As part of the Concentra acquisition, First Health will own a large field case management force. From all indications, Coventry (FH’s parent company) has wanted to get into the case management business for some time – it generates steady fees, as opposed to the ups and downs of Coventry’s core HMO business.
Well, they’re certainly in the case management business now. Concentra has hundreds of nurses and vocational rehab specialists located around the country who spend hours each week driving to attend office visits with work comp claimants, meeting with employers, and discussing cases with adjusters.
At least FH hopes they’re getting lots of windshield time. If they aren’t, they will be sitting around doing nothing while getting paid.
Field case management used to be much more common than it is today. In the olden days, back in the nineties, most lost time cases were “managed” by a field nurse. Nowadays, best practices call for assigning field case managers (FCM) to fewer than 10% of lost time cases.
And when they are assigned, they don’t have carte blanche to do what they want when they want. Today, FCM is more often than not a task assignment, wherein an FCM is asked to accomplish a specific task for a defined payment – like attending an office visit, obtaining a return to work release, and writing up a report.
And if that weren’t bad enough, across the country, over the last decade the number of lost time cases has been steadily declining.
The result of the evolution in the use of FCM has been a gradually decreasing demand for FCM and strong pressure on pricing and therefore margins.
UPDATE – These factors have resulted in significant declines in CM revenue (that’s both telephonic and field) for Concentra. From a peak of $267 million in 2002, revenues dropped to $248 MM in 03, $237 in 04, and $202 in 05, the most recent year with available numbers.
The company has done a good job in maintaining margins during this period, achieving a 14% gross profit in the most recent year after hitting 12% in 2004. That result reflects well on Concentra’s management.
Coventry/First Health now has a large pool of expensive professionals which require a very large, steady flow of cases. Kind of like a monster in the basement with a hearty appetite. As long as it’s fed, it’s fine. But if you run out of monster food, it starts to come up the stairs…
Joe : The premise of case managers not having enough work to keep themselves busy is unfounded.
Concentra has had a stable compliment of approx 800 case managers -this number has remained relatively flat over the last 2-3 years.
They are busy and are operating under new business service rules that are better aligned with customer goals and to validate outcomes improvements in RTW success,reduced case durations and reduced case costs.They are also deploying new “front ended” products that get case managers involved earlier on e.g 90 days vs 18 months..and aggressively developing a predictive modeling tool via preliminary customer data modeling.
The issue is not do they have work ,but are they destined to be needing a larger case manager workforce to keep pace with the added volume that might be expected to follow these new concepts being deployed.
I think the cutting edge in claims management is knowing when to get the CM involved. As a risk manager I like to see the CM more involved at the front end of the case to ensure timely and appropriate care. We have seen too many cases where the injured worker is stuck in a cycle of therapy and diagnostics only to end up in surgery 18 months into the claim. That’s too much lost time for my taste. You have to keep the CM on a short leash to keep the costs down. But, adjusters just don’t have the experience they once had and the early intervention model is my best example of a stitch in time saves nine! I like this move for Coventry.
I agree with rskmgt comments-case management used timely and with focus gets the best results.
Case managers that are incented to have the same outcomes driven goals as the customers they serve need not be on short leash’s because there is an inherent win/win motivation.
Concentra has become one fo the only national case management firms I am aware of that has re-examined how the CM industry has operated for years..many hours of billing time with “too much hand holding” activies vs getting claim files to a point of stability or resolution ideally with a return to work as an end result.
Case costs,duration of engagement,RTW success rates are the measures that will allow the “purchasers” of these services to regain confidence in the benefits of good case management and no longer worry about the need for professional “shackeling’ –
Lets see what the Corvels and Intracorp’s of the industry do to attempt to step to the plate in the same manner..I doubt it’s likely to occur.
This is a great win for COVENTRY..lets hope they too have the business savey to stay the course with the direction Concentra has embarked.
Alex – with all due respect, you’re wrong.
if concentra has had 800 case managers for the last few years, and their revenues have dropped significantly each year, something is wrong. And that something is the volume of cases is decreasing, as is the amount of time spent on each case, and the amount billed per case.
CM revenues have dropped $65 million over three years, and over the last year margins have increased while the top line has dropped. This is not possible while maintaining the same number of CM staff as you claim. I don’t know what your perspective is, but the figures are pretty compelling.
