Insight, analysis & opinion from Joe Paduda


Vegas Day Three – Yin and Yang

With sore feet, a pocket full of business cards, and an envelope stuffed with receipts, the work comp world is headed home.

My main takeaway from the NWCDC conference – Yin and Yang, black and white.

Serving patients and employees.

Congratulations to Starbucks and Noreen Olson, Claims and Risk Management for winning a Teddy Award. I met Noreen for the first time yesterday, and her passion for doing the right thing by her “partners” (that’s what Starbucks calls employees) came across loud and clear.

This from Risk and Insurance’ Autumn Heisler article on the award, quoting Steve Legg, director of risk management, Starbucks:

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” [emphasis added]

As a big Starbucks coffee fan, I like it even more now.

There was an entire track devoted to the advocacy model – which is terrific. But, we’ve got so far to go.

Let me explain…

The hall had too many vendors focused on how to reject claims, surveil patients, use tech to deny work comp benefits.  I spoke with one that touted their tech’s ability to help payers use AI to show a worker couldn’t possibly have gotten hurt at work.

Yes there are cheaters, but they represent a small fraction of patients.

Several sessions involved InsurTech/data analytics/Artificial Intelligence. Kudos to the session selection folks (I am peripherally involved, but don’t have any role in those decisions) for helping educate all of us non-techies on this.

Sedgwick’s George Furlong and Stephany Rockwell of JBS talked about using tech to improve decision making; their session provided real world examples while pointing out the dangers of relying solely on machines to assess data and come up with recommendations.

But much of this great tech isn’t focused where it should be – the customer interface. Reality is, dealing with insurance and insurers is a pain in the butt. Claimants are treated with suspicion, made to jump thru hoops, and generally not served well.

This from Gallagher Bassett SVP Jeff White’s presentation…

Contrast this with how Vegas treats visitors – everyone from cab drivers to housekeeping staff is welcoming, happy, courteous and out to make your stay a good one. The entire town knows its success – and each person’s livelihood – depends on you having a great time and telling everyone you know you did.

The contrast between the Vegas experience and how we treat “claimants” is a lesson in itself.

Opioids – progress – one patient at a time

I’m both very happy and deeply sad that opioids were the subject of several sessions. The solid attendance at these sessions speaks to the continued concern about opioids, and the focus on long-term chronic pain patients is critically important. The message – we CANNOT lose focus on this. We will be fighting this battle for years to come.

The good news is the growing recognition that we have to solve this one patient at a time. There are no general solutions, no silver bullets, but only a hard slog involving analyzing data, talking with each and every patient, designing a recovery plan specific to that patient, persisting when patients relapse.

One of the more realistic approaches is that developed by Carisk. I spoke at length with one of their customers, and came away heartened by the depth of understanding and focus on the patient.

Yes we are making real, meaningful progress; the work comp world has done so much more to reduce opioid use than every other payer system. We have much to be proud of – but there are still hundreds of thousands of patients taking way too many pills.

What does this mean for you?

Treat patients like Vegas treated you. And understand we are all individuals.




Vegas Day Two – Industry headwinds and poker

Yesterday’s top takeaway – the consolidation continues – and the impact can be seen on the exhibit hall floor.

Sure there were some new names on the floor, but there seemed to be fewer companies exhibiting this year than in the past.  Not surprising as work comp claims counts are down, premiums continue to drop, and there’s fewer dollars in the system to support service providers of all stripes.

Yet most companies are still planning to grow, and some of the biggest booths are from newcomers who don’t seem to know a lot about workers’ comp.

Investors talk about structural limits as “headwinds”, conditions that inherently limit growth opportunities.

Trade wars, full employment, declining frequency and employers that – for very good reasons – don’t care much about workers’ comp are combining to reduce growth in comp services.

Two possibilities.

Those headwinds may grow in velocity – or, a recession will increase claims and delay re-employment, which will help service companies while hurting payers’ combined ratios.

The companies planning to grow are hoping to draw to an inside straight.

A few – those with great customer service and a deep understanding of the business – have much better odds of success.

But most seem to be the chump at the table.


Vegas – Day One

Random takes from the first day of the National WC Conference.

myMatrixx landed the party spot of the Conference; SkyFall atop the Delano last night. First class event, lots of fun people, and great way to start the week.

The Vegas venue is excellent. Everything you need is here, located close to the hall, hotel, meeting spots, and restaurants. It makes doing business at the conference easy and efficient.

