an average of $300…even better, next year President Biden’s Inflation Reduction Act will limit seniors’ out-of-pocket costs for all prescription medications $2,000 per year.

There’s activity in Congress and by the Biden Administration that would limit everyone’s cost – young, old, and in-between – for insulin to no more than $35 a month…here’s hoping the pols get this done.

This means...With diabetes affecting more Americans, improving access to insulin means healthier families and employees, which leads to lower healthcare costs.

More good news…the Medicare Hospital Trust Fund’s financial solvency was extended to 2036, a five year extension. Not to worry, there’s no doubt this will be extended again.

This means…better finances for hospitals and seniors.

Lots more jobs in Wisconsin and…No more noncompetes!

In the “government CAN actually make life better” category,  we have…lots of great jobs coming to Wisconsin…AND a ban on non-competes.

Microsoft is building a giant AI Center near Racine, Wisconsin. The city was hit hard by the collapse of the Foxconn deal which promised gazillions of dollars and jobs…but never happened. Supported by the Investing in America project, this brings new investment why private companies in Wisconsin to $5 billion – and counting.

The Federal Trade Commission effectively banned non-competes...thereby freeing you up to…actually control where you want to work.

Non-competes are contractual controls that effectively prohibit employees from working at specific jobs, customers, or companies for a defined period in exchange for a/some defined “benefit(s).”

This is a MAJOR bonus for anyone working today as it allows you – not some corporate entity – to control your life. And, the rule is quite broad, clearly empowering workers.

This from Harvard Business Review…

“Worker” is defined not just as an employee but also includes independent contractors, externs, interns, volunteers, apprentices, or a sole proprietor who provides a service. The rule also broadly defines noncompete clauses not only as terms or conditions of employment that explicitly prohibit a worker from competing with a former employer, but also to mean any other clauses that “penalize a worker for” or “function to prevent a worker from” competing. With this definition, the FTC also prohibits clauses that operate as de facto noncompetes, including overly broad NDAs, nonsolicitation clauses, and TRAPs — training repayment agreement provisions. [Emphasis added]

Have a most excellent weekend!


May
7

Cost Doesn’t Equal Quality Part 2:

All over the country there are areas where the more expensive facility has poor scores for patient safety and outcomes. And with facility costs accounting for about 40% of workers’ comp medical expenditures, you can hardly afford to ignore this reality.

Today we look at Sarasota, Florida. More specifically, we are comparing Sarasota Memorial Hospital against Sarasota Doctors’ Hospital.

According to Health Strategy Associate’s Facility Assessment Tool (c) – Sarasota Memorial Hospital scores:

60+% higher on Clinical Outcomes

50+% higher on Person and Community Engagement

75+% higher on Patient Safety

than Sarasota Doctors’.

And Memorial is a whopping 7 points better on Relative Price – which means you are paying much less for a much higher-scoring facility.

When combining all 5 metrics the Facility Assessment Tool considers, Sarasota Memorial Hospital scores 2.94 against just .16 for Sarasota Doctors Hospital.

Oh, and these two facilities are just 6.4 miles away from each other with Sarasota Memorial Hospital closer to the beach!

Take a look at your network and see just what facilities you are utilizing – and what they are costing you.


May
3

Physical medicine management firm MedRisk will acquire Conduent’s Casualty Claims Solutions business.

So…what and why and how?

What will MedRisk do now?

Improve Conduent’s performance is Job One.  
Conduent has – to be kind – struggled to deliver customer service, to respond to client needs, to keep systems, regulations, and fee schedules updated, to keep its customers much less win new ones, to actually perform. MedRisk has a wealth of experience and expertise in turning around an entity with those problems, has the staff and internal knowledge to help fix Conduent’s major issues, and has the leadership to actually get it done.

Stabilizing the current business is the first, and by any measure the most important task.

I’d note that MedRisk is the most successful physical management company in the space because it listens to its customers; partners – in the truest sense of the word – with them and works very hard to make payers’ front-line staff’s jobs easier, less stressful and less complicated. (I know, MedRisk is not perfect, no organization is…)

That corporate culture will be hugely helpful for Conduent’s bill review clients.

