Didn’t hear anything in Coventry’s earnings call yesterday about workers comp – even though it accounts for about three-quarters of a billion dollars in revenue and somewhere’s north of $85 million in margin – for Coventry.
Turns out I didn’t listen close enough – workers comp was mentioned twice during the call – once when discussing the Louisiana suit, and the other when describing what new CFO Randy Giles will be doing for the next few months (he’ll be “splitting his time…” between workers comp and Coventry’s six other businesses).
I’ve discussed Louisiana before – and made no secret of my view that Coventry’s been severely…mistreated…by the courts.
It is indeed encouraging to hear the new finance chief will be learning the work comp business – although Workers Comp chief David Young’s amply demonstrated his ability to squeeze ever more margin out of the sector, another pair of eyes may be helpful. As long as they aren’t accompanied by questions such as: “how many members do you have?”
My sense is Coventry’s work comp business has been squeezed just about dry. Price increases and assertive contract negotiations on the one hand, with ongoing issues with data quality – and the downstream negative impact on revenue – on the other have pushed the numbers pretty close to stasis. Emerging alternatives, brutal competition, declining claims frequency and increasing provider negotiating leverage will make 2011 a tich tougher than 2010.
Or perhaps more than a tich.
Feb
9
