Marketing is NOT sales support

Marketing is not sales support.  If proposal writing and RFP responses are in “marketing”, you aren’t doing “marketing”.

Selling is one-to-one. Selling is finding out what that individual’s views, perspectives, challenges, biases, needs, opinions, fears and desires are. It is NOT “selling”, rather it is finding out what problem that person has and what she wants to buy, then packaging your offering so it addresses that individual’s needs and situation.

Marketing is one-to-many. It is doing the research to identify market segments, and those segments’ needs, wants, fears, and buying processes. It is developing and modifying products and services so they specifically address general and specific needs. It is promoting those products and services so potential buyers are aware of them and see the applicability to their situation.

Marketing can be squishy; it can be hard to assess the ROI on a marketing campaign or investment.

Work comp services execs often think marketing is easy, simple, and they are good at it. Hey, they can write an article, press release or “white paper” or give a speech or design a booth.

While a few execs understand Marketing, most do not.

And that is precisely why work comp services is a highly commoditized industry where price is critical. 

What does this mean for you?

Marketing’s budget should be 2 percent of your revenues, and led by someone who really knows the subject.


Marketing drives product – not vice versa

With rare exceptions, work comp services companies don’t get marketing, don’t fund it adequately, and then complain when “marketing’ doesn’t work.

They build a product/service then try to convince buyers they need it.  Example – “buyers want to buy all ancillary services from one vendor!”

That’s bass ackwards.  Instead, they should identify an unmet need, then build their products/services to meet that need. 

Okay, you’ve already got products and services, so you aren’t looking to create any new ones.  Same rule applies –

  • figure out what the market wants,
  • adjust your offering so it meets those needs, and
  • package it such that potential buyers see how it solves their problem(s).

More broadly, services companies must understand what drives buying decisions in work comp.  I’d suggest “fear” is a much more potent driver than “greed”.  Note these terms are very general and are not meant to connote actual fear or greed, but rather concern over lack of performance vs desire for optimal performance.

Buyers want to be assured the problem will be solved, the risk of non-performance is vanishingly small, and the cost will be borne by policyholders/clients/assignable to claims. They want as close to zero risk as possible – more for reasons of personal survival than corporate objectives.

And, understanding there are at least two “buyers” is critical – the exec in the home office who signs the contract and the desk-level person who actually uses the services. Both have to be comfortable that your product/service meets their individual needs, which are usually quite different.

The corporate buyers want solutions that deliver cost reductions with no compliance issues and minimal-to-no IT resource requirements.

The desk-level folks want seamless connectivity, proactive communications, and service that handles any and every issue.

What does this mean for you?

It isn’t about you or your products. Start from your customers’ perspective and not from your’s.  And stay there.




Happy Friday! It’s Research Roundup time.

Here’s my quick takeaways on new research – and how it affects you.

WCRI on the interaction of health insurance and workers’ comp

Bogdan Savych PhD of WCRI has provided an excellent review of the interaction of health insurance coverage and workers’ outcomes post-injury. 

The percentage of workers with health insurance increased from 84% in 2008 to 90% in 2017, driven primarily by the ACA.  Notably Medicaid expansion was responsible for most of this growth. Overall, workers who had private health insurance:

  • got an initial non-ER evaluation a little earlier;
  • recovered a little faster;
  • were more  likely to return to work; and
  • were a bit less likely to hire an attorney.

Note these differences were slight – but real – for workers who had employer-based coverage, NOT Medicaid. (Dr Savych separated out workers covered by these two payers.)

This means – health insurance coverage slightly improves work comp outcomes.

Implementation of the ODG formulary and opioid reduction

NCCI’s just-released analysis shows minimal correlation between adoption of the ODG formulary and decreased opioid dispensing. From the report:

The ODG Formulary had a limited observed impact on opioid utilization in the early period after implementation.

It appears other factors such as much more public and prescriber awareness of the dangers of opioids and general changes in prescribing patterns may have been a primary driver of the across-the-board decrease in opioid scripts.

This means…formularies are a relatively small part of the solution. Strong UR and external factors are likely much more important.

Drug prices and profits

Adam Fein’s excellent Drug Channels delivers details on where the pharmacy profits are piling up.

Dr Fein notes “many multi-billion-dollar businesses profit as drugs move through the U.S. reimbursement and distribution system.”

This means…most rebate dollars are passed thru to employers and PBMs.