Damn expensive, but easy and efficient. I just paid $4.65 for a medium cup of dark roast – but got it at 5 am. The gym is pricey indeed. And dining here is just stupid expensive. Wah Wah Wah…I know, first world problem.

Conversations with several folks highly knowledgeable about work comp pharmacy. The industry continues to consolidate, drug spend continues to drop, led by double-digit reductions in opioid spend, and the revenue model will have to change.

Paradigm announced it is rebranding it’s subsidiaries; all will carry the Paradigm name. That makes a world of sense.

  • Paradigm has a strong brand name and is closely tied to catastrophic claims. When folks think cat claims, Paradigm is the name that comes to mind. Leveraging that brand awareness is just smart business.
  • The company hosted a media dinner last night – a very intelligent move and one other companies would do well to consider. All the key media outlets were there – and even a few minor ones like MCM.
  • Very few work comp services businesses understand the value of brand. As in almost none. Paradigm CEO John Watts does – and his company will be better off for it.

Paradigm paid very hefty prices for recent acquisitions, and itself sold for a billion dollars or so just a few months back. Watts et al will have to hit on all cylinders all the time to make that investment pay off. So far, so good. But the hard work is ahead of them.

Finally, among my many foibles is a terrible memory for names – I’m OK on faces, but can’t remember names at all. So, it’s not you – it’s me.


Preparing for Vegas

The annual gathering of the work comp tribes begins tomorrow – here’s a few thoughts from last year’s post.

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.  Get the NWCDC app for your Droid or iPhone – there’s a web-based version for tablets too.  It has the schedule, exhibit hall layout, local map, and a bunch of other handy information and tools.

5.  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.

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

A few sessions you may want to consider:

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!!!



Bill Review Survey, Takeaway #3

Our last Bill Review Survey was in 2012; things have changed a lot since then – and mostly for the better.

Overall Industry rating

Six years ago we asked the 24 respondents to rate their overall impression of vendors on our standard 1 – 5 scale: the result as reported in 2012:

In what might be best described as a wake-up call for vendors and application providers, there were no ratings higher than a 3.4, with the average a 3.07 on the 1-5 scale (among respondents who knew of the specific vendor).

Put another way, the people who use BR services view BR providers as generally mediocre/adequate/acceptable.

Today, the average rating was just under 3.3, a small but significant improvement.

However, there were significant shifts for individual companies.

In 2012 the three top vendors – Medata, Mitchell, and StrataCare were all in a statistical dead heat, with Xerox/ACS rated a full point lower. (Xerox/ACS bought Stratacare, converted most/all of its users to the Strataware platform, and now operates under the Conduent brand.)

No longer.

This year, we asked the 30 respondents to provide ratings of ten bill review vendors on four different metrics;

  • overall perception
  • handling the basics of bill review
  • customer service and implementation
  • innovation and forward thinking

(All respondents did not give ratings for all categories or companies; the findings below are averages across those respondents who gave a rating for that specific company).

Mitchell (3.75) and Medata (3.71) were in a statistical dead heat for top honors in Handling the basics.

For Customer service and implementation, Medata (3.94) was the clear leader with Mitchell second (3.54).

Medata held serve for Innovation (3.91) and Mitchell (3.5) again took second place honors.

Here’s where it gets interesting. Medata and Mitchell were essentially tied for Overall perception by respondents who rated them.

But across ALL respondents, Medata’s Overall perception rating was 3.4, with Mitchell at 3.08. While Medata has the lowest market share of the top three application providers, it was tied for highest name recognition among our 30 respondents, and thus garnered the top spot in Overall perception amongst ALL respondents.

Here’s where we link back to last week’s posts on the critical importance of customer service;  the data shows Customer Service has the highest statistical correlation with overall perception.

Note – Corvel shared the top spot in name recognition, but got the lowest rating for customer service – and was essentially tied for the lowest score for Overall perception.

What does this mean for you?

Customer service wins.

Note – I’ve received several anonymous comments/emails lately.  I’d remind commenters that anonymous comments on MCM posts are ignored, as are comments with fictitious email addresses.

You know who I am. I and my readers need to know who you are.







Bill Review Survey – Takeaway #2

One of the more intriguing findings from our third Survey of Bill Review in Work Comp and Auto pertains to data analytics.

