Integrated Services v. Choice
Friday, August 21, 2015 | 0
A prominent issue for many work comp payer execs is the continued consolidation in the medical management space; as the big get huge, there are fewer and fewer choices for payers to turn to.
The big, multi-product/multi-service companies tout the benefits of buying everything from them; cheaper, better coordination among various services, easier for adjusters, easier to connect information technology systems.
Their competitors offering one or a couple different services have a different view. Their position is a narrow, “hedgehog” focus, allowing them to be the best-in-breed. Because they only do one or two things, they are really, really good at those one or two things.
That’s the vendor viewpoint – but what about buyers?
My sense is buyers generally come down on the “choice” side. That is, they don’t want to get everything – or even just one service – exclusively from one vendor. Not that they don’t see the benefits of single-sourcing services – they clearly understand the potential for lower administrative burdens, less hassle for all their staff, fewer IT connections and perhaps lower pricing.
As one of my coaches told me years ago, “Son, you’ve got potential. That means you haven’t done anything yet.”
Therein lies the issue – or more accurately, one of the core issues with the integrated/comprehensive approach.
To date, it just hasn’t delivered lower costs, lower hassle or better outcomes.
But even if it does, many payers will be leery of single-sourcing. The concerns include:
- Complacency on the part of the vendor.
- Difficult to break up and move the business.
- Lack of control over referral processes.
- Desire to give front-line staff control over specific service decisions, e.g. independent medical examiners.
- Potentially mismatched priorities and incentives.
Each of these deserves its own post, but you get the drift – in one word, payers don’t like to lose “control.” That happened years ago when Coventry bought Concentra, and payers have not forgotten what that felt like.
I spoke with a very experienced, very knowledgeable work comp executive recently; she said it well: “We tried the integrated approach years ago, and we saw how well that worked…it didn’t.”
What does this mean for you?
That’s not to say a work comp services company can’t deliver on the promises of integrated, comprehensive services. Like all young athletes, they do have “potential."
Joe Paduda is owner of Health Strategy Associates, an 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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