Calming a Perfect Storm--Managing Workers' Comp Claims with Data

To make eyes glaze over accompanied by severe hearing impairment, simply launch a discussion about data management. Data analysis is not a topic that breeds popularity at social or even business gatherings. So this article is not about data or data management. Rather, this is about a concept known as Knowledge Management, i.e., how to manage processes and outcomes in an organization by strategically managing the organization’s knowledge.

What knowledge?

Knowledge Management evolves from the more familiar concept of Business Intelligence whereby an organization intentionally and comprehensively gathers, organizes, integrates, and analyzes its data to better understand its business processes. Business Intelligence reports and graphs are produced in abundance in most organizations to portray cost drivers and trends, profits and loss, and multiple other factors dissected by any number of variables. Knowledge Management, on the other hand, takes that intelligence and links it to operations, thereby making it actionable. Knowledge Management methods takes the results of analyses and distributes them throughout the organization in the form of software-like tools that can be used for decision support and to initialize appropriate action. Knowledge Management is widely used in other industries, such as retail.

Walmart, for example, is unusually skilled at developing and managing their Knowledge Management systems. They gather raw data from various sources including purchase transactions at the cash register to determine customer preferences, timing, and demographics. They analyze buying patterns in geographic areas, at certain times of year such as holidays, and during unplanned events such as calamitous weather. They even monitor weather data to determine which stores are likely to be effected by predicted storms. The data are integrated with data gathered from other sources including current inventory, inventory location and distribution schedules. Finally, the data are analyzed to determine the effects on inventory in affected stores during by a storm. But that is only the beginning.

The steps described to this point meet the classic definition of Business Intelligence. However, Walmart kicks it up a notch. It operationalizes its intelligence using a practice known as Information Management.

Walmart uses the gathered intelligence to automatically mobilize a pre-designed action plan. A predicted weather event such as a hurricane mobilizes strategic action to immediately and automatically redistribute goods in the affected region. Inventory known to be in high demand during such events is shipped to stores in the area as soon as a storm is identified. Normal shipping schedules are shifted, taking the closest high-demand inventory available and redistributing it to affected stores. Results: Customers find the products they need in adequate amounts in their local Walmart stores even though the demand has multiplied. Walmart not only increases revenue through increased sales, but also gains the benefit of meeting customer needs.

The process of Knowledge Management does not end there. New data gathered from all the sources throughout the course of the event are analyzed and applied to validating or improving the solution for the next time a crisis event occurs. For instance, normal inventory levels in the region may be adjusted during the entire hurricane season to insure quicker response. Walmart practices Knowledge Management by operationalizing its business intelligence and the entire organization benefits, along with its customers. By acting on their current data, they are able affect immediate change in practice and prevent further problems for themselves and their customers. Moreover, the same processes can be applied to other businesses in other industries, even Workers’ Comp.

Knowledge Management can be translated to the Workers Compensation payer and managed care industry. Certainly, the data are available from many sources as it is at Walmart. Billing data, bill review data, claims data, FROI, physician reports, pharmacological data, OSHA reports, medical case management data, UR, and payroll systems are among the data sources. The data must be integrated and analyzed, like it is at Walmart. However, in Workers‘ Comp, the data are rarely collected and integrated from the multiple sources, and certainly not as intentionally as within Walmart. But when the data are collected and integrated from just two sources, huge gains can be made. Take billing and claims data to start.

Organizations that collect, integrate and analyze billing and claims data can embark on the path to Knowledge Management and expect optimized outcomes. The data are similarly gathered, integrated, and analyzed within the context of the business. The leap to Knowledge Management is a matter of disseminating the results through the organization in the form of actionable tools, appropriately directed, just like Walmart.

In Workers Comp, a hurricane-like, calamitous event is a potentially hazardous claim. Conditions of the claim are represented by data elements that when combined, portend high risk, high cost and poor outcomes—a perfect storm.

The data in a claim can identify it as potentially high risk, such as a leg amputation, with additional high risks (the claimant is 65 and obese or diabetic), and complications (second surgery). When such combinations of data occur, the Knowledge Management system that is monitoring current data, can prompt automatic and immediate action by appropriate persons immediately. Perfect storms in claims are best prevented by identifying early those claims that will develop high cost and poor outcomes. They can be discovered by integrating, analyzing, and monitoring the data from the various sources to uncover tell-tale combinations and initiating action.

Implementing Knowledge Management methods for Worker’s Comp claims is not very different than managing storm demand for Walmart. Rather than shifting inventory levels, alerts are sent to key persons when high risk data combinations occur. Currently monitored, integrated and analyzed data mobilizes action to insure early intervention to calm the perfect storm and prevent unnecessary further damage.

View additional articles by Karen Wolfe under Blogs at www.medmetrics.org