Joe:
I don’t think you have factored into your numbers the signifigant billing policy changes Concentra has undertaken-see Care Management site data..The days of industry wide aggressive billing has come and gone for them.This accounts for a large part of the downturn you mention..this along with a new focus on better outcomes..better ROI is whats at play.
I would be happy to wager that they won’t have case managers sitting around or sitting in their cars..Concentra like other firms are having difficult times finding new case managers given the nursing shortage..
Care to bet??
Alex- your numbers don’t work. 800 nurses, $200 million in revenue is $40k in revenue per nurse. there is no way there are 800 nurses at concentra. my experience in WC managed care completely contradicts your claims. what do you base your statements upon?
Joe,
No doubt the revenue started to drop as customers became more aware of average case cost and durations. I think the days of allowing a CM to milk a file for 10 months are over. We also know that CMs traditionally been billing machines that were incented on how many hours they bill. When you look at their website they have clearly made a shift toward transparency and ethical billing. If they are going to grow that business they have got to focus on outcomes, ROI and quality initiatives. Having been a customer of this company for more than 15 years I know they have a history of really poor management with very little vision. In the last couple of years this company appears to have shifted gears and rededicated itself to bringing new products to the market and becoming outcomes focused. I think the changes in billing have got to have a short term blip on the balance sheet. I suspect that they will realize greater revenue growth as they continue to sell their story. Coventry’s connections can bolster their prospects. I think the work is out there for them.
“The monster in the basement – case managers at First Health”..This was your tag line.First I see no indication FH will “inherit” any such “sleeping monster” as you would like readers to believe,secondly as a kid I believed there was a monster under the staircase.Thats when I didn’t know better.
There is nothing you have said nor any real indicators that the move to FH/Coventry does anything to alter the case management business dynamics-you yourself said had well managed margins under Concentra’s watch.
Perhaps the monster reference is better suited to struggling HC consultants that are getting hungrey from smaller pieces of the “pie”..time for dinner Joe?
Mr/Ms Stein – Insulting comments are neither professional nor appropriate. Moreover, your comment does not refute the central premise of my post. The move to FH does indeed do nothing to alter the dynamics – the revenues are shrinking, margins are under pressure, and the industry is waning.
Either mature professionally or limit your comments to bathroom walls.
Joe,
Do you recall this post about the Pittsburgh market? https://www.joepaduda.com/archives/000670.html
Today, another Pittsburgh based behemoth made news in central Pennsylvania. http://washington.bizjournals.com/pittsburgh/stories/2007/03/05/daily22.html
Essentially, this move takes away 60,000 members from another insurer’s flagship healthplan that frequently makes the headlines of your site…
Could there be a monster in the basement, under the bed, in the closet and behind the door now as well?
I own a large independent case management firm in Florida. We have always sold “total case cost” vs “rate per hour”. Unfortunately, “rate per hour” almost always sells better in the marketplace.
My experience is that it’s not so much the case management company’s fault as the failure of the buyer of service to really understand what is being bought & the full costs, those directly billed and those hidden in profits from subsidiaries, like clinics, PT units, and DME companies.
The February 13 2007 post from user rskmgt completely sums up the problem those of us in the case management field have. S/he has been a customer of Concentra for over 15 years even though “they have a history of really poor management with very little vision.”
Wow ! ! ! That’s a truly interesting comment from a purchaser of service. Who’s really the poor manager with little vision? The seller of service sold what the buyer bought. If the buyer thought it was bad, s/he had an obligation to look for something better.
There are lots of really cost effective case management providers out there. They are, however, the smaller regional firms. Large companies just cannot manage everything. I know. I used to manage offices for large national firms. And I am truly grateful to them now. My company is eating their lunch. Our volume has almost tripled in just the past year.
Don’t count CM out just yet. Just don’t count on the tired old usual suspects to be the vanguard
Joe: I agree with “CBS”. Maybe you should take a closer look at the independent case manager and independent case management company. I started my case management company in 2001 after leaving CorVel and having previously working for GENEX. After I witnessed many unethical business practices I knew I could provide better case management services at a better price. My company continues to grow every year, with increased referrals and revenue. Small independent case management companies can be succussful because they don’t have to deal with the large MCO’s corporate policies that focus on milking the customer and forgetting about the patient.