Work Comp Predictions for 2014 – Part 2

Okay, the easy ones are done.  Now it’s on to the tough, out-of-nowhere predictions, the ones that make – or more likely break, any reputation as a prognosticator.

6. Aetna will not sell its work comp business.  Even though some really smart folks (and people I respect) in the PE world think otherwise, I just don’t see it happening. I should have bet David Donn…(see comments section in the link).

7.  Someone is going to buy Stratacare.  OK, I know this appears to conflict with my earlier statement that the deal flow is going to slow down, but it really doesn’t.  There’ve been, what, a gazillion deals in work comp services this year?  So half-a-gazillion is less, right?

Anyways, Coventry needs a bill review platform (but I don’t think they’ll buy S-care).  Methinks it will be Mitchell; their new owners could consolidate a LOT of the work comp bill review business.  While that may appear to be a market-dominating move, don’t discount Medata and MCMC.  Agile, quick, and aggressive, these companies are taking share at the expense of the big boys – and will continue to if the “boys” become “boy”.

8.  Frequency will level off – somewhat.  Except for the recession-driven increase a few years back, claim frequency has steadily declined, averaging 2-4 percentage points per year.  With employment up, the economy improving, and manufacturing, logistics, construction, health care and energy all strengthening I’d expect frequency’s perennial decline to end, or at least moderate quite a bit.

9.  Guidelines are going to get a lot more attention – and more regulatory support.  I’m doubling down on last year’s prediction that guideline usage would grow; with the release of ACOEM’s drug formulary, Minnesota’s adoption of back surgery guidelines, the great work of PCORI, and Medata’s analysis of the impact of guidelines on cost the pressure on regulators to add more science to the art of work comp medical care is growing daily.

10.  The train wreck that is senior management at the North Dakota State Fund will continue to demonstrate the perils of politically-driven leadership.  After sacking one of the best senior execs in the industry on BS charges, WSI has:

• blown $17 million on a failed IT project (remember this is for the NoDak State Fund, we’re not talking a top five insurer/TPA here);
• allowed senior executives to hire and manage relatives, in direct violation of the State ethics code;
• printed up ID cards with the wrong phone number, one that rang thru to a call service staffed by “red hot babes” (and this was done by one of the senior exec’s family members on staff at WSI)
• screwed around with a claimant’s file, deleting a nurse’s note that supported the claimant’s request for benefits
• pressured their own medical director to change his medical opinions.

Under state law, an audit is supposed to be conducted right about now.  Haven’t heard what firm will be conducting the audit, but if past history is any guide, expect a whitewash. We can expect continued screwups as the far-in-over-their-heads “leadership” of WSI makes a mockery of management.

The tragedy here is there are a lot of very capable, competent, and diligent folks at WSI, working every day to do the right thing.  They and the workers of NoDak deserve far better leadership.

There you have it.  One more day to go for this “business” year, and then it’s off for a couple weeks.