Multiple questions probed into respondents’ utilization of data analytics. The questions ranged from the state of their data management program through the relationship between the future of BR and data analytics. In our 2012 Survey, numerous respondents stressed the importance of data analytics, data quality, data management, etc. But despite that emphasis six years ago, respondents seemed to have made little progress employing data analytics packages and integrating data analytics into BR and vice versa.

From the Survey Report (to be released in early December):

A surprisingly low number of organizations have invested significant resources into data analytics.  Only a handful of respondents report that their organization has acquired, sorted, and leveraged data sufficiently enough to begin building predictive modeling or provider profiles.

That’s not to say payers haven’t built data warehouses or aren’t developing analytics capabilities. In fact, “Every large and medium sized respondent said their organization aggregated and transferred bill review data to a data warehouse for analysis.” Rather, most are still in that data modeling development and construction phase; using that data to build models, profiles, and gain deeper understanding is still a ways off.

More narrowly, half of respondents who process their own bills internally tied a data analytics package to their BR product (a more limited approach than combining BR data with data from other sources such as pharmacy, claims, medical management, first notice, and external data sources) while only 6% of those who outsource bill processing used a data package with their BR.

This dichotomy isn’t surprising as external users are generally much smaller organizations.

To get even more specific, fewer than 20% of respondents mentioned building predictive models and in most cases respondents said data was compartmentalized and only used for particular departments such as finance.

We asked what was the greatest unmet opportunity in bill review; Only 10% of respondents specifically noted the importance of data analytics going forward. And, just 20% of respondents said that a higher level of data analytics would be the future of BR.

Considering the value added that accurate data analytics can provide on virtually all BR functions – not to mention the entire claims function, loss ratios, and financial results – and that a vast majority of respondents are not fully linking BR and data analytics, these results indicate significant opportunity.

Thanks to the 30 professionals who participated in the Survey, we have a clear picture of where the industry is today, and what they are looking for from vendors/partners tomorrow.

The respondents hail from all around the country, from insurers, state funds, TPAs, and large employers. Very large to very small, from national in scope to a single-state focus, these experts gave freely of their time and expertise and for that we are grateful indeed.

What does this mean for you?

The opportunity is clear.

Note – I’ve received several anonymous comments/emails lately.  I’d remind commenters that anonymous comments on MCM posts are ignored, as are comments with fictitious email addresses.

You know who I am. I and my readers need to know who you are.




Work comp services: Specialize or Generalize?

WorkCompWire’s Leaders’ Speak column features a two-parter from Jack Bailey of Bailey Southwell.  He has worked on a lot of transactions in our space and knows a lot about deal-making.

Bailey’s point about the growing importance of technology, and specifically the need for accreditation around cyber-security is dead on. His other thoughts on the importance of execution and customer service are as well.

I do have a different perspective on one of his statements.

From WorkCompWire:

Trend Away from Monoline Vendors to Integrated Service Offerings: While this isn’t necessarily a new concept in the industry, payers increasingly emphasize the benefits of having multiple service lines handled by a single vendor in their contract decisions. As an example, see the below quote from the recent quarterly earnings call of publicly-traded industry vendor:

…singularly focused vendors are quickly becoming obsolete while payers recognize a greater efficiency and effectiveness of integrated services.

Two points here.

First, outside of the quote – which I’ll get to in a minute – I don’t see any supporting evidence for this assertion. OneCall is the best example of a diversified service provider, and we all know how that experiment has worked out.

It hasn’t.

In contrast, single-focused vendors such as bill review firm Conduent, physical medicine management company MedRisk (HSA consulting client), DME/Home Health provider HomeCare Connect, and PBMs (most of which focus almost entirely on pharmacy) are doing well. Conduent and MedRisk are the largest providers in their business sectors, HomeCare Connect is growing rapidly, and PBMs myMatrixx (HSA consulting client) and Optum now dominate the work comp pharmacy business.

There are many reasons for this – which I’ve explored in past posts in mind-numbing detail – but the core issue is the same as in any other industry – doing one thing really, really well is hard enough. Doing several things really well is damn near impossible.

As Bailey noted, payers are demanding excellence in execution and customer service, demands that have (with rare exceptions) not been met by diversified service providers.

Point two.  The quote in Bailey’s piece comes from CorVel’s CEO. 

Of course Clemons would say that integrated services are the bee’s knees;  CorVel’s business model is predicated on getting as many dollars from its customers as possible.

