Quick takes

Stuff you may not have seen/thought much about…

Good work from the Travelers...Analysis of a very large number of WC calms found:

  • watch those new workers – those with < a year on the job account for more than a third of all WC claims
  • workers >60 cost more…a whopping 1.4x more than the 18-24 year olds (but only 15% more than the 25-59 folks)
  • but…the 60+ folks don’t get injured as often.

The report is here.

kudos to the folks under the umbrella and WorkCompWire for getting the work done and news out.

you may have missed this – Texas Mutual is getting into the health insurance business.  I’ve reached out to TM and will be interviewing the new leader. I’ve a lot of thoughts about this…

  • the just-hired leader has a wealth of experience
  • standing up a new health insurance entity in a year is a very heavy lift
  • regulatory structure is quite different from WC
  • all research shows market share is the key factor in negotiating provider reimbursement, making it hard for new entrants to gain traction

Then there’s the question: “Why did legislators want TM to get into health insurance?” If they wanted to cover more people, expanding Medicaid would have been a lot faster, far less expensive, and much more impactful.

Finally, (somewhat) new WC bill review company accuro solutions acquired Splashlight...Splashlight is also in the WC BR business.  Good to see competition in an industry sector that sorely needs it.



Friday catch-up

Lots happened this week while I was hunting, driving, and finishing up the annual survey of pharmacy management in work comp.

A quick update on pharmacy data points…

  • across the 30 respondents we have so far (a few more to come), drug spend was down one percent...however
  • there’s a ton of variation between respondents with some seeing big jumps and others steep drops in spend.
  • 91% of all scripts are generic…that’s a big increase from a few years back
  • pharmacy is viewed as being just a bit more important than other medical categories such as facilities, surgery, E&M.
  • and opioid spend is down again (YAY!!)

From HBR comes this trenchant observationIn Supplier Negotiations, Lying Is Contagious

“Lying once can be contagious. It can pave the way for lying again in other interactions or negotiations with people at other companies.”

The brief article is intended to provide guidance to buyers, but sellers would do well to internalize the researchers’ observations.

Health spending in the US is almost twice (as a percentage of GDP) as high as other developed countries’.

The graph is here if the pic above is hard to read.

Which means far fewer dollars to spend on wages, R&D, IT investment, and stock dividends – and much higher taxes to pay for civil servants’ health benefits.

Oh, and costs zoomed up in 2020 and 2021 due to COVID…due in large part to staffing shortages and concomitant labor costs.

What does this mean for you?

Next time someone starts comparing US healthcare to those with national systems, ask them if they have any idea how much more money we spend than those “socialists” do.


How we measure “value” in healthcare is all wrong.

The most popular formula for calculating the “value” of healthcare is pretty simple…

If you want to get a bit deeper into details, there’s this…

It’s about the “quality” of the medical procedure (was it done right? was the patient re-admitted? was there a surgical error or infection), perhaps the appropriateness of that procedure, and the “patient experience” – measured…somehow.

Pretty much every formula, discussion, or description of the healthcare value equation is focused on “outcomes” defined as the result of a surgery or treatment (did the patient get better?) or avoidance of sickness or injury (did the patient stay “healthy”).

None – as in none – focus on what’s really important to you and me –

Did the healthcare we received maintain/improve our ability to function – to raise our kids, work, exercise, function in society, do things we like to/have to do.

Functionality is the only “value” metric that matters, yet pretty much no one in healthcare and no healthcare organization – except in workers’ comp – talks about functionality, measures their results based on functionality, reports member functionality, studies it or seeks to improve overall member functionality as a core goal (except for a few unique healthplans).

Further, employers, who pay hundreds of billions of dollars on healthcare insurance premiums don’t even think about the impact of that healthcare on employee functionality/productivity.


Procurement, CFOs, finance departments and management are constantly challenged to show a return on investment on any project, hire, new initiative, acquisition or investment.

But never when they are buying healthcare – which, after payroll, is the biggest single part of the budget for most service companies and a major cost for every type of employer – public, private, not-for-profit.

Nope, it’s the thickness of the provider directory, whether or not some health system is in that directory, perhaps some “quality” rating, plus the biggie – cost.

What does this mean for you?

We are buying healthcare all wrong.


The problem with primary care?

It doesn’t generate profits for the medical-industrial complex.

From a societal perspective primary care is wildly undervalued – and wildly under-appreciated – because primary care doesn’t make money for anyone, especially primary care providers.

