Focus, customer service, and execution are the three reasons MedRisk has thrived over the last several years.

That’s what Carlyle bought into when they invested in the company in a transaction that will be announced today. This comes less than two years after TA Associates bought a minority stake in the company, one of the quickest “flips” in the workers’ comp services industry.

Disclosure – MedRisk is an HSA consulting client.

I could not be happier for Founder and Chair Shelley Boyce, CEO Mike Ryan, EVP Marketing Rommy Blum, COO Michelle Buckman, CFO Tom Weir, and CIO Vic Pytleski – the rest of the professionals at MedRisk – and the customers MedRisk serves. Great people built this company by focusing relentlessly on execution, sticking to the business they now dominate, and doing business the right way.

And they will continue doing exactly that.

MedRisk continues to innovate, building the industry’s first telerehab program (which is up and running under Mary O’Donoghue’s leadership). A home-built IT platform specific to the industry is making adjuster’s days easier, communications smoother, and patient scheduling a matter of a few hours.

Management is staying. An oft-heard mantra in private equity is “you’re investing in the management team”, and nowhere is this more true than in this transaction. You will see the same people doing the same great work for years to come.

There is one major change; now that MedRisk is in the Carlyle portfolio, the company’s access to capital is greatly expanded. How and where that capital might be deployed is to be seen.

What is crystal clear is this: MedRisk will be a buyer, not a seller.

Every year I dance the danger line, coming up with predictions for the upcoming year. And every year I hold myself accountable, reporting to you, loyal reader, exactly how those predictions worked out.

Clearly not a self-portrait; I could never grow that facial hair…

So here’s this year’s results…

(predictions are here)

1. Premiums will rise as employment and wages continue to grow.
   It’s a yes.  Rates continue to decline, but hourly wages have been ticking up for over a year now, and employment has been trending up for over 60 months. So, the combination has overcome the drop in rates. For now…
2. Medical costs will remain flat or close to it.
   Not according to NCCI – at least not for last year in NCCI states. Medical costs increased 5 percent last year. California is not an NCCI state; trend was up 6 points last year. So, got that one wrong.
3. Frequency will continue to decline.
   Because it always does. On average, by 3.6 percent a year.
   That means there will be about 10 percent fewer claims in three years, 20% fewer in six.
4. Insurers will double down on efforts to reduce administrative expenses.
   Frequency’s down, investment returns are dropping, and medical costs pretty much under control; premium rates are headed lower as well. So, insurers have continued their efforts to slash admin costs by outsourcing more claims to TPAs (contacts in the TPA business indicate that’s their biggest source of growth).
5. More payers will move their claims adjusters to home offices.
   No news on this – so I’ll count this as a no.  If you know of moves, let me know.
6. Winners will focus on execution.
   Yes. MedRisk [HSA consulting client] has taken the top spot in physical medicine management from competitor OneCall by out-executing OC. PBMs that deliver seamless customer service, lower drug costs and reduced opioid spend are winning; myMatrixx is perhaps the best example. Kaiser Permanente on the Job is another example; K-PoJ is delivering better results for patients and employers by doing what KP does so well – focusing on what patients need, not what creates billing opportunities. And BWC Ohio has made amazing progress in reducing unnecessary opioid use – by developing and implementing a comprehensive, careful approach.
7. Telemedicine is coming fast
   Yes indeed.  Coventry, MedRisk (HSA consulting client), CHC Telehealth (Mitchell has helped fund CHC), Kura, and other entrants were all over the NWCDC. MedRisk’s telerehab program is up and running, and case management firms are moving quickly.
   Unlike other “innovations”, tele-services is going to change everything.
   8.  Mitchell will continue to add work comp services businesses via acquisition.
   Yes – Unimed and PMOA are additions this year, adding breadth to both the UR and PBM businesses. I’d expect more in the future – although there are fewer businesses to buy that fit well with the company’s strategy.
   9. Drug cost decreases will flatten out somewhat, while reductions in opioid spend will continue to increase.
   Well, I got this one partially – but pretty badly – wrong. Costs dropped by double digits, led by a 13.6 percent decline in opioids.  And I’m supposed to know a lot about this business…sheesh.
   10. More value-based payment pilots will hit work comp.
   That’s a really easy prediction, so I’ll quantify it – there will be more than five new pilots or program seeking to deliver care via bundled payments or similar mechanisms that will start in 2017.
   Well, except for K-PoJ I can’t find any evidence that this happened – and in fact in a post a few months after my 2017 predictions, I backtracked bigtime on this prediction. Any new news on this is welcomed.
   11. Bonus pick – more consolidation in case management
   As frequency and severity continue to slide, field case management businesses are going to have to find new revenues from new services they can offer to current clients/cases and get more revenue from current cases.
   Argh…haven’t seen much evidence of this – perhaps because there’s already been a lot of consolidation.

The net – I got 4.5 wrong out of 11.  Ouch.

I’m hoping to do a LOT better with next year’s prognostications.