Supporting evidence for my contention that single-focus companies are doing well, and are very attractive to investors is everywhere.

For example, SUNZ’ purchase of case management company Ascential Care and Mitchell’s acquisition of physician adviser/peer review/IME firm MCN. Both Ascential and MCN were founder-owned and had narrowly-focused businesses; they weren’t diversified.

Then there’s Paradigm’s acquisition of Adva-Net for about $110 million, a transaction completed in the last month or so. Adva-Net was also founder-owned (with some venture capital as well) and narrowly-focused; it brings a network of pain management providers and facilities to the table.

This follows Paradigm’s purchase of Foresight Medical last year. As I said last September, “Foresight’s niche is narrow but important – the company’s core business is negotiating prices for implantable surgical devices.”

Finally, in all my conversations with larger work comp payers, the vast majority of buyers want best-in-class services – because their customers expect and demand it. SVPs of Claims, VPs of Medical Management, Chief Medical Officers – I’ve never heard one say “I’ll take mediocre service levels and results because working with one vendor makes my life easier and is less burden on my department.”

Yes, there are exceptions, primarily for smaller payers who don’t have the staff or resources to handle multiple relationships. In that case, the “multi-offering supplier” approach makes sense, and this can be an attractive niche, with vendors building attractive businesses around wide service offerings.

What does this mean for you?

Market segmentation is key; understand what your buyers’ problem is, and solve it. Larger payers want best-in-class, and many smaller payers are looking for simplicity.




Bill Review Survey – Takeaway Number One

The three top takeaways from HSA’s 2018 Survey of Bill Review in Workers’ Compensation and Auto are:

  1. It’s all about customer service
  2. Analytics are lacking
  3. Medata leads the pack

We’ll dive into customer service today, and discuss the other takeaways later this week.

From the Survey’s Executive Summary:

The importance of customer service cannot be overstated. At a time when the BR industry and payer community are looking at e-billing advancements, connectivity, and predictive analytics to make BR faster and more efficient, customer service rose to the top of the list when discussing or scoring the most important aspects of BR.

Whether we were asking “are bill review vendors differentiated?”, “how important is customer service”, or how respondents ranked individual bill review vendors, customer service kept coming up. Whether respondents outsourced bill review or processed bills internally using a third-party application, whether their companies were large or small, operated in a single state or nation-wide, customer service and variations on that theme were pervasive.

For example, one may well think bill review is a commoditized business, where vendors compete on price and relationships. Fully 2/3rds of the 30 respondents believe bill review vendors are differentiated, primarily by responsiveness, customer service, and a sense of partnership.

Stepping back, this is not surprising.

In any commoditized market, the customer who believes they are being listened to, serviced promptly and competently, that their vendor/partner really cares about the relationship and is always looking to add value, will view that vendor as a partner – a key differentiator.

In non-commoditized businesses, buyers don’t care nearly as much about customer service. Think Apple; people stand in line for hours if not days to buy their latest tech because it can do all this innovative stuff, has a really great camera and screen, can store a gabillion photos…(and many of us love to show off our latest toys to jealous friends). And often that tech has bugs and costs a fortune and shatters when you drop it and battery life sucks and it is obsolete in months… (Disclosure – I’m an iPhone, Mac Air, and Mac desktop user…but I’ve never camped out at a Store)

Or Tesla.  Costs a mint, one has to wait months to get the car you want, software can be buggy, getting service is a pain in the neck, charging is NOT easy or simple or readily available in many places…Yet lots of people buy Teslas.

I know, there are deep psychological/emotional reasons we humans want to own iPhones and Teslas. That doesn’t negate the key point here – people buying highly differentiated products don’t care about customer service.

Service can be THE differentiator in a commoditized business.  

Tomorrow, data analytics.

What does this mean for you?

Much of workers’ comp – claims, medical management, insurance, related services – is pretty much commoditized. I would argue  – and the research clearly indicates – that differentiation is not only possible, but critical to your company’s survival and success.


Customer Service, part 2

Well, who knew a holiday week post on customer service would be so popular?

It appears we struck a nerve there, perhaps driven as much by universal frustration with big “service” companies as anything else.

To that point, here’s an example of a huge business that completely misses the point.

This summer American Airlines allowed flight attendants to give little things to passengers upset about delays or other problems. Frequent flyer miles, drink coupons, seat upgrades, stuff that didn’t cost AA anything but made angry passengers feel that AA cared about the problems the airline caused.

