I’ve been conversing with a few old industry hands about Coventry work comp’s recent decision to become kinder and friendlier. As I reported, the motivation stemmed from a customer survey done this summer by an outside consultant/now employee, Pat Sullivan. I haven’t seen the survey, but it appears it shook up Coventry management enough to (finally) recognize what everyone else has known for years – Coventry’s customers really don’t like Coventry.
Jim McGarry, Coventry work comp’s leader, then hired Sullivan to help reform the company’s image, (as well as to oversee their California strategy) an initiative that was announced last week.
They have two major challenges.
First, cultural change. There are two competing cultures at Coventry work comp – the remnants of First Health and Concentra. Sitting on top of these folks are the Coventry senior managers and a few experienced work comp managed care execs from outside organizations (e.g. Rob Gelb from Intracorp and Dwight Robertson MD from Travelers/USHealthworks/Zenith).
The First Health folks came out of an organization that was quite self-confident and pretty hard-nosed with customers, vendors, and competitors. I recall a conversation I had with one of their top execs about sharing data to compare my client’s results in an area with FH’s; the exec asked me “who the F*** do you think you are?” the conversation deteriorated from there. I’d note that this persona did not by any means extend to everyone, and in fact some of the folks in customer-facing positions were strong advocates for their clients.
In contrast, Concentra, while not without its warts, tended to foster a culture that was somewhat more customer-centric. Their people tended to listen better (at all levels of the organization) and be more proactive in dealing with customer issues internally.
Those two groups have clashed at Coventry, with the FH folks seeming to dominate early on, and Concentra alums now starting to exert more influence. But make no mistake, Concentra came into a company that was already dominated by FH staff, and that dominance will not be readily displaced.
Compounding the problem is the abysmal record American companies have when they try to change their culture; fully three-quarters of execs said that 50% or fewer of their cultural change initiatives were successful.
Second, there may well be a conflict between Coventry’s financial objectives and desire to become more customer-focused. These are NOT mutually exclusive, and in fact many organizations have been financially successful because of their customer focus.
That will be a challenge at Coventry. Growing the workers comp business has long been a top priority for Coventry. Inordinately profitable (estimates are that WC margins are three to four times higher than Coventry’s group health business), work comp is also a ‘fee’ business – unlike the ‘risk’ business in Coventry’s portfolio, there’s little uncertainty – you charge X, collect Y, and profits are Z. Thus work comp balances out their book of business nicely and as a mandated benefit employers have to buy it (unlike group health, which is declining as premiums continue to escalate).
In a time of decreasing injury rates, falling insurance premiums and declining TPA fees, Coventry has been pushing customers very hard to agree to higher prices and additional services. Network access fees have been increased substantially for clients facing renewal, and Coventry has also strong-armed customers into using its networks exclusively, thereby preventing customers from selecting other networks in specific jurisdictions (e.g. California and New Jersey). The company has also threatened big (and small) customers with litigation as a way to force the customer to comply with Coventry’s requests. Meanwhile, improvements in data quality for bill review and network directory functions, enhancements to the 4.0 bill review application, and other client issues appear to be on the back page of the priority list.
As much as account managers may want to help out their customers, their bosses’ bosses are driving hard for more revenue across an expanded product line. And as the only viable national work comp ppo, Coventry has monopolistic power in that segment.
David Young, Pat Sullivan, Ken Loffredo, Jim McGarry et al are smart and capable business people. If they can pull this off they will have accomplished something few companies ever have.
What does this mean for you?
It is really hard to change a company’s culture. It is especially difficult when the people tasked with taking that message to the customer also have to tell the customer their prices are going up and they have to buy more services.
Oct
21
As a former FOCUS repricing client, I would elect to go out of business before I ever entertained doing business with a merger of two arrogant companies which now operate under the name of Coventry.
At the time we did business with them, FOCUS knew they were the only game in town and strong armed us on the fees and provided us without almost no customer service to speak of. When I contacted First Health in an attempt enter into a contract with them, they never returned my calls and were rude in their reply emails to me. They didn’t want our business as they knew they would soon be merging with FOCUS to form their monopoly. Their intent was to force small repricing companies out of business. Thankfully, they couldn’t compete with the level of customer service offered by small companies and therefore, small companies like ours thrived. I suppose I should be thanking them.
We now access the Aetna WC Access network and although they do have their own quality control issues to work through, their customer service team is doing an excellent job communicating and providing prompt answers to our staff.
However, in my opinion, none of these large PPO companies really understand how to successfully operate a workers’ comp PPO network. I also wish they would stop calling themselves managed care companies as they do absolutely nothing to manage care.
All they do is request discounts from physicians as they have absolutely no mechanism in place to direct the referrals to these physicians. They are all basically operating backdoor discounted networks and providers would be foolish to join for the sole purpose of receiving WC injury referrals. Since they do not have this mechanism, they simply piggy back off of the group health discounts they have negotiated and the WC discounts suffers.
Further, the quality of the provider network data that these organizations distribute to their clients is, for the most part, highly inaccurate. A carrier could never arbitrarily select a list of physicians from their network listings to develop WC panels in those states that use them. The ones that have tried this have embarrassed themselves as their employer clients find out in short order that there are out-of-service numbers, incorrect addresses, deceased physicians, closed hospitals, etc., on their panels rendering them useless and unenforceable.
Additionally, anyone using Coventry for repricing, especially in PA, should have their bills audited. We have done a number of audits for Coventry customers and have detected many overpayments. Additionally, their customers should specifically look for instances where Coventry did not deny undocumented services, miscellaneous services, and did not apply the appropriate NCC coding edits to bills in lieu of taking the PPO discounts. PPO networks such as Coventry make most of their money on the % of PPO savings they derive. Therefore, it is not in their best interest to reprice the bills properly by denying these services, and this is to the financial detriment of their insurance carrier and self-insured clients.
So, if you’re waiting from change from Coventry, don’t hold your breath.