Hospital prices

RAND’s research finds the gap between Medicare reimbursement for facility services and what other private health plans pay increased over the last few years; on average private insurers paid almost 2 1/2 times Medicare rates.

This varied widely among states; if you operate in Colorado, Montana, Wisconsin, Maine, Wyoming, and Indiana reimbursement is even higher, while Michigan, Pennsylvania, New York, and Kentucky’s commercial prices were only 1.5 to 2 times Medicare rates (yippee…).

This means…work comp payers are almost certainly paying way too much for hospital care.



The Arrogance of Ignorance

Your systems, savings, capabilities, and results are better than the competition.

You know that because, well, it’s true. You’ve seen reports that show it’s true, been told that by your bosses, or some independent third party said so.

I cannot count the number of times I’ve heard “we save X to Y points more than the competition.” – or something just like that. One problem – your competitors believe the same thing. All of them. They’re wrong…right?

I heard it again at the National Council of Self Insurers’ meeting in Orlando yesterday – several times. When I demurred, my demurrals were rejected out of hand.

Allow me to burst your bubble.

Utilization review should be used to ensure the medical care delivered to patients is the right care, for that specific patient, by the right provider. In most cases, it is nothing of the sort. Rather, it is done to comply with regulations, generate revenue and is almost never integrated into billing.

Bill review is merely applying relevant regulations and fee schedule edits, sending bills to network vendors, and adding in some high-cost bill audits and perhaps retro UR and clinical audit.

Network selection doesn’t account for lower cost providers – it is based on discounts not net costs.

This is really basic stuff – and compared to what happens in group health it barely scratches the surface. Fact is medical providers are way more sophisticated than payers when it comes to coding, billing, and revenue management. There’s an entire industry devoted to revenue maximization for workers’ comp.

Data point – work comp represents about 1 percent of a health system’s revenue, but more than 10% of profits.

If you’re doing such a great job managing medical, why are providers making so much money off your patients?

With the exception of the Workers’ Comp Trust of Connecticut – I’ve NEVER seen a workers’ comp medical management program worthy of an A grade. In fact, the metrics most to evaluate program results are prima facie evidence the programs can’t be succeeding. Metrics like:

  • savings below billed charges
  • savings below fee schedule
  • turn around time
  • UR denials
  • network penetration

are all process – not outcome – measures. And they measure the wrong things.

The right metrics include:

  • medical cost by claim – case mix adjusted
  • drug cost per claim
  • time from date of injury to correct diagnosis
  • disability duration – case mix adjusted – by provider and employer location

How am I so confident you’re not as good as you think?

I’ve audited dozens of programs and seen crappy data, inaccurate reporting, useless metrics, and poor analytical methodologies in almost all.

A fundamental problem in work comp medical management is complacency and an unwillingness to ask and demand answers to tough questions, borne out of today’s low medical expenses and continually dropping premiums. The result is many have grown fat and happy.

What does this mean for you?

You can do better.  A lot better.



A reminder – work comp is a tiny part of medical care

Work comp medical expenses total around $30 billion.  Total US medical expenses amount to $3.6 TRILLION.

Clearly work comp is a minuscule part of the healthcare world; less than one percent.

This matters because health care providers – doctors, therapists, facilities, clinics – see very few work comp patients.  While some providers tend to see more work comp patients than others, it’s rare indeed for a provider’s work comp patient population to amount to more than 10 percent overall.

Think about this in terms of regulations, network relationships, systems integration, clinical guidelines and UR requirements.

One patient out of a hundred – that’s how many work comp patients the average physical therapist, prescribing physician, pharmacy or clinic sees. When regulators require prescribers comply with a new formulary or UR prior authorization requirements, they are asking the provider, and the office and clinical staff that work with that provider to:

  • learn something new; and
  • develop, implement, maintain, and potentially modify new workflows and communications protocols and standards.

How would this work out in your world?

In your work, how much of a hassle would it be if one out of every hundred customers – or even one out of 25 – required unique and special handling, different processes, and a failure to comply with those requirements could lead to some type of legal sanction or unhappy customer?

I would suggest that many regulators don’t factor in the obvious challenge inherent in getting clinicians to change their practices for one out of every hundred patients.

Yes, regulators need to ensure regulations meet legislative intent, but often regulators can influence that intent, educate legislators, and if nothing else work diligently to hopefully reduce the potential friction inherent in changed regulations.