Which makes no sense on every front but the profit one. If everyone had good primary care,

  • they’d be healthier,
  • their health risks would be identified early and a plan developed to address them,
  • they’d have a provider who treats them as a whole person, who understands that we are a bunch of tightly-interrelated organ systems that have to be considered as a whole, not as individual organs,
  • they’d understand non-physical issues can be just as impactful as physical ones,
  • there’d be a lot less need for specialists, and
  • healthcare costs would likely be a lot lower.

Healthier people don’t need as many medications, devices, treatments, injections, therapies, surgeries, rehab, inpatient beds or surgical centers as unhealthy people.

And that’s where the money is.

Kaiser Permanente has generally excellent primary care – yet it can’t/hasn’t been able to translate that excellence into a sustainable competitive advantage.

I believe that’s because KP – and pretty much everyone else – is thinking about the “value” of healthcare the wrong way.

Tomorrow – how we define value today – and why that is wrong.


Private health insurance – can it be fixed?

I’ve been thinking long and hard about why our health insurance and healthcare systems are such a clustermess. Hugely costly, lamentable outcomes, a morass of bureaucracy, red tape and stupid rules enriching a few and impoverishing many.

So, I think I have a solution – and it involves workers’ comp.

First, the problem.

Today I’m reprising a post from a couple years back – if anything it is more accurate today than it was way back then.

If you had “government” health insurance for the last decade, your costs would be 20 – 25% lower today.

That’s because private insurers have not controlled spending nearly as well as Medicare and Medicaid have.  This from KFN via Axios.

Doesn’t matter what your economic or political ideology is – that’s a fact.

You and your insurance company pay your doctors and hospital more than twice what Medicare does. Yes, the Feds can exert pricing power – but why can’t United Healthcare, or Aetna, or Blue Cross?

Those healthcare giants should be able to negotiate better deals with providers; they have massive buying power and millions of members to leverage. They should be able to use that power to give you lower insurance costs – but they can’t.

Those private insurers are (theoretically) more nimble, smarter, better run, and more efficient than the government. And they have hundreds of billions of healthcare dollars to leverage.

Yet they’ve failed to outperform a bunch of bureaucrats.

I won’t dive into the “whys” today, because that would take away from the over-arching truth – government has been much more effective than private insurers.

What does this mean for you?

Cutting your health insurance costs by a quarter = more dollars you could have spent on other stuff.

note – happy to hear other thoughts; please use citations to back up any assertions.


Amazon, Kaiser, and primary care

Two seemingly-unrelated new items hit my news feed – Kaiser Permanente lost over a billion dollars last quarter, and Amazon paid $3.9 billion to buy One Medical, a primary care company.

Amazon is betting it can make primary care “work”, yet one of the best healthcare systems hasn’t been able to translate excellent primary care into lower costs.

Reality is, in the US primary care is (mostly) a money-loser.

One Medical, Amazon’s new purchase, has consistently lost money – a lot of money. That’s because reimbursement for primary care remains pretty low – despite Medicare’s move to increase pay.

We spend twice as much on healthcare as other developed countries, yet our outcomes, well…suck. One driver is likely access to primary care:

  • High income countries spend 2 to 3 times more on primary care services than we do; United States as a proportion of their (14% of total health care expenditures vs. the US’ 5% to 8%)
  • In those other countries primary care providers (PCPs) account for a substantially higher proportion of all practicing physicians; almost half of French physicians and a quarter of docs in the UK are PCPs compared to just one out of 8 in the United States.
  • that last data point may be due to pay; family practice docs make less than half what orthopedic docs do.

Good primary care saves big bucks by reducing the need for specialty care – an economic impact that isn’t reflected in primary care reimbursement in the US. At least not in most reimbursement schemes; risk-taking, ACOs, risk share, and other variations are among the models that attempt to reward PCPs for effectively managing patient health.

Amazon’s move to buy One Medical comes on the heels of lots of other investments in primary care; what’s notable is how few have resulted in profits.

Can Amazon “fix” primary care?

Well, they’ll  have to be a lot better than Kaiser Permanente.

KP is one of – if not the best – health care systems in the world, with excellent primary care and provider compensation that better reflects the value of primary care.

Yet KP lost over a billion dollars last quarter – and over $2 billion for the first half of 2022. Yes, a big chunk of the Q2 loss was due to investments, and there are extraneous factors – COVID-related mostly; Kaiser also has to pay orthopedic surgeons and other specialists a lot (increasing KP’s overall cost of care) because those docs could make much more outside KP.

Still, when one considers that Kaiser Permanente’s operating margins are generally pretty thin and certainly KP is less profitable than other health plans (UnitedHealth Group’s Q2 profits were up 19%) it shows just how difficult it is to make primary care “pay.”

What does this mean for you?

