Insight, analysis & opinion from Joe Paduda


Leaving Las Vegas

Quick takeaways from National Work Comp…

Don’t know what total attendance was, but seemed somewhat less than in pre-COVID years. Exhibit hall corridors were pretty empty despite sessions located around the exhibits.

Newest thing du jour – AI...sessions on AI, vendors promoting various applications, attendees mentioning AI in conversations about claims, data interpretation, claim intake, you name it.

Nurse triage – just…stop. Far too many are touting nurse triage – almost all without a clue as to what exactly this is, why they want to do it, what a “nurse” is, and how this will improve things. More on this in a future post, but for now:

  • define nurse – do you need an RN? APRN? LPN? nursing assistant?
  • what expertise/training/experience does this “nurse” need? orthopedics? emergency medicine? trauma? behavioral health?
  • okay, so a new RN is on the phone with a person…exactly what value does this add? Be specific.
  • more to come.

Events – by all reports myMatrixx’ get together was really well attended...I didn’t get to any others as they were past my east-coast bedtime. I do miss the myMatrixx transportation services from years past :( (mM is a consulting client)

There was a beach party outside my window that prevented a lot of us form getting to sleep before 11. Mandalay Bay staff was far less than helpful, told me this was on me as I should have checked the event calendar before booking my room (WTF!) and offered to send housekeeping up with a couple earplugs…I will NEVER stay there again.

Optum’s dog party was a big hit – great idea, really smart marketing, and good buzz generator.

Provocative session addressed anxiety, suicide and depression – more on that later. Sobering and much needed. Really respect the speakers for sharing their views and personal experiences. Yvonne Guibert – you are an inspiration.  

Booth staff – STOP pitching your stuff. JUST STOP. Until you have a decent sense for what the person in front of you needs, wants, is challenged by, don’t say anything other than a one-sentence line about the service/product your company delivers. 

have an excellent weekend.


Vegas starts…

The annual gathering of the work comp tribes begins today – I’m reprising a post from a couple years ago on lessons I’ve learned…

1.  Realize you can’t be everywhere and do everything. Prioritize.

2.  Leave time for last-minute meetings and the inevitable chance encounters with old friends and colleagues.

3.  Unless you have a photographic memory, use your smartphone to take voice notes from each meeting – right after you’re done – or write down key points immediately.  Otherwise they’ll all run together and you’ll never remember what you committed to.

4.  Introduce yourself to a dozen people you’ve never met.  This business is all about relationships and networking, and no better place to do that than this conference.

5.  Wear comfortable shoes, get your exercise in, and be professional and polished.  It’s a long three days, and you’re always ‘on’.

Finally, in these day of YouTube, phone cameras, Twitter, Instachat and SnapGram, what you do is public knowledge.  That slick dance move or intense conversation with a private equity exec just might re-appear – to your dismay.

And beware the white man’s overbite!!!


Yelling into the void

I attended a New England Journal of Medicine webinar on value-based care yesterday…net is I heard a lot about “patient centric” care, “patient experience” and quality but precious little about functionality and patient-specific or patient-desired “outcomes.”

Except for a few tangential mentions by the Optum Medical Director, what patients actually want was not addressed at all.

This is a big miss.

Like so many other failing industries, healthcare is completely missing the point – which is delivering what the consumer wants. “Patient experience” is mostly was the office clean, the nurse nice, the floor quiet.

We are ignoring this at our peril…we are not asking what patients actually want from healthcare; NOT the processes and functions noted by one of the panelists but how patients define “healthy”, what they want to be able to do, what functionality is important to them, how they want to live their lives.

Healthcare is provider and process centric;  the entire industry has failed to address what consumers and employers want from healthcare.

Here’s hoping that healthcare figures this out faster than Detroit did.

What does this mean for you?

Healthplans and healthcare providers that figure this out will kick butt.



Medical inflation in work comp…

Isn’t a problem. In most states. Today.

That is the headline takeaway from WCRI’s presentation last week…

First a few key factors.

  • Drug spend is a much lower percentage of total medical today than it was a decade ago. I’m quite confident total drug spend in WC today is 40% lower than it was 15 years ago.
    • That equals a reduction of about $2 billion.
  • Facility costs continue to be the main driver of what inflation there is. Inpatient (IP) and outpatient (OP) hospital inflation averaged 2.5% annually from 2012 to 2022;
  • Facilities account for 53% of total medical spend – 26% of which is OP; 9% is ASCs (Ambulatory Surgical Centers)

The details…

the best way to think about medical spend is per claim…this accounts for changes in claim volume (which is driven by injury rate and total employment).

Leaving out COVID’s impact (see end note for details) medical costs have barely budged for more than a decade…up a paltry 2 percent per year. 

However…Facility costs are a big problem for all payers…exacerbated by massive consolidation in health systems which allows them to charge “facility fees” for services rendered in physicians offices and clinics. (what a scam…)

Work comp specifically…

National averages don’t mean much if you operate in states like Florida or Wisconsin, where poor controls on workers comp medical billing enable providers to hoover dollars out of employers’ and taxpayers’ pocket.

