Stratacare’s (relatively) new owners are delivering on their commitment to growing the company; they will be acquiring Marsh’s CS STARS MedBillPro operation.
Paul Glover et al (Stratacare leadership) has been aggressively on the hunt for new business; they were finalists in the now-defunct Bunch and Associates deal, and looked hard at OneCall Medical and at least one other deal. Expect to see more from Stratacare in the future; the RIMS Conference is coming up at the end of April, an event where new deals are often announced.
The announcement is here.
What does this mean for you?
Activity generates interest in the investment community…

I was interviewed by CompTalk Radio’s Bob Wilson a few days ago on the subject of the direct – and indirect – effects of health reform on workers comp.
The interview is here.

I’ve commented at length on the impact of health reform on workers comp, and will dive deeper into this topic in the coming months. There are several others who also are looking into reform, and their different opinions are well worth considering.
Greg Krohm, Executive Director has posted his views on the topic recently; as the head of the association of workers comp regulators, Greg has a unique perspective enhanced by deep knowledge of the intricacies of work comp regulation and operation in every jurisdiction.
Greg makes several interesting points:
– pharma costs may continue to rise due to increased demand for drugs
– the increased demand for physician services, particularly in rural areas, may lead to extended delays in getting initial treatment, especially in states with low fee schedules and high administrative loads. This is a trenchant observation, and one I’m going to have to think about as it relates to provider networks.
– with lower state budgets due to the significant expansion of Medicaid leading to possible continued reductions in staff at regulatory agencies, disputes will take longer to settle, rulings longer to be handed down, and clarifications on rules and laws delayed.
Greg’s observations are well worth considering.
What does this mean for you?
The impact of reform will play out over several years; knowing what may come will help you recognize the early signs and prepare for change.

In the five and a half years I’ve been publishing this blog, I’ve never had a guest post. Today’s post breaks that tradition. (This is NOT a change in policy; please don’t submit guest posts)
Good friend and colleague Peter Rousmaniere is one of the most thoughtful and interested observers of all things related to workers comp; his work appears in many other publications including Risk and Insurance. Peter and I were discussing the issue of the federal government’s role in work comp, he mentioned the history of federal involvement in occupational disease, and was kind enough to agree to write up his thoughts on the issue. I don’t necessarily agree with Peter’s perspective, but his views are well worth consideration.
Here’s Peter’s view.
There is talk about the threat of complete federalization of the workers compensation system without any evidence that the Administration and Congress is giving the idea any thought. However I envision a scenario for a serious effort in the next few years to take over coverage of work-related diseases. I have four points to make.
First, there is a very apt precedent of a federal takeover of about ten years ago. Thousands of nuclear weapon workers employed from the 1940s through the 1970s at private companies contracted by the federal government filed disease claims in state systems. Hardly any were accepted, an indication less of the merits of the claims than of the torturous, glacial pace of disease claims in virtually all state workers compensation systems.
After decades of inaction at the state level, Congress in 2001, in a bipartisan way, and with tacit concurrence by the states, said that the federal government was assuming the task of managing these claims. Thus emerged the Energy Employee Occupational Illness Compensation Program. The Department of Labor has spent several billions of federal tax dollars paying disease claims that were not paid through the workers compensation system.
Second, there is some interesting evidence that most occupational diseases do not enter into the state workers compensation systems. These ill workers go without the protections provided by these systems. The Massachusetts Department of Public Health studied asbestosis-related hospitalizations between 1996 and 2000 and found that among 3,344 hospitalizations, only 15 were paid for by workers compensation insurers.
Using epidemiological methods, and after analyzing state records of disease claims, other researchers estimated that the large majority of disease claims were missed. They went on to estimate that the annual national medical spend outside the workers compensation system for occupational diseases is between $8 and $23 billion.
Third, if the Democrats maintain their control of Congress in November, they are very likely to return to massaging the issue of OSHA undercounts. Congress could well extend its scope to investigate any kind of systemic barrier to protection of workers from the incidence and effects of occupational injury and disease. Congress will have not problem filling a conference room with claimant bar attorneys and medical reseachers.
Fourth, threats of federal takeover actually work. At the time the Nixon Administration created OSHA, it also launched a National Commission on State Workmen’s Compensation Laws. The commission’s report of 1972 is credited with embarrassing and prodding many states to modernize their workers’ compensation systems.

Today’s employment report contains a bit more of the good news workers comp have been hoping for: an increase in manufacturing employment and continued overall growth in industrial production. Overall, the economy generated 190 thousand jobs in March, the highest rate of job creation in three years.
according to Marketwatch,
“Manufacturing payrolls increased by 17,000. Construction employment rose by 15,000. Manufacturing hours increased by half an hour to 41 hours per week, with 3.7 hours of overtime on average.”
The net is positive – more jobs, longer hours, more overtime.
A decline in construction spending tempered the positive employment news, but that could have been significantly affected by the lousy weather experienced by much of the country in February.
The investment income picture isn’t quite as encouraging, with returns for the P&C industry down sharply in 2009 over the prior year, That’s somewhat offset by the jump in the equity markets over the last year. While higher returns would be nice, the silver lining is comp insurers aren’t able to keep premiums low by generating significant investment income, forcing underwriters to price to risk rather than bank on high investment returns covering claims costs.
There are some indications that carriers are beginning to strengthen pricing in selected markets and products. That’s not to say the market is turning, but the bottom may be near.
What does this mean for you?
As employment picks up in manufacturing and the spring brings increased construction activity, claims counts and frequency are also likely to rise. While bad news for the injured, this will be good news for occ medicine clinics, managed care and bill review firms, PBMs, and, most of all, TPAs.