Why did MedRisk do this deal?

Data.

It’s all about the data.  I CANNOT emphasize this enough.

MedRisk’s analytics folks are quite adept at assessing provider performance  – “performance” being based on what its customers value. Payers want more control over physical medicine (which is one of the fastest growing costs in workers’ comp). Now, with access to terabytes of data on provider billing, treatment practices, related services e.g. surgeries, medications, facility visits, treatment documentation, claim demographics, duration of care and lots of other hugely valuable data points, MedRisk will be able to help customers better:

  • assess and identify high- and low- performing providers
  • get instant notice of changes in billing patterns (e.g. new Revenue Cycle Management tricks designed to hoover dollars out of payers’ pocketbooks)
  • reduce leakage from provider networks
  • evaluate treatment plans to identify effective and less effective approaches to specific types of claims, diagnoses, and cases
  • and a host of other things we haven’t yet thought of.

How?

Is MedRisk – a rehab management company (!!!) – becoming the major provider of bill review services which are generally recognized as the most important and impactful of workers’ comp services?

Simply put, because it is very well run, has a really impressive growth record of late, and is worth a ton of money. That corporate equity gives it a relatively low cost of capital and access to even more investment.

Finally…

I’ve worked with MedRisk for more than 2 decades. In no way am I responsible for or attempting to take credit for what Shelley Boyce, Mike Ryan, Sri Sridharan, Michelle Buckman, Ed McBurnie, Vic Pytleski, Rommy Blum, Jamie Davis, Tom Weir, Mary O’Donoghue and many others from the most senior to the least senior workers have accomplished.

The company’s leaders – starting with Shelley and continuing to today – have focused on doing right by customers and pushed that ethos throughout the organization. Yes, MedRisk had its stumbles along the way…but it recovered and became more successful by learning from those mistakes and returning to its core principles.

What does this mean for you?

Success is all about delivering your customers what they want how they want it.


May
3

Good news Friday…much safer cities and a world-leading economy!

There’s a ton of good stuff happening…we’ll start with the economy.

The US economy is boomingwe now account for more than a quarter of the world’s production.

Over the last three years:

  • 15.2 million new jobs were created
    • 768,000 are manufacturing jobs
  • more people are in the labor force than during the previous 4 years
  • the unemployment rate has been lower than any time in the previous four years
  • the S&P stock index is up by 33% – a massive increase in wealth for retirement plans and IRAs

Crime

Jeez, to hear some pundits you’d think cities are burning down, people are getting shot on every street corner, and no one is safe…

That, dear reader, is utter nonsense.

Reality

The net – Streets are much safer and so are homes

Environment

You’d expect the booming economy would be pumping more greenhouse gases into our air…the VERY good news is carbon dioxide production actually dropped while the economy boomed.

What does this mean for you?

A booming economy, fatter retirement accounts, lower crime, and less carbon emissions = lots to be happy about!

 


Apr
30

Walmart is shutting down its healthcare centers…which means…what?

Three things.

First, healthcare is a very complicated and complex business, nothing like Walmart’s core business 

Walmart’s culture, ethos, business practices, priorities, and people built a multi-gazillion dollar consumer business by TBH, beating the crap out of vendors to deliver really low prices.

That is diabolically different from building a service-oriented, one-at-a-time, people-based interaction around a very complex need – healthcare.

So, yeah, healthcare is about as different from Walmart’s core culture as you cold possible get. 

Walmart’s failure comes after Haven Healthcare, the joint venture of giants Amazon, Berkshire Hathaway and JP Morgan went belly-up early in 2021.

Haven CEO Atul Gawande MD lacked the intimate, deep knowledge of healthcare infrastructure, reimbursement, regulations and management required to be successful. A brilliant writer, insightful analyst, and highly visible public figure, Gawande didn’t have the management chops. He also didn’t give up his other jobs and had no experience as CEO of a start-up.