Pay more for primary care. 


The jobs boom

Gas prices are up, there are concerns about inflation, and some shortages continue – that’s the bad news.

The good news is the hiring boom that’s been going on for over a year shows no signs of abating, AND wage increases seem to have moderated a bit – which may be good news on the inflation front.

As a result, unemployment is down to 3.8% – a great number by any standard.

From the New York Times:

Job openings are near a record high. Layoffs are at a new low. And hiring has remained strong in the ebb and flow of successive waves of the pandemic — employers have added at least 400,000 jobs every month since May, the longest such streak on record. [emphasis added]

The economy is moving in the right direction; things are looking solid for a robust 2022 indeed.

What does this mean for you?

More workers = more health insurance and workers’ comp premium dollars.


The death of office work.

Ok, that was a bit clickbait-ey…

but just a bit

Lately I’ve had several conversations with work comp and health plan executives that lead me to believe office work is changed forever  A recent survey of workers by Grant Thornton concluded:

  • 40% will look for another job if forced to return to the office full time
  • 56% are looking forward to returning to the office
  • 51% would give up a salary increase for more flexibility in when and where they work
  • 34% believe their manager is the most stressful part of the day

Here’s the key takeaway…

It “appears the requirement to be in the office full-time is a driving factor that is motivating record resignation. According to the survey, 79% of survey respondents say they want flexibility in when and where they work…”

And this isn’t unique to the US.  Employers in India look likely to adopt a hybrid work model.

Tech and telecoms are already embracing the new model, and I’d bet the rest of us aren’t far behind. For work comp this isn’t anything new as many payers already have long had adjusters and case managers WFH (working from home). Full-service insurer Strategic Comp’s always had field-based adjusters; the carrier’s excellent performance adds serious weight to the argument for remote work.

Then there is quality of life.

You’re an adjuster for a major payer in California. Your commute is over an hour, traffic is awful, you have kids at home, and childcare is darn near impossible to find. You’ve been working remotely for over a year. Your performance is solid, your finances are in the best shape they’ve been in years, and the thought of getting back in the car and listening to the Morning Zoo makes you break out in a cold sweat.

oh, and your employer is desperately short of adjusters and case managers and can’t afford to lose you.

What does this mean for you?

Don’t invest in commercial office buildings.



COVID’s impact on workers’ comp…focus on the facts

Could COVID have a “very alarming potential outcome that could have a huge impact on workers’ comp” due to claims for neurological and psychiatric issues? That’s a concern raised by Mark Walls in tweet that was noted in a recent article in

Before we opine on Mark’s fears, let’s look at the science. I know, you just want the takeaways, but you have to eat your veggies before you get dessert.

A few days back the Lancet published a study assessing the neurological and psychiatric “outcomes” of about 236 thousand US COVID survivors. Here are the key findings.

  • there was a statistical correlation between COVID-19 and higher frequency of neurological and psychiatric diagnoses (the Brits used “outcomes”, but for we Americans, in this instance the analogous word is diagnoses)
  • these diagnoses were more common in patients who had required hospitalisation, and more common still in those who had required ICU admission or had developed encephalopathy

The researchers compared the increased frequency of those diagnoses in COVID survivors to increases in a similar set patients with non-COVID respiratory diseases including flu.

OK, here are some key considerations.

First, these patients are in the US; many of them may not have had regular healthcare prior to contracting COVID, and the neuro/psych conditions may have been present but not diagnosed pre-COVID. While the researchers attempted to control for this by comparing the group to a similar demographic of patients with respiratory infections, it is indeed possible – if not likely – the post-COVID patients had much more thorough medical care during and after COVID than the control group.

Interpretation – The more care, the higher the likelihood of a diagnosis.

Takeaway – The more you look for something the more likely it is you’ll find it.

Second, the older the patient group, the higher the correlation – and the less likely the patient was employed (note I did NOT say “risk” as the study did NOT show that a COVID diagnosis caused the neuro/psych diagnosis.) The average patient that was hospitalized or in the ICU was about 15 years older than non-hospitalized patients (58 vs 43).

Interpretation – COVID hits older people much harder than younger folks; the older the person, the less likely they are working.

Takeaway – the higher the correlation, the less likely the patient is employed, so the lower the potential for a workers’ comp claim.

Third, patients who already had neuro/psych diagnoses may have had that condition exacerbated by COVID. The research showed that a patient that had a stroke before COVID, was more likely to have another one than a COVID patient that had not had a stroke before COVID.

This is especially true for the most severe neuro/psych diagnoses…see “any” vs “first”

Takeaway – very tough to blame an ostensibly work-caused disease for a second stroke or encephalitis event.

