Category: Workers Comp

Nov
4

19 years ago

Posted by Joe Paduda on Friday, November 4th, 2022 | Comments

I wrote my first post on opioids and workers’ comp. Almost two decades later, the post – which was really an excerpt from a Workers’ Comp Insider blog post – is terrifyingly prescient.

Interesting item from Workers Comp Insider today:
There is an interesting convergence of issues concerning the pain killer, Oxycontin. Originally developed to combat cancer pain, Oxycontin has been aggressively marketed over the past three years by its manufacturer Purdue, to the point where the drug is now the pain-killer of preference for work related injuries. This drug is twice as powerful as morphine and, while not technically addicting, it can create withdrawal symptoms when a person stops taking it. According to a study by NCCI, Oxycontin is prescribed for pain in 69% of permanent partial disability cases. This same study also points out that 49% of these prescriptions go to people with back injuries. When you combine that with the next interesting piece of data – Oxycontin is almost always dispensed in 50 day supplies (100 tablets) — you have a potentially volatile mix.

Kudos to Tom Lynch and Julie Ferguson for their early warning.

Dr Steve Feinberg sent me a note re the CDC’s just-released update to opioid guidelines; there’s a lot to unpack here. A couple of key takeaways.

  • the guidelines were just that – guidelines. In far too many instances they were used to define hard limits, which was wildly inappropriate and completely inconsistent with CDC’s guidance.
  • this from Christopher Jones, acting head of the CDC’s National Center for Injury Prevention and Control and a co-author of the updated guidelines:
    • “The guideline recommendations are voluntary and meant to guide shared decision-making between a clinician and patient…It’s not meant to be implemented as absolute limits of policy or practice by clinicians, health systems, insurance companies, governmental entities.”

What does this mean for you?

Pay attention to early warning signs and don’t over-react.

Nov
2

Employee and customer trust = loyalty = success

Posted by Joe Paduda on Wednesday, November 2nd, 2022 | Comments

with “success” defined as;

  • more revenue,
  • sticky customer relationships, and
  • more new business driven in large part by referrals from happy customers.

So, how do you measure “trust”?

Well,  you can use lengthy surveys, have long conversations, or track measures such as additional revenue, referrals, and added services.

All of which don’t tell you much about loyalty and are vulnerable to interpretation and confirmation bias.

Or you can take an objective, reproducible approach that can help you determine what really matters to customers, where you’re falling short and what you need to do going forward.

Why do this?

According to an analysis by the Economist, lost trust has financial consequences. Volkswagen, Wells Fargo, and six other corporations lost 30% of their value when they lost trust, at least in the short term.

From Harvard Business Review:

customers who trust a brand are 88% more likely to buy again, and 79% of employees who trust their employer are more motivated to work and less likely to leave…

Customers who give a brand high trust scores are three times more likely to stick with it through a mistake. Eighty-eight percent say they’re more likely to buy from that brand again, and 62% will buy almost exclusively from the brand.

The HBR piece outlines a pretty simple yet powerful way to assess trust and loyalty – which is built on a foundation of trust – and to identify specific factors that will affect customer and employee trust and loyalty.

Briefly, there are four components, each scored on a 7 point scale.

  • Humanity: The company/brand demonstrates empathy and kindness toward me and treats everyone fairly.
  • Transparency: The company/brand openly shares information, motives, and choices in straightforward and plain language.
  • Capability: The company/brand creates quality products, services, and/or experiences.
  • Reliability: The company/brand consistently and dependably delivers on its promises.

Different customers may give your organization the same net promoter score, but for different reasons. A brief survey can unpack key drivers and enable you to focus on specific areas that will improve employee and customer trust.

What does this mean for you?

Nothing is more important to business success than employee and customer trust.

The survey tool is here. Use it.

Oct
31

Complacency and arrogance – part 2

Posted by Joe Paduda on Monday, October 31st, 2022 | Comments

Last week’s post on Complacency and arrogance struck a chord with quite a few readers; some commented on on the post and/or LinkedIn while more chose instead to email me directly.