Many who think they know healthcare – don’t.

Then there’s commitment. Gawande was committed to Haven – and frankly the three founding companies were as well – like the chicken is committed to breakfast.

If you want to take on something as daunting as reforming healthcare, you’d best be committed to the task like the the pig is committed to breakfast.

Second, reimbursement.

Despite a partnership with giant UnitedHealthcare, Walmart Health was unable to attract enough customers paying enough for care at its 51 centers. This MAY have been due – at least in part – to the venture’s focus on Medicare Advantage members…

This from UHG’s announcement back in 2021:

(the partnership will launch in) 2023 with 15 Walmart Health locations in Florida and Georgia and expand into new geographies over time, ultimately serving hundreds of thousands of Medicare beneficiaries in value-based arrangements through multiple Medicare Advantage [MA] plans. [italics added]

MA has been having a rough time of late which may have factored into a non-produdctive partnership…As the payor, UHG would want WH to agree to low reimbursement rates…as the provider, WH wanted high reimbursement…

Third, providers.

Primary care providers are expensive, rare, and thus have a lot of bargaining power. Oh, and you can’t have a business without them.

Which – to return to the lede, runs directly counter to Walmart’s…everything.

What does this mean for you?

Fixing healthcare requires understanding healthcare.

 

 


Apr
29

Hospital goings on…

Couple things you need to track…

First, hospital mergers and acquisitions soared in the first three months of 2024.  From Fierce Healthcare…

Among the quarter’s 20 deals, four were “mega mergers” in which the smaller party had annual revenues exceeding $1 billion, per the report. This pushed total transacted revenue “near historically high levels” at $12 billion…

Kaufman Hall’s report is here.

Some of the big for-profit chains sold off lower-performing facilities; a few big not-for-profit system mergers were announced.

Unsurprisingly financials drove a lot of these deals; a lot of hospitals are on shaky financial ground while most of the big for-profits are making bank. Some not-for-profits’ numbers are improving although the sector as a whole is still struggling.

Meanwhile, giant for-profit HCA reported a big jump in earnings.

From Reuters:

HCA posted quarterly revenue of $17.34 billion, beating estimates of $16.78 billion and reported an adjusted profit of $5.36 per share for the reported quarter. Analysts on average had expected a profit of $5.01 per share, according to LSEG data.

What does this mean for you?

Facility costs are going up because not-for-profits (in general) are struggling, while for-profits (in general) are jacking up revenues. 


Apr
26

There’s a LOT of good news today

The House finally approved a massive aid bill for Ukraine – and the aid is already flowing – hallelujah.

Several encouraging takeaways…

  • It was bipartisan, with strong support from both parties (who’da thought??)
  • It passed despite strong opposition from the Republican Presidential candidate
  • It includes long-range missiles that Ukraine can use to demolish Russian air defenses, oil infrastructure, shipping, bridges and railroads

Long range ATACMS

Here’s why this is so incredibly important…

Health insurance coverage

is benefiting more Americans than ever, thanks to expansion of the Affordable Care Act. Another major driver is the increase in insurance subsidies for lower-income folks.

This means more moms and dads, kids, and families have access to health care.

The addition of dental care is the cherry on top; new regs allow states to add that coverage.

Work comp

WCRI’s just released in-depth analyses in its CompScope series…this year they’ve added details on COVID’s impact in 17 states.

Work comp rates for employers continue to dropIVANS reported a drop of 0.9% for the first quarter of this year. (Hat tip to R&I for the news)

California is slamming work comp fraudsters, (sub req) with the latest conviction resulting in a 54+ year prison sentence for a scheming fraudster. The Golden State’s been ramping up its prosecution of these dirtbags...here’s hoping these massive penalties discourage others from stealing from employers and taxpayers. Kudos to WorkCompCentral for a comprehensive update on recent convictions.

What does this mean for you?

A safer America comes from a diminished Russia.

More insured Americans = healthier families.

More crooks in jail = hopefully less future fraud.