Work Comp Medical, OneCall and the Future of Workers' Comp
Tuesday, November 13, 2012 | 0
Something struck me during the bloggers' speak session on Thursday – at a time when medical costs are heading up, driven by over-utilization, opioids, crappy networks, and percentage-of-savings-based networks, there are few medical experts in positions of real authority in claims organizations – much less leading those claims organizations.
Even more revealing, the medical directors at most (but not all) payers have little real authority. Work comp payers are mostly run by men with backgrounds in claims, underwriting/actuarial or finance. Sure, many are highly experienced and very well seasoned, but they’re fighting the last war – the one where indemnity was the enemy.
That’s no longer the case, hasn’t been for some time, and most certainly will not be in the future when medical accounts for 70% of claims costs. What we have is an industry where claims doesn’t adequately consider medical – which is understandable because the top guy is a former claims guy.
They see the world as it was back in the day, not as it is today. A piece on military leadership by Thomas Ricks is worth quoting:
“In Iraq: our military commanders focused on planning the 2003 invasion but virtually ignored the task of planning for what might happen during the long occupation that followed. Though it was clear, almost from the start, that our round-’em-up approach to the insurgency wasn’t working and that using heavy firepower in the effort was counterproductive…
"Why weren’t our troops better prepared for the challenges of protecting civilians from resistance fighters, interrogating suspected insurgents and detaining enemy fighters?…The stakes of not finding out are great — for while we know we have a strong military, we truly don’t know if we have the right one for the conflicts we may face during the next two decades.
"That was the discovery the British made — the hard way — in the Second World War. On the eve of the war, the Royal Navy was the biggest in the world, but Britain’s military leaders did not understand that the aircraft carrier and the submarine had drastically changed the nature of maritime conflict.” [emphasis added]
Most payers and claims organizations are built for and managed to “fight the last war,” where indemnity was the enemy. Yes, the rare “claims guy” does “get” medical – but most don’t.
Outsiders get this, and that’s why there were a plethora of private equity folks and related people circulating the exhibit floor and attending sessions. There are three (and that’s only the ones I know about) deals currently in process and lots of rumors flying around about others. Smart people see the opportunity created by this situation and are moving quickly to position themselves to profit from others’ myopia.
As proof, some may not realize that Coventry is no longer the largest (measured by revenue) WC managed care company. OneCall/MSC is. Yes, OneCall does seem to be buying up everything, but it doesn’t take a genius to figure out they’ve figured out where the future opportunity is – managing medical for payers who can’t do it on their own.
Oh, and contrary to oft-repeated rumors, MedRisk is NOT being acquired – not by OneCall or anyone else. Lest you, dear reader, think I know not of what I speak, I promise to listen to Rush Limbaugh for an entire week if MedRisk does get bought.
PMSI isn’t on the block either.
Joe Paduda is owner of Health Strategy Associates, a Connecticut-based employer consulting firm, and co-owner of CompPharma, a consortium of pharmacy benefit managers. This column was reprinted with his permission from his Managed Care Matters blog.
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