One question was raised by several of you; how does one guard against complacency and arrogance?

a few thoughts…

  1. survey your staff
    there’s an excellent piece in this morning’s Harvard Business Review on employee surveys. Key takeaways include:

    1. tell your staff you need and want their feedback/input/recommendations
    2. confirm that by a) let your staff know you value their input and appreciate their willingness to be honest; b) letting all know what you heard and what you plan to do about it; and c) show some self-awareness by letting them know you recognize one or more of your habits/tendencies that may be a challenge for them and want their perspective on how you can better work with them
    3. change what you do and how you do it based on staff feedback
  2. survey your customers
    1. ask what you can do better
    2. identify one thing they’d like you to do differently
    3. ask how you can make their interactions with your company easier/faster/more useful
  3. be self aware
    1. seek to better understand why you react/respond the way you do to criticism or disagreement. Are you defensive, aggressive, placid, dismissive, apologetic? Why? is it because you aren’t as self-confident as you’d like to be? Perhaps a bit over-confident and egotistic?
      The way you react speaks volumes about you – and will determine if your outreach is a success or another nail in your coffin.
  4. Don’t talk – listen.
    No one cares about you, your company, your story, your successes – and the more you blather on, the less they care.
    Until you’ve convinced the audience you understand their need/wants/problems/fears and can help solve them. Ask questions, and follow-up questions, and more questions. Listen hard. Repeat what they’ve told you “If I heard you correctly, you said XXX is limiting your ability to do YYY…Did I get this right? Ok…what have you tried to do to address that? What’s worked, what hasn’t, and why?
    for more on this – here’s a post from 11 (gulp) years ago…

OR, hey, just ignore doubters and staff and customers…

What does this mean for you?

If that little inside voice is bugging you, you’d best listen…and listen. hard. 

Oct
28

Complacency and arrogance

Posted by Joe Paduda on Friday, October 28th, 2022 | Comments

Reading your own press clippings.

Belittling competitors.

Overweening self-confidence.

All are all too common when companies are succeeding, growing and taking marketshare. Everything is going well and senior leadership is blissfully confident that it always will. Any hint of a shadow on the horizon is rapidly dismissed as insignificant, unimportant, and nothing to be concerned about. After all, everything we do is well thought-out, smart, and insightful, if not outright brilliant.

Internal dissent, contrasting opinions and concerns about troubling indicators are quickly dismissed. After all, things are going so well, those can’t be right. Nah…that negativity is just the product of jealousy…feeble efforts by detractors unable to compete in the marketplace or staff unable to grasp how smart the C-Suite is.

You gotta see the new product/service we developed…it’s a game-changer, a big leap forward, way better than our erstwhile competitors! How do we know? Well because we built it…and everything we touch turns to gold.

But wait, what about continuing to improve our core product, enhance our service, incrementally get better? That’s where most of our revenue comes from, what made us successful and built our stellar reputation…

Sure of course yeah let’s do that…but look at this shiny object!
this webinar! This industry award! This way-better-than-anyone-else-has product! This brochure that features a big picture of…me! This interview in (insert media outlet)!

This is all too common in the world of work comp services. As in sports, business, entertainment and politics, leaders that focus on themselves, their successes, their brilliance – and fail to focus on continuing to do what made them successful in the first place – will inevitably fail.

Success is not about you, your social media followers, your past successes, resume, or brilliant ideas.  It certainly isn’t about how much better you are than your competitors…or rather how much better YOU think you are.

Success is about nurturing customers, listening hard to them, seeking to understand what they want, why they want it, and how they want it. It’s about making damn sure the people who pay your bills – your customers – know you are 100% focused on them.

what does this mean for you?

1. if you are darn sure you’re really good and all is well…it isn’t.

2. It’s not about you  it’s about your customers.

 

 

Oct
21

Leaving Las Vegas

Posted by Joe Paduda on Friday, October 21st, 2022 | Comments

After 2 1/2 days of nonstop meetings, change encounters, and talks, it is a relief to be heading out.

What was notable

Loved the way the conference planners set up the sessions in “rooms” surrounding the exhibit hall. Exhibitor attendance has been…declining for some time, with exhibitors rightly bemoaning the lack of traffic.

This generated more traffic – as did locating lunches and beverage consumption opportunities.

Newbies – lots of tech-focused entities on the floor this year. I’m not sure they all entirely understood their value proposition, what drives workers’ comp buyers, and exactly how they fit it. But hey, great to have them and their cool stuff on the floor.

Coolest premium – myMatrixx’ charger. Now, I didn’t spend a lot of time trolling for freebies – but this was far and away the best I saw. (disclosure – mM is a consulting client)

Biggest disappointment

Attendance at the session on impact of climate change on workers’ comp.

Aren’t you paying attention?

Every day there is more news about floods, fires, droughts, blazing heat and devastating storms – all of which have direct and major import for work comp.

And more regulations about heat exposure, polluted air, and employee safety.

And more discussion of unforeseen impacts of climate-change driven weather – from flesh-eating bacteria in the swampy waters inundating Florida communities to new regulations addressing exposure to smoke-filled air in western states.