Unfortunately, this often isn’t the case. As a result, conflicts arise, conflicts caused by misunderstanding or misinterpretation, or just plain ignorance.  These conflicts may well lead to increased litigation, angry patients, and/or delays in patient care.

It can also lead to providers dropping out of the workers’ comp system, as the hassle just isn’t worth it.

What does this mean for you?

A bit of perspective is always helpful.  It is also essential.

As my late father used to remind me quite often, better to do it right from the start than have to fix it later.



The Golden Rule, Part Two

Back to the work comp services business…

A while ago I wrote about how some buyers’ attitudes are a bit overbearing. I know, unusual for me to be rather subtle.

The post itself generated a few comments; many more were sent to me directly with the request they not be made public. I will always honor that request.


Here are a few ways buyers mistreat “vendors”.

  1. The Jerk-Around
    This begins pleasantly enough, with lunches and dinners and meetings building rapport and “relationships.”  The buyer is really, really interested, voicing approval of the vendor’s product/service, requesting more information, discussing needs and priorities. The vendor is convinced the buyer is really interested, it’s just not the right time. Perhaps in a couple months.

    Then, a new management focus appears, and this is on the back burner for a bit. Oops, a change in systems resources is holding things up.  It may be because the buyer is really trying to get a deal done. More likely, the buyer just doesn’t want to say “no”. While understandable, this is the wrong thing to do – for everyone.A fast No is far better than a long maybe.Yes, the sales person is at fault too. They should be asking, probing, talking with others at the buyer’s employer. But if they keep getting the wrong information and are led the wrong way, it’s easy to succumb.

  2. The Disappearing RFP
    This starts with a voluminous request for proposal asking every possible question and attestation in multiple ways. It takes weeks of work by the vendor, pulling scarce resources away from other projects.

    And then…crickets.

    Days become weeks, weeks stretch out into months, and months disappear into the void. Eventually everyone involved forgets what happened, who wrote what why, and where things stand. And the vendor has lost tens of thousands of dollars in labor costs…so has the buyer. Why payers go thru all the work to write an rfp only to abandon it, often without informing – and apologizing to – the respondents, is a mystery.

    (Actually it isn’t…there are way more service providers with way more capacity then there are potential customers, so you’ve got no choice…you HAVE to respond to every RFP even though you know your chances are miniscule…)

    What you’d LIKE to say…

  3. The Change-a-Thon
    The original specs both parties agreed to are set forth in stone. Well, still-liquid mud actually, but mud is just stone that hasn’t solidified quite yet.

    Then, there’s a Note/email/change request… “due to regulatory issues, or a change in management, or because we just forgot something, we now need your data to feed this other system/comply with this standard/include these fields that we never told you we wanted, and/or your staff has to have the following credentials, and/or we need the reports on pink paper on Tuesday.”Oh, and we can’t pay you any more for this.Then there’s another change request, and another, and on it goes.

  4. The “We Need a Better Price”
    You’ve negotiated everything, and it’s pretty much a done deal. Then the buyer – often a procurement person – says they need a better price.  You’ve been hearing for months that the customer wants better service, is leaving their current vendor because of lousy service, and places a premium on service.Except they refuse to pay for it.

    So, you’re stuck.  It’s either agree to barely break-even or perhaps even lose money, or agree to the price knowing you’re going to reneg on service once the contract is signed.Which leads to the final problem (although I’m sure you have your own list)

  5. The Procurement Problem
    Oh boy.  The business people have written the specs, delved deeply into your capabilities, certifications, experience, and results.  They fully understand that the service they want – and what you are expert in – is hugely complex, requires deep experience and highly trained staff, and will evolve over time as you work together and learn how to do things smarter/faster.

    The procurement/purchasing folks have been involved, but up till now they’ve been pretty much silent.

    Now they start negotiating price, and the dreaded Service Level Agreement (SLA). They want performance guarantees with financial penalties, but won’t agree to bonuses based on stellar achievements. They may demand you agree to specific time frames and project specs, refusing to factor in possible screwups/delays on their side of the implementation process. They negotiate price like a pitbull; in fact they focus most of their effort ratcheting down the price.Your business contacts plead with you to agree to the terms, saying they’ll work it out. Then, you’re locked in, and once again stuck in the “we can’t afford to deliver this for that price” – so it’s lose money or be accused of failing to deliver.