Then, some genius at HQ decided this was a bad idea.

This from Forbes:

Every time some bright young marketing executive tried to make American (or some other airline) more responsive, and more quickly responsive to passengers’ dissatisfaction by empowering front-line workers to offer some form of compensation, the bean counters back at headquarters quickly noticed that the cost of such empowerment escalated rapidly. The result, alas, always has been the dramatic reduction or elimination of front-line workers’ authority to solve customer service issues at the point of contact.

Instead of fixing the problem, the corporate knuckleheads tried to deal with the fallout – but stopped when it cost too much. 

This is exactly what killed US manufacturing, autos, and many other businesses. At the end of their assembly lines, GM, Ford, and Chrysler diverted many just-built cars with manufacturing defects to another mini-factory.

Auto worker using hammers to straighten a hood on a just-built car…

There, very skilled and very expensive workers diagnosed and fixed cars that had just been built. These guys are yesterday’s American Airlines flight attendants, tasked with fixing problems caused by management.

Clearly senior management didn’t understand that if they spent the time and energy and dollars to do it right the first time, they wouldn’t have to a) fix problems with cars they just built, and b) deal with pissed-off customers.

Yes, it takes that time and energy and dollars. But the results are measured in customers kept, service problems eliminated, and extra costs avoided.

Or, you can just wait for your businesses’ version of Honda to come in and eat your lunch.

What does this mean for you?

Find out what your customers want, and do it right the first time. They will love you and reward you for it.






It’s all about customer service

HSA’s third Survey of Bill Review in Workers’ Comp and Auto is done – final editing is in process and we’ll have the report out shortly. There’s one key takeaway – it’s all about customer service.

We will dig into the details next week, but first a couple thoughts about “customer service.”

The core of customer service is this: the customer wants to feel valued, that they are important to the seller. There are two basic ways of achieving that – thru organizational policy and by individual employee actions.

I fly American Airlines a lot, and almost exclusively. I’ve long figured that it’s best to have some “status” with an airline because something bad will inevitably happen and when it does you need some stature to get any help at all. In general, that works out. But of late, the “value” of my loyalty has dropped considerably. While I’m still piling up the miles, American seems to have made the corporate decision that it is now “Too Big To Care.”

AA is the world’s largest airline, flies everywhere, and probably thinks it can do what it pleases and we’ll just have to deal with it.

Verizon has a similar Too Big to Care perspective. As the dominant wireless carrier, they are all about maximizing revenue from each customer, and in my experience give their service staff little leeway to fix problems or come up with creative solutions.

USAA has long had a reputation as the best personal lines insurer, but of late it’s customer focus seems to have been shoved aside in favor of snappy TV ads during football games. You have to put your dollars somewhere, and it’s cool to be an exec in a company your neighbors see on the tube.

These three organizations are surveying me all the time about service, about how smiley the flight attendants are, how fast they answered the phone, whether I was happy or not with the encounter with customer service.

Wrong questions.

These are questions intended to rate, reward, and penalize the folks on the phone, at the counter, at the airport. Instead, the should be asking customers what upset them about the service or how they change their policies to do better.

Because most times it’s not the person, it’s the policy.

For example – Dumb corporate edicts about closing flight doors 10 minutes before “departure” time may help on-time performance stats, but they piss off late arriving customers. The bigwigs are missing the point – who cares about on-time performance if you can’t get on the damn plane?

What these companies are missing is understanding that people care about how they are treated as individuals, which means these huge organizations have to give their service people the leeway, training, and flexibility to solve the customer’s problem.

And this isn’t apologizing and offering to rebook on another flight sometime in the next couple of days in seats by the rear restroom. It is keeping the plane’s doors open, or giving a credit when a customer misreads a confusing policy or doesn’t exactly comply with a process designed to make the seller’s workflow easier.

So, what does this all have to do with bill review?

These three companies are all Too Big To Care.

With consolidation increasing in work comp, it’s possible some vendors may get Too Big To Care.  In fact, it’s likely. 

That opens up opportunities for others, for companies that understand what patients, providers, employers want and need, and give their front-line staff the ability to deliver on those wants and needs.

What does this mean for you?

Customer service starts with understanding that customers want to feel like you care. It’s a ton of work to figure this out, but the rewards are long, stable, and profitable customer relationships.

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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