Of note, drug costs would likely be several hundred million dollars lower if it weren’t for the profiteers enabling physician dispensing.

What does this mean for you?

All costs are local…which means all cost management approaches must be as well.

COVID…medical costs for claims during COVID were down 10% – decreases in utilization and price drove this with utilization the main driver. Not surprising…during COVID no one wanted to go to any healthcare facility for anything not essential.

This was totally predictable...


Good news Friday…Build America, Buy America

You may not have heard of the Build America, Buy America Act…here’s why it is good news indeed for US manufacturing and construction – and employment.

BABA lays out requirements for US content in federally funded infrastructure projects, requirements that specify how much Made in the USA content is needed to qualify for Federal funding.  

BABA impacts at a minimum,

  • the structures, facilities, and equipment for roads, highways, and bridges;
  • public transportation;
  • dams, ports, harbors, and other maritime facilities;
  • intercity passenger and freight railroads;
  • freight and intermodal facilities; airports;
  • water systems, including drinking water and wastewater systems;
  • electrical transmission facilities and systems;
  • utilities;
  • broadband infrastructure; and buildings and real property; and
  • structures, facilities, and equipment that generate, transport, and distribute energy including EV charging.

All iron and steel must be produced in the US…all manufactured products must have at least 55% minimum Made in the USA content, all construction materials must be “produced in the US” AND manufacturing processes must take place within the US.

per capita funding

Building trades welcomed the new guidance, with Nevada, West Virginia, Mississippi,  Louisiana, Wyoming and Tennessee among the states that will benefit  from new hiring and vastly improved: 

  • roads,
  • bridges, 
  • wildfire protection, 
  • electricity transmission, and
  • broadband.

Check out your state’s funding here.

What does this mean for you?

Better roads, schools, broadband; more good jobs; and more workers’ comp premiums and claims. 


Mergers, acquisitions, and reasons therefore

M&A activity in the world of workers’ comp services has been somewhat quiet of late, although there’s been some under-the-radar activity that – taken together – shows consolidation continues.

That’s no surprise…workers’ comp is a classic mature industry with all the attributes thereof. Scale is key, margins are tight, cost-cutting is constant, and funds for innovation scarce.

Here’s a quick roundup of recent activity from various sources…

Sedgwick is rumored to be doing a re-capitalization, another word for current investors cashing out a chunk of their equity. In my view TPAs are one of the very   few workers’ comp service sectors that have growth opportunity, so terms may be favorable. However, interest rates are still a drag (recaps almost always involve taking on a lot of debt) and of late private equity (PE) investors seem really hesitant to close on deals.

Of note, WC is just one of the insurance lines handled by the giant TPA – those other lines are in rough shape (more on that in a future post). I don’t know whether P&C carriers will be more or less interested in outsourcing work to TPAs for non-WC lines, but those calculations will undoubtedly weigh on potential investors’ enthusiasm for a Sedgwick transaction.

Ametros inhabits another sector that could be quite promising – handling funds from claims settlements. One of the extremely few companies that really gets marketing (which is NOT sales support or writing proposals), Ametros is rumored to be in the final stages of a sale/recap. While I like the company and the sector, reality is major growth is really dependent on what CMS does – or doesn’t do – re Medicare Set-Asides. CMS’ continued lack of a coherent, consistent, and clear policy on if/when MSAs are required for what lines of insurance is nonsensical, frustrating, and a disservice to we taxpayers.

Enlyte/Mitchell/Genex just completed the acquisition of Therapy Direct, a rather small PT management firm. Expect TD to be fully absorbed into Enlyte subsidiary Apricus with most functions assumed by Apricus’ current staff. Unfortunately, that’s just the way these things work; Enlyte gets a few more millions of revenue and reduces costs by cutting expenses. Classic mature industry growth…buying revenue to grow top-line. 

Lastly, any potential transactions for One Call are likely on hold pending resolution or conclusion of various legal issues involving current investors; word is some are suing others.

There are a couple others in various stages…will wait and see if things progress or not.

What does this mean for you?

In a highly mature industry, it’s

Scale. Efficiency. Differentiation. Service. 




Scary stuff…COVID death details

A just-released study found striking differences in death rates from COVID based on political party affiliation.

The study reviewed “538,159 deaths in individuals aged 25 years and up in Florida and Ohio between March 2020 and December 2021…”

more from JAMA

“Between March 2020 and December 2021, excess death rates were 2.8 percentage points (15%) higher for Republican voters compared with Democratic voters…(Table)….political party affiliation became a substantial factor only after COVID-19 vaccines were available to all adults in the US.”

After April 1, 2021, when all adults were eligible for vaccines in Florida and Ohio, this gap widened…with excess deaths among Republican voters 43% higher than among Democratic voters.

(you can get a higher resolution view here)

What does this mean for you?

Take a step back and consider how it came to this. 



Good news Friday – and implications for workers’ comp

Inflation. Employment. Manufacturing jobs. Wages.

All are in waaaaay better shape than they were a couple years ago.