    (Terrific insights into marketing and procurement here.)

    (Now that I’ve thoroughly angered my friends in purchasing/procurement roles, know that some – a few – are reasonable, thoughtful professionals that seek to understand these issues and recognize the price implications.)

    What does this mean for you?

    You get what you pay for.

    Workers comp services is a shrinking business in a highly mature market. The only way vendors grow is by taking business from a competitor. Buyers have all the negotiating power, and often use every bit of it to wring concessions from suppliers.

    That’s almost always a grave mistake, leading to poor service and poor results.


The next recession – Not if, but when, and how bad will it be?

This month marks the second longest economic expansion in US history; it’s been a decade since things turned around back in June 2009.

Like all expansions, this one is going to end – and there’s mounting evidence it will happen soon.

The latest Fed forecast shows GDP growth slumping to 1.3% this quarter, driven in large part by a drop-off in commercial and industrial construction.

Without Congressional action, we will see another government shutdown this fall; the Treasury will run out of money by early November. There’s hope the Republican-controlled Senate and Democratic-controlled House will reach some sort of deal. Whether an increasingly-volatile President – who has been public about his lack of concern about the possibility of the US defaulting on its debt – will approve it is anyone’s guess.

Absent a deal, $125 billion in Federal spending will be cut immediately, thanks to the 2011 sequestration bill.

Manufacturing growth is slowing. New data shows the U.S. Manufacturing Purchasing Managers’ Index is at its lowest point since the last recession. From Bloomberg:

customers were postponing orders due to growing uncertainty about the outlook. Similarly, new business from abroad contracted by the quickest pace since April 2016 to the first decline since July 2018.

One industry that’s hurting is autos. The president’s latest moves to slap tariffs on Mexico will increase US consumer and business costs alike; the auto industry is particularly vulnerable as Mexico supplies a lot of car parts – and 2.6 million cars – to the US. Analysts project the tariffs would add about $1,300 to the price of an average car. If Trump keeps his promise to continue to raise tariffs, that will jump to $10,000 on Mexican-made autos and trucks by October.

This has caused so much consternation amongst Congressional Republicans that they are actually considering going against Trump…

There’s a lot more data out there on this – the inverted yield curve is perhaps the one most worrying to economists.

So, we can fix this, right. Well, it’s going to be a lot harder to dig out of the next recession than it was to crawl out of the Great Recession. It’s increasingly likely the Fed will slash interest rates this year in an effort to keep the economy growing. Of course, rates are already near historic lows and the Fed has few resources left to buy back debt in “quantitative easing” without risking rising inflation…the tools available to the Fed to reverse a downturn are few and may be overmatched.

What does this mean for you?

It’s going to happen. When it does, worker’s comp payers will see a downtick in claims frequency but likely a rise in claims duration.

From here, my take is the next recession is going to be long and deep; we just don’t have the tools to claw our way out of it.


Drug price fixing – the impact on workers’ comp

The generic drug manufacturers’ price-fixing scheme raised prices by up to 1,000 percent. There’s good news for workers’ comp payers as the impact has been minimal.

Here’s why.

Workers’ comp is mostly about trauma treatment and pain management; relatively few drugs are involved. Contrast that to Medicaid, Medicare, and health insurance which cover all conditions – and have a much broader “formulary”.

Contrary to what others have opined, this didn’t have any significant impact on workers comp, because there were very few “work comp” drugs affected by the price-fixing.

Here’s more from my conversation with Jim Andrews, RPh.

MCM – In your view how did the alleged price fixing affect workers’ comp payers?

Andrews – Since WC utilizes specific drug classes the impact of these 100 drugs could/would be significantly less than that of the commercial and governmental markets (especially Medicare and Medicaid). A quick scan of these drugs (without reviewing the larger WC PBM annual drug trends) reveals that there are blood pressure medications, antibiotics, birth control, dermatological , blood thinners etc. I do not see (might have missed it) – narcotic pain medications.

So the overall cost impact from this companies’ activities do not significantly impact WC by themselves.

MCM – What medications commonly used in workers’ comp may have been involved?

Andrews – Generic Celebrex (celecoxib), generic Neurontin (gabapentin) and generic ketoprofen represent some of the more commonly prescribed drugs utilized today.

[These drugs] didn’t seem to detail the same level of price support that some of the other drugs had e.g. pharmacy and GPO involvement.

