Okay, the easy ones are done.  Now it’s on to the tough, out-of-nowhere predictions, the ones that make – or more likely break, any reputation as a prognosticator.

6. Aetna will not sell its work comp business.  Even though some really smart folks (and people I respect) in the PE world think otherwise, I just don’t see it happening. I should have bet David Donn…(see comments section in the link).

7.  Someone is going to buy Stratacare.  OK, I know this appears to conflict with my earlier statement that the deal flow is going to slow down, but it really doesn’t.  There’ve been, what, a gazillion deals in work comp services this year?  So half-a-gazillion is less, right?

Anyways, Coventry needs a bill review platform (but I don’t think they’ll buy S-care).  Methinks it will be Mitchell; their new owners could consolidate a LOT of the work comp bill review business.  While that may appear to be a market-dominating move, don’t discount Medata and MCMC.  Agile, quick, and aggressive, these companies are taking share at the expense of the big boys – and will continue to if the “boys” become “boy”.

8.  Frequency will level off – somewhat.  Except for the recession-driven increase a few years back, claim frequency has steadily declined, averaging 2-4 percentage points per year.  With employment up, the economy improving, and manufacturing, logistics, construction, health care and energy all strengthening I’d expect frequency’s perennial decline to end, or at least moderate quite a bit.

9.  Guidelines are going to get a lot more attention – and more regulatory support.  I’m doubling down on last year’s prediction that guideline usage would grow; with the release of ACOEM’s drug formulary, Minnesota’s adoption of back surgery guidelines, the great work of PCORI, and Medata’s analysis of the impact of guidelines on cost the pressure on regulators to add more science to the art of work comp medical care is growing daily.

10.  The train wreck that is senior management at the North Dakota State Fund will continue to demonstrate the perils of politically-driven leadership.  After sacking one of the best senior execs in the industry on BS charges, WSI has:

• blown $17 million on a failed IT project (remember this is for the NoDak State Fund, we’re not talking a top five insurer/TPA here);
• allowed senior executives to hire and manage relatives, in direct violation of the State ethics code;
• printed up ID cards with the wrong phone number, one that rang thru to a call service staffed by “red hot babes” (and this was done by one of the senior exec’s family members on staff at WSI)
• screwed around with a claimant’s file, deleting a nurse’s note that supported the claimant’s request for benefits
• pressured their own medical director to change his medical opinions.

Under state law, an audit is supposed to be conducted right about now.  Haven’t heard what firm will be conducting the audit, but if past history is any guide, expect a whitewash. We can expect continued screwups as the far-in-over-their-heads “leadership” of WSI makes a mockery of management.

The tragedy here is there are a lot of very capable, competent, and diligent folks at WSI, working every day to do the right thing.  They and the workers of NoDak deserve far better leadership.

There you have it.  One more day to go for this “business” year, and then it’s off for a couple weeks.

Proving once again that I’m not smart enough to leave well enough alone, it’s time for my annual predictions for the coming year. I’m putting on my Carnac costume, examining tea leaves, and stopped by the butcher to get ready for some haruspicating – that’s analyzing sheep entrails (and yep, that’s a legitimate future forecasting technique)…

So here’s what’s going to happen in 2014. I hope.

1. Overall, the work comp insurance market will be steady.  Employment is slowly picking up, manufacturing and construction are doing ok, and premium rates are level to a bit higher.  This will mean more business for TPAs, slightly higher premiums for employers (and insurance companies), and more focus on loss prevention and risk management.

2.  More consolidation in the TPA market is on the horizon.  Expect some of the mid-tier TPAs to grow via acquisition, and there may be a deal involving one of the larger ones as well.

3.  Medical trend – on a paid, not incurred basis – will increase by at least a couple of points.  The ongoing problem of facility costs, coupled with cost-shifting and a lack of focus on (real) medical management on the part of most payers will be the drivers.

4.  Deal activity for mid-sized to large transactions in the work comp services sector will taper off.  There’s one more big transaction in process, but after that gets done there just aren’t that many big companies left to sell.  Expect to see a couple transactions but nothing like we’ve seen in 2013.

5.  At least one – and likely more – insurers will discover the real impact of opioids on their claims costs, and the impact will affect their reserves, rating, and/or financial stability.  As of now, few carriers have split out the cost of claims with and without opioids, and when they do, they are in for a (financial) shock.

More tomorrow!