What’s downright weird is how gloomy many are…in the face of pretty good news on many fronts. So let’s start the weekend off with what’s REALLY going on…

Inflation dropped to 3% – a third of what it was in June of 2022…when it was 9% –  “we’ve made a lot of progress [reducing inflation] without much pain. And I think that’s what’s critical so far.” says Stephen Juneau, an economist at Bank of America Merrill Lynch.

Employment  – there are one and a half jobs open for each unemployed worker which a) means there is NO recession and b) employers are in better shape than they were 18 months ago when there were more than 2 jobs per unemployed worker.

US manufacturing is roaring of new factories is at an all-time high and companies are adding over 400,000 new manufacturing jobs this year.

Wages are also going up – adjusted for inflation annual median household income was up over $3,000 over the last three years.

What does this mean for you?

Things are going pretty darn well.

As for the implications for work comp…this from a post in August.

Hundreds of billions of dollars is flowing into infrastructure, investment that has already created ninety thousand jobs in:

  • construction,
  • transportation improvements,
  • highway, bridge and road maintenance and replacement, and
  • heavy industry.

And many more jobs are on the way. (check out where this is happening here).

These are very well-paid, high-frequency and high-severity jobs.

This means premiums will increase as will claims and claims costs. And this will continue for years.



Medicare drug price negotiations – implications abound!

Medicare will negotiate drug prices, Big pharma’s really upset…AARP is really happy…what’s the REAL story?

Briefly…One of the key parts of the Inflation Reduction Act authorized Medicare to negotiate drug prices for 10 medications. Those 10 meds have been identified, and the howls of protest from big pharma are deafeningbut our profits!!!!!

chart credit arsTechnica

(Pharma is the most profitable sector in the economy with a gross profit margin double that of non-pharma companies)


for taxpayers, Congressional Budget Office (CBO) reports taxpayers will save $160 billion by reducing how much Medicare pays for drugs

for millions of Medicare recipients, drug prices and out of pocket expenses for those 10 drugs will drop by thousands of dollars…seniors currently pay up to $6,497 in out-of-pocket costs per year for these meds.

(due to the Inflation Reduction Act, starting in 2025 Medicare beneficiaries’ annual out of pocket drug costs will be capped at $2000)

for payers, the picture is pretty very complicated...netting it out, “these steps would lead to a higher MFP [maximum fair price] and less or no impact on the drug’s…commercial net prices [after rebates]…” [emphasis added]

lest you feel sorry for big pharma, you should know that the ten medications are “older drugs and drugs that have really been blockbusters in the Medicare program. So the companies that have made these products have really reaped handsome profits from those drugs for many years, before they’re even eligible for negotiation.” cite

oh, and about Pharma’s complaint that this will hamper innovation, experts disagree…overall changes to Medicare’s Part D drug program “will probably have a positive impact on drug innovation, especially in areas that address the unmet health needs of high-cost Medicare beneficiaries”


Fentanyl, immigration, and home health care

Illegal immigrants are NOT smuggling in fentanyl across the Southern border.

Americans are.

Yet half Americans  – and 6 out of ten Republicans – think it’s those damn immigrants.

I’ve been yelling about opioids of all types for almost two decades…and avoiding it for the last year or so because I’m burnt out on the topic. Yet here it is again, with demagoguing politicians and “news” outlets using the fentanyl crisis to scare the crap out of people by blaming brown folks for a crisis entirely of our own making.

News flash – WE Americans are consuming fentanyl…if we weren’t, there would be no crisis, no awful death toll, no broken families and destroyed communities.

And we Americans are the ones importing fentanyl.

From a Former Border Patrol sector chief:

Virtually none is smuggled by migrants themselves, says Victor Manjarrez, Jr., a former Border Patrol sector chief who’s now a professor at the University of Texas at El Paso.

“The probability that they’re going to carry some kind of illicit narcotic is probably close to zero,” Manjarrez said. “The vast majority of that fentanyl is going through a port of entry.” [emphasis added]

This is clearly a fact-free campaign to demonize immigrants, to scare us into voting for politicians that talk about building walls and banning immigration.

What does this have to do with healthcare?

I’m sooooo glad you asked.

As a nation – and individuals – we are getting older fast. Older = more need for healthcare = need for more healthcare workers.

Where are those workers going to come from? Are your kids signing up to be home health aides? Your neighbors’ kids?


There is a crisis  – but is sure as hell isn’t immigrants bringing in fentanyl.

No, the crisis is in healthcare staffing, so blocking immigration is worsening the crisis.

By far the most projected job openings is in direct healthcare workers in the decade ending in 2026 – 2 1/2 years from now – we’ll need 1.4 million direct health care workers – plus over 400,000 nurses.

States most affected by the healthcare worker crisis include Texas, Florida, Nebraska, Alabama, Wyoming and Maine.

Where are those workers going to come from – especially home health care workers? Today, almost four out of ten home heath aides are immigrants; that HAS to increase if we are going to have enough workers to care for us and our parents and grandparents.

Meanwhile Canada is attracting immigrants by giving health care workers a path to citizenship.

What does this mean for you?

If you want to change your own bed pan, vote to block immigration. 

PS…I dumped Twitter and moved to threads – follow me there at joe_paduda

Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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