[MCM – note data from workers’ comp PBMs indicate the these three drugs account for about 7% of total drug spend].

MCM – There’s a difference between drug reference price (AWP, etc) and the actual price paid. Does the report provide any insight into whether the price fixing actually affected the price paid?

Andrews – It is unclear to me whether the purchase price for these channels actually increased or whether the drug reference price e.g. AWP increased.

MCM – this from Vox shows changes in overall drug costs over time.

What does this mean for you?

Yes, the price-fixing affected workers’ comp, but not much.


Drug price fixing…the details

A massive price-rigging scheme that drove up drug manufacturer profits by inflating drug prices has been exposed in a lawsuit filed earlier this month by 44 states.

Rather than compete in an open market, manufacturers including Teva, Pfizer, Novartis and Mylan conspired to split up market areas, allowing them to increase prices for more than 100 generic drugs by up to 1000%.

Are you angry yet?


“A key element of the scheme, the complaint alleges, was an agreement among competitors to cooperate on pricing so each company could maintain a “fair share” of the generic drug markets. At the same time, the companies colluded to raise prices on as many drugs as possible, according to the complaint.”

The Times’ piece added:

“Rather than enter a particular generic drug market by competing on price in order to gain market share,” the complaint states, “competitors in the generic drug industry would systematically and routinely communicate with one another directly, divvy up customers to create an artificial equilibrium in the market, and then maintain anticompetitively high prices.” [emphasis added]

I asked Jim Andrews, RPh, for his thoughts on the suit; here’s the first part of our discussion. [Jim has been working in retail pharmacy and PBM for decades and understands this stuff as well as anyone]

MCM – In your view is the suit filed on solid ground?

Jim – Yes, it is obvious from the volume of materials collected, referenced and cited – that this investigation has been going on for multiple years. I think the sheer volume is indicative of the seriousness of the lawsuit. Many areas of the lawsuit that I found were redacted so I assume they are the most damning.

MCM – What were some of the key claims made by the plaintiffs that caught your attention?

Jim – Hyperinflation of common generic drugs, especially after 2012. Fair share territories maintained between competing generic manufacturers that preserved current drug pricing and prevented price declines. Collusion between competing generic drug companies in the form of sharing confidential information on drugs, pricing, customers and strategies.

MCM – It appears that the alleged behavior has been going on for some time – do you think this type of behavior has occurred before?

Jim – I assume that this had been going on prior to the 2012 time frame referenced in the lawsuit but the 2013/2014 hyperinflation indicates a period of increased strategic cooperation.

What does this mean for you?

The alleged criminal behavior cost consumers – and some payers – millions. 

Tomorrow – what this means for workers’ comp.


Hey work comp payers – Do Your Job.

Has any workers’ comp insurer, excess carrier, or state fund, any self-insured employer sued opioid manufacturers, distributors, or dispensers?

Have you?

Generic opioid manufacturer Teva just settled a lawsuit with  Oklahoma, paying the state $85 million. Purdue Pharma – in my view the worst company in the world – had already agreed to pay $270 million –  $70 million from the founding Sackler family’s coffers. Next up is Johnson and Johnson subsidiary Cephalon.

Sounds like a lot, right? Well, no.

The annual cost to the rest of us – in taxes, insurance premiums, lost wages, higher drug costs – is in the hundreds of billions of dollars ANNUALLY.

Meanwhile, a massive lawsuit involving 1600 cities, counties, other governmental entities, and Native American groups is headed to trial later this year in Ohio.

And, Massachusetts’ Attorney General Maura Healey’s suit against Purdue is pending. The massively detailed complaint is comprehensive and terrifying in its detail; here’s the AG’s record of the billions the Sacklers made from OxyContin.

I’ve asked dozens of work comp execs about this, and with a couple of exceptions, none have reported they are suing anyone in the opioid business.

Why not?

Is it because it’s too much work?

Or insurers don’t really care as they can just increase premiums to pay opioid-related costs?

Neither is remotely acceptable.

Workers’ comp payers – all of you – have a fiduciary responsibility and an ethical and moral duty to recover as much money as possible for their policyholders from the companies and people who’ve addicted, killed, and destroyed work comp patients. Those dollars should go back to the taxpayers and employers harmed by the opioid industry.

What does this mean for you?

Yes it’s going to be hard. Stop making excuses and start doing your job.