Two claims professionals all-too familiar with hurricanes, floods, and wind (Jill Leonard of LWCC) and fires, heat, and drought (Jeff Rush of California Joint Powers) spent a ton of time preparing to help you handle what is coming. They know all about preparation, planning, the impact on injured workers (where’s my check!!?), dealing with new “employers” that flood an area after a hurricane, and all the things you can only learn from decades of experience.

As Jeff noted, Mother Nature doesn’t care about your opinions on human-caused climate change.

But your boss sure will when the stuff hits the fan and you aren’t ready.

 

Oct
17

National Work Comp conference – go time…

Posted by Joe Paduda on Monday, October 17th, 2022 | Comments

The annual gathering of the work comp tribes begins tomorrow – here’s a few thoughts from a post a few years back.

1.  Realize you can’t be everywhere and do everything. Prioritize.

2.  Leave time for last-minute meetings and the inevitable chance encounters with old friends and colleagues.

3.  Unless you have a photographic memory, use your smartphone to take voice notes from each meeting – right after you’re done – or write down key points immediately.  Otherwise they’ll all run together and you’ll never remember what you committed to.

4.  Get the app for your Droid or iPhone –  you got an email with the info…It has the schedule, exhibit hall layout, local map, and a bunch of other handy information and tools.

5.  Introduce yourself to a dozen people you’ve never met.  This business is all about relationships and networking, and no better place to do that than this conference.

6.  Wear comfortable shoes, get your exercise in, and be professional and polished.  It’s a long three days, and you’re always ‘on’.

7. Remember what your mom told you in high school…nothing good ever happens after 10 o’clock. 

This year I’ll be (mostly moderating) two sessions – one on fraud with my good friend Bill Barbato of Change Healthcare and SA Jefferson Grace of the FBI’s Las Vegas office, and

another on the impact of climate change on workers’ comp with Jill Leonard of LWCC and Jeff Rush of California Joint Powers. Hope to see you there.

Stop by the AppliedVR booth – it’s 769 right across from the networking zone – I’ll be there a good bit.

Finally, in these day of YouTube, phone cameras, Twitter, Instachat and SnapGram, what you do is public knowledge.  That slick dance move or intense conversation with a private equity exec just might re-appear – to your dismay.

And beware white man’s overbite…

Oct
6

Work comp drug spend – profiteering rampant in LA FL and PA

Posted by Joe Paduda on Thursday, October 6th, 2022 | Comments

WCRI’s webinar on interstate variations in drug payments reminds us that lax regulations and absent legislators cost taxpayers and employers millions.

Slides are here – and are free to access. The report itself is here – available free to members and a nominal fee for non-members.

There’s a ten-fold variation across the 28 states studied by WCRI, with WI MN and MA around $22 in quarterly drug spend per claim, but LA and FL right around $200. A far higher percentage of claimants get scripts in the two high-spend states than in those on the lower end – and I’ll bet most of those are from dispensing physicians and attorney-represented workers using mail-order pharmacies.

WCRI looked at data from non-COVID claims less than 3 years old in 28 states from Q1 2018 to Q1 2021.

Top takeaway – overall quarterly drug payments dropped from $102 in Q1 2015 to $68 in Q1 2021 – but PA FL and CT – states with physician dispensing and/or mail order pharmacy problems – actually saw an increase – and that increase was largely driven by dermatological agents.

Want more evidence of the rampant profiteering enabled by lax regulations and compromised legislators?

  • Dermatological payments account for about 20% of payments in the median state – although there’s a wide variation, from 6% in the lowest state to over half (52%) of payments in the highest state.
  • These dermatological agents are almost always combos of lidocaine, menthol, diclofenac sodium and other generics – profiteers mix ’em up and bill at a huge markup.
  • PA is especially egregious – the vast majority of these dermatologicals are pharmacy-dispensed, and the average price paid was over $300.
  • Physician dispensed drugs accounted for more than half of drug costs in several states including Florida
  • It’s not just dermatologicals…California saw a big jump in NSAIDS driven by fenoprofen and ketoprofen…both questionable medications that have become darlings of the physician dispensing/mail order profiteers.

There’s good news too…after dermos, NSAIDs have the next highest payment across all drug groups at 18%…while opioids account for about 7% in the median states – way down from 13% in the same quarter three years ago.

I’d note that this is for claims <3 years old, and likely reflects the successful effort to avoid prescribing opioids to patients better served by other therapies.

What does this mean for you?

PA FL LA and CT  – stop screwing employers and taxpayers.

