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Paduda: Innovation in Workers' Comp Doesn't Exist

By Joe Paduda

Friday, July 21, 2017 | 720 | 0 | min read

Real innovation in workers’ comp is rare, indeed — which is completely understandable, and unfortunate.

Joe Paduda

Joe Paduda

As the rest of the world embraces automation, artificial intelligence and disruptive technology, we rely on old approaches, systems, processes and tools that are relics of the pre-internet days.

Yes, only in work comp would our version of "Mad Men" be able to fit in seamlessly if dropped into today’s workplace.

Sure, there are many differences, but these are from outside work comp; after they figured out push-button phones and men got their heads smacked for harassing women, it would be business pretty much as usual, albeit with flat screens instead of typewriters and paper files.

Innovation does exist. I’ll cite a couple of examples next time — examples that are notable as much for their rarity as for their potential impact.

What’s deeply troubling for an industry struggling to adapt and evolve, we have a culture that values stability, safety and tradition, and actively avoids anything that seems even remotely risky. I’ve spoken with many executives, risk managers, front-line staff and brokers who decry the lack of innovation in workers’ comp, yet they are often the very reason innovation doesn’t happen.

Some will argue that they do innovate, and in a couple of instances they may be right. But those are rare, indeed, as most in workers’ comp conflate “innovation” with incremental improvement.

Everyone wants to be the second — or even better, the third — to try something. They want someone else to do it first, to figure out what works and what doesn’t, to take the risk. God forbid they ask permission to try something that turns out to not work as well as it was supposed to, or doesn’t work at all.

What our industry is missing is that people and companies learn far more from failures than from successes. Just like sports teams take lessons from defeats to change what they do, to adapt and evolve, industries and companies get better faster when they screw up.

One of our daughters works for a huge tech firm; her account is a giant application provider. They just invested well over $10 million on a new system/technology that may or may not work. The approach seems to be, “We have to try it. If it fails, we’ll learn a  lot, and if it works, we’re way ahead of the competition.”

Can you imagine anyone in workers’ comp doing this?

Maybe once. Then they’d get fired.

Because we don’t understand the difference between “failing” and “failure”.

I see this happen all over workers’ comp. Giant insurers and third-party administrators force their vendors to develop systems, programs, technology, knowing that they have no risk because if it fails, the TPA/insurer is fine.

What they miss is the real, and long-lasting damage they do to their “vendors” — and every other vendor. Far too often, suppliers build systems and technology at the behest of payers, only to be told, “We need you to tweak this and change that. Oh, and can you integrate with this other system? Uh, let’s think about a pilot. Jeez, just doesn’t seem to be exactly what we need. Let’s put it on the back burner for now.”

Vendors have been burned so many times that many are (quietly) refusing to do anything new or different, because they’re going to get screwed.

I’m not solely blaming big payers; this is industry-wide, due to the pervasive culture that prizes stability and safety over innovation and insight. 

That’s great for today, but the implications are frightening.

The worker-employer relationship is fundamentally changing.

Where work happens is rapidly changing.

What workers “do” is changing even faster.

And here we sit, waiting for the other guy/gal to try something so we don’t “fail."

What does this mean for you?

  • This is a primary reason why our industry attracts few "A" players.
  • Change will be forced on us from outside if we don’t change first, and we will not like it.
  • This industry is incredibly vulnerable to disruption from outside forces.

Joe Paduda is co-owner of CompPharma, a consortium of pharmacy benefit managers. This column is republished with his permission from his Managed Care Matters blog.

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