Fourth – the most common post-COVID diagnoses were anxiety disorders (occurring in 17% of patients), mood disorders (14%), substance misuse disorders (7%), and insomnia (5%).

But here, the differences between the COVID and control populations were minimal (HR is Hazard Risk – the risk that a member of that population will have that event occur)

Takeaway – very tough to blame an ostensibly work-caused disease for a mood/anxiety/psychotic disorder, especially when the control group’s incidence rate is so close to COVID survivors’.

Fifth – Mark makes the point that outcomes for workers’ comp patients are worse than under group health for similar conditions – he goes on to say costs are higher too – and this may well be the case with COVID. Couple thoughts…

The definition of “outcome” in comp vs group health is pretty different and highly subjective; in comp we care about functionality – group health doesn’t. If you are worried about functionality, you will pay more for more care to improve the patient’s functionality. Ergo…more dollars spent.

There are any number of other reasons costs are higher in work comp – but I’d argue – vehemently – the primary reason is this – compared to other payers, WC does a generally crappy job managing medical. I work in both comp and group/Medicaid/Medicare, and the sophistication of medical management in group, managed Medicaid and Medicare is far superior to comp.

As in a graduate student vs a junior high student.

Takeaway – Lower quality healthcare = poorer outcomes at higher cost.

Finally, Mark says “we’ve never had a global pandemic where the government has mandated it be covered under workers’ compensation.”

Well…we still don’t.

I’m not sure which – if any – government(s) have broadly  “mandated COVID be covered under workers’ compensation”. Sure some states have passed presumption laws or had executive orders re presumption – but those are few, far between, rarely cover all workers – and typically come with a rebuttable presumption.

  • Only California and Wyoming cover all workers with a rebuttable presumption
  • Several states (NJ VT IL) cover “essential workers” – with varying definitions thereof
  • MN UT WI only cover first responders and healthcare workers

An excellent and up-to-date resource on state laws is provided by the good people at NCCI…

I’m struggling to see how the science and current state mandates will cause anything like a “huge” impact on workers comp.

  • The people with the most “risk” are older and less likely to have contracted the disease at work.
  • The study did not show a causal link but a statistical correlation – and correlation is not causation.
  • There have been relatively few COVID claims accepted by work comp.
  • Only two states have passed broad presumption laws.

To his credit, later in the article Mark notes “when you see a study like this, it makes you pause.”

I agree. Pause, read the study, then step back and think it through. And avoid hyperbole. 

What does this mean for you?

There’s a lot of fear out there about COVID – much of it more FOTU [Fear of the Unknown] than fact-based. Focus on the facts, and don’t react until and unless you know the details.

Side note – I opined on a related story 14 months ago…




Are health insurers profiting while providers suffer?

Well, yes – but it’s not intentional.

Most medical practices have seen a sharp drop in patient visits – and revenues – due to patient concern over COVID19 exposure. Hospitals have also suffered, as have ancillary providers, and many are on the brink of financial collapse.

Rural and safety-net providers are especially vulnerable, as many were on very shaky ground before COVID19.

Primary care providers are in the worst shape, as their patients often don’t have serious health needs that need to be addressed immediately. And primary care providers have the lowest pay as well. Research indicates that PCPs will lose about $15 billion this year.

Meanwhile, health insurers’ finances have never been better.

The connection is clear – insured people are not getting care, so insurers don’t have to pay their bills.

For months, healthcare providers have called on insurers to help them out by prepaying for care, paying billed charges, authorizing all treatment requests, providing loans, or otherwise funding providers. Much of this is nonsensical; authorizing all treatment requests would certainly lead to widespread abuse, over-treatment, and poor outcomes. Paying billed charges is nuts; NO ONE pays billed charges, which can be 10-30 times higher than average reimbursement.

What’s clear is COVID has likely created a significant one-time profit bump for healthplans, as a lot of foregone care will not be “made up” as practices gradually return to normal. While insurers should carefully assess their reserves, it is highly likely their “excess profits” won’t all be needed to pay for future COVID19 costs.

So, what to do?

Prepaying care may be a viable option. Healthplans would mine their data to determine what they paid a practice in the recent past, figure out how many members are using that practice, and sign a contract with the practice to ensure the plan’s interests are protected.

That’s just a short-term solution to a problem with roots that far predate the pandemic.

Reality is primary care is still under-valued, fee for service creates huge administrative friction and incentivizes over-treatment, and health care prices are unsustainably high.

What does this mean for you?

COVID will accelerate systemic changes that are desperately needed. There will be lots of pain for some stakeholders – primarily specialists and facilities.