 

 

Oct
5

You have to go

Posted by Joe Paduda on Wednesday, October 5th, 2022 | Comments

to comp laude.

It’s unlike any other work comp conference – it is focused on what people and organizations are doing right, the right way – and the impact that has on the people we serve – injured workers.

There are some pretty emotional moments…injured workers sharing their stories about horrific accidents and their months if not years of recovery. One came from Brance Tully, a young man of eighteen who fell through a skylight two years ago – when he was 16.

After dozens of surgeries, untold hours of therapy and what could have only been an incredibly painful and seemingly-interminable journey, he is back at work. He called his adjuster the day he returned to be met with incredulity – justifiably so.

That was just one. Injured workers recovered from shootings, fires, vehicle accidents, falls and all manner of accidents.

There are several other reasons to attend:

  • plenty of time to connect and network
  • solid attendee list with folks from large employers, payers, and other buyers
  • terrific location – the Pasea Hotel is pretty nice.

Kudos to Yvonne Guibert – a dear friend and colleague, and the best marketer in workers comp – for making this happen. Shout out to GB and Greg McKenna – his engagement with the “stories” folks are remarkable.

Sep
29

One Call’s credit rating – nerd alert

Posted by Joe Paduda on Thursday, September 29th, 2022 | Comments

Fielded several calls and emails yesterday re the Moody’s credit review of One Call…while always (ok, mostly) happy to talk, rather than answering the same questions multiple times I’ll lay my thoughts out here.

These are in no particular order…

A colleague noted the possibility of a recession might affect One Call’s credit worthiness as a recession would affect employment – thus reducing claims.

Well, not exactly..

I’ve written extensively on how economic ups and downs impact workers’ comp; posts are here. Here’s a quick summary..

At the early stage of a recession, employees who get hurt are less likely to file a workers’ comp claim. While we don’t know why that happens, research suggests it’s because workers are concerned their bosses will eliminate their job while they are out on disability, and they’ll have no job to return to.

graph courtesy NCCI

As the recession deepens, frequency tends to bump up as employees realize their jobs are in real jeopardy.  Claims increase as a result, and it is tougher to find re-employment opportunities for workers ready to resume some level of work. This extends to part-time or other limited duty work that is essential to recovery and return to full duty. So, duration increases too.

In the final stages, as the economy recovers frequency appears to accelerate. Employers put older, less-safe equipment back on line, require workers to put in big overtime hours, hire temps who have minimal training on safety, and the pace of work picks up speed. The result – more injuries.

***If we are in a “recession” it’s a pretty weird one; employment continues to grow, employers are hiring anyone and everyone who applies, and there are more job listings than potential workers to fill them…not exactly what one expects in a recession***

Another suggested the current owners can “just give One Call more money” thereby alleviating cash flow worries.

That’s a possibility – but I’d suggest a pretty unlikely one.

The current owners took over One Call when it was on the brink of bankruptcy; if OC had gone down that route it would have made it less likely OC’s bondholders/lenders would recover all their funds. In my admittedly limited experience, credit investors are much less likely to send more cash to assets that are struggling than private equity investors. And PE firms aren’t exactly enthusiastic about bailouts.

One insightful question focused on whether OC has debt with variable interest rates; those of us with fixed rate mortgages are protected from rate increases while our friends and neighbors with variable rate mortgages are seeing pretty significant increases in their monthly payments.

nerd alert…

OC has several different debt vehicles/types/forms

The First Lien (think of this as your house mortgage) of $700M is Libor+550 Floor <.75 which means that when Libor moves so does their interest payments. Libor moves when the Fed moves so, away you go.

For example in the beginning of the year OC would have been paying the Floor and for September about 2.52%. With the recent Fed increase, that will be going up to over 3%.

Note that One Call may have bought financial instruments that protected it (either in whole or in part) from interest rate changes – these are known as hedges.

[if memory serves One Call also has to pay down principle every quarter to the tune of around $2.1 million; that’s pretty small potatoes for a $1 billion+ enterprise]

Finally word is One Call had recently been awarded new business from a large payer, and this would certainly benefit the company going forward.

This is definitely good news for OC and congratulations are due to the C-suite and sales team (as well as the behind the scene folks involved).

That said, work comp payers are notoriously risk-averse; its too early to tell if Moody’s announcement will give the new customer pause.

What does this mean for you?

This stuff is complicated and one has to be careful making assumptions (I continue to learn to question mine!)

note – if I got anything wrong or you have another view please comment below.

