When the huge Chinese treasure fleets up-anchored and raised their sails, their mission was simple, the execution of that mission anything but.
Expanding Chinese influence and trading was the goal, a goal that required designing, building, crewing, and training a navy that could sail into uncharted waters with unknown weather, currents, navigational hazards, and enemies and return to their home ports with valuable cargo.
Needless to say, the routes taken by the fleets are littered with wrecks, as the ships were driven ashore by typhoons, wrecked on unknown shoals, and sunk by rogue waves.
While the dangers were there, so were the skills of the shipbuilders, crews, and officers.
Therein lies the lesson for work comp.
Over the near term, premium receipts are likely to increase, driven by higher employment in the health care, manufacturing, logistics, and some day possibly construction sectors. There are some early signs, as Roberto Ceniceros reports in Comp Time. On the claims side, Concentra’s clinics saw an increase in initial patient visits in the last quarter of 2009, and that trend has continued so far this year.
NCCI has researched the relationship between increasing post-recession employment and injury rates, and the anecdotal information provided by Concentra is consistent with their findings. Their report read in part “Job creation is related to an increase in the proportion of workers who are inexperienced in their current job and, hence, more likely to sustain a workplace injury.”
As firms staff up to meet demand for new houses, cars, and services, the faster pace of work, coupled with the inexperience of the new hires, will likely result in more injuries both in total and as a function of hours worked. Again, according to NCCI, “On net, the effect of job creation dominates quantitatively, thus generating the observed pro cyclical behavior in the growth rate of workplace injury and illness incidence rates. Further, it is shown that the growth rate of frequency tends to overshoot during economic recoveries, although this effect is not common to all recessions.”
Concentra ‘battened down the hatches’ a couple years ago in an effort to hang in there while waiting for the economy to rebound. Investments in improving the ‘patient experience’ were also made, and according to CEO Jim Greenwood, these investments are probably contributing to the uptick in visits.
There’s no question work comp is largely driven by employment, and we’re seeing encouraging signs that things are looking much brighter.
The better-but-still-not-good-but-nonetheless-welcome employment news heartened several TPA execs I spoke with last week at RIMS. This is likely linked to evidence of firming TPA per-claim pricing in some areas and sectors; the sense was the improving economy, the Sedgwick deal, and specific growth in manufacturing and temp hiring will lead to a 2010 that is a significant improvement over ’09. News from the midwest indicates manufacturing activity, new orders, backlog, and employment all rose in April, led by Caterpillar’s announcement it is rehiring 9000 workers.
Across the country, the economy has grown for three quarters in a row, and some economists are expecting this to accelerate, creating hundreds of thousands of jobs in the process. If current patterns continue for the rest of the year, there will be about four million new jobs created since the signing of the Stimulus Bill.
Even Warren Buffet is excited…
On the medical expense side, the nearest term will likely be most affected by drug costs. Expect drug prices to level off (after last year’s 9.3% brand drug price increase) somewhat, but watch carefully: if pharma thinks the Feds are going to negotiate prices for Medicare Part D, we may well see another jump in price.
State drug fee schedules are already starting to change to reflect BlueBook’s demise; New York has decided to use RedBook and sources indicate other states are exploring that alternative as well. With the demise now ten months away, expect activity to accelerate.
What does this mean for you?
Good news on a Monday is always welcome. If employment continues to increase (April numbers will be out by 8:15 est today) insurers, TPAs, and managed care firms can expect decent growth after a year and a half of misery.
May
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