Sep
28

The latest on One Call

Posted by Joe Paduda on Wednesday, September 28th, 2022 | Comments

Since its last-minute recapitalization three years ago, things have been quiet on the financial front for One Call. That changed yesterday; credit rating firm Moody’s released the results of a credit review – which were not good. [you can access the review by registering with Moody’s – there is no cost]

Historical corp rating changes from Moody’s

First, the summary. [I’ve written about One Call extensively; you can find other posts here]

Moody’s downgraded One Call’s Corporate Family rating to Caa1. According to NASDAQ, Caa1 is:

“A rating within speculative grade Moody’s Long-term Corporate Obligation Rating. Obligations rated Caa1 are judged to be of poor standing and are subject to very high credit risk.”

Here’s Moody’s summary:

The ratings downgrade reflects the company’s challenges to grow earnings and reduce its very high leverage which stood at over 10x as of June 30, 2022. Despite initiatives to improve operating performance and preserve cash, and Paying-In-Kind interest on the second lien notes, Moody’s expects One Call to generate small positive free cash flow which will not allow for material debt repayment. Without a material improvement in operating performance and meaningful debt reduction, Moody’s expects One Call’s capital structure to become increasingly unsustainable.

There’s a lot to unpack here – here’s my attempt to translate the summary into English (corrections/suggested edits welcomed).
  • One Call has a LOT of debt – as in almost 11 times more debt than it has in EBITDA (earnings) – and it is growing.
  • One Call has to use a lot of its cash flow to pay interest on part of the debt.
  • it does NOT have to pay interest on another chunk of the debt, but if it doesn’t, the missed payments are [usually] added to the principal – which increases the amount of debt (this is known as Payment-in-Kind or PIK debt); this is kind of like credit card debt)
  • as this debt increases it constrains One Call’s financial flexibility, making it hard to invest in technology, people, product development, and other stuff.
  • Moody’s goes on to note that a lot of One Call’s revenue comes from a relatively few customers – this concentration (in Moody’s view) increases pressure on One Call as the loss of one or more of these customers would make it even harder to pay down the debt.
[Moodys also refers to “the loss of a large contract”; no, I do not know details ]
Notably, Moody’s did indicate the rating is “stable” and expects One Call to grow earnings “modestly” over the next 12-18 months.
Okay, nerd alert. One could find fault with one of Moody’s statements regarding a governance issue:
Governance risk is further exacerbated by private equity ownership, which increases the risk of shareholder friendly actions that come at the expense of creditors and has used debt exchanges and recapitalization transaction.
Not mentioned in the Rating action is the fact that the equity owners (affiliates of KKR, Blackstone and Chatham Asset Management) – who control the Board – also own a lot of One Call’s debt. That being the case, it’s hard to see why the Board would screw (sorry, easiest way to convey the point) debt holders.
I spoke with Jay Krueger, One Call’s CEO and a person I consider a friend and he was kind enough to provide responses to several questions.  These are provided verbatim below.

MCM – What impact – if any – will the rating change have on One Call’s customers?

JK – None. We have positive cash flow, strong liquidity, no pending debt maturities, and the backing of some of the world’s largest, most respected investment firms. We talked with many clients yesterday who expressed this was not a concern for them. They continue to be pleased with our strong value proposition, commitment to service, and superior solutions for them and their injured workers.

MCM – After One Call’s recapitalization two years ago, did the current owners (shareholders) continue to hold a significant amount of debt? If so, it strikes me that Moody’s concern about governance risks may be overstated. Thoughts?

JK – Our current owners hold nearly 50 percent of our debt. This is a very real symbol of their commitment to our mission of getting injured workers the care they need when they need it. I believe we are the only company in the industry with an ownership group that also supports the company by participating in the debt structure at such a high level. The shareholders have a high amount of confidence in our team and strategy. So yes, I believe Moody’s concerns are overstated.

MCM – As hiring has continued to increase, and employment as well, it appears likely that claim volumes may also see a slight increase. Any observations or trends relative to claim volumes you can share?

JK – Over the last three months, we have seen month-over-month, low to mid-single digit increases in referral volumes. Some of this increase is seasonal, some of it is related to the macro-economic factors you mentioned, and some of it reflects market share gains we have achieved in 2022. September volumes month-to-date are consistent with this trend, setting us up for a strong fourth quarter.

MCM – Can you elaborate on the large customer “loss” referenced in the Moody’s report?
JK – The Moody’s report referenced some minor adjustments to that customer’s vendor panel. The customer referenced is a large, national TPA that continues to be one of our largest and most important customers.  
Tomorrow, I’ll discuss factors not directly addressed by Moody’s that may impact One Call’s future.