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The MedMetrics blog provides comments and insights regarding the world of Workers’ Compensation, principally, issues that are medically-related. The blog offers viewpoints regarding issues affecting the industry written by persons who have long experience in the industry. Our intent is to offer additional fabric, perspective, and hopefully, inspiration to our readers.

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Sunday, March 25, 2012

Survey: Employers Want WC Cost Control. Really?

by Karen Wolfe

Much has been said about the recent Workers’ Comp survey reported in the Insurance Journal revealing that employers’ top concern is cost containment. Really?

Tired remedies
That employers are concerned with cost is obvious. Focusing on and controlling cost is the only way companies survive and thrive. But the survey did not report how frustrated employers must be with the same tired “solutions” offered as remedies. For instance, 65% of the employers surveyed said the most effective measure would be having a safety-minded culture. Nice.

Additionally, fifty-nine percent indicated that a light-duty or return to work program is a highly effective method of controlling cost. That one has been proven effective through research. Other measures mentioned were onsite accident evaluations, loss prevention evaluations, zero-accident goals, having a dedicated claims manager, safety committee efforts, and using a preferred occupational medicine facility. The suggestions are good and can be effective. Sometimes.

Soft cost controls
When implemented consistently with unrelenting energy and consistent funding, soft cost controls listed can be very effective. But they rarely are applied in that manner. Each is subject to individual leadership interest, commitment, management skill, intervening business demands, and budget allocations. For instance, how is a safety-minded culture structured, implemented and sustained it over time? Such programs can be excellent when conceived, implemented and managed by a creative and strong leader willing to stay on the job. But, that is difficult and rare.

If these time-worn measures were significantly effective over time, Workers’ Comp costs would not be an issue. Adequate funds would be allocated consistently, along with appropriate training and monitoring methodologies. Unfortunately, soft controls rely on the individual initiative. Programs of this sort suffer from too many variables, too many moving parts, and for the most part, no way to insure uninterrupted implementation. However, another approach that does not rely on the human factor is not mentioned in this study as a solution. The omitted solution is computer-aided cost control.

Computer-aided cost control
For instance, one of the suggested tactics for cost control in the survey is using a preferred occupational medicine facility. However, which should be the preferred provider? What are the track records of various clinics? How is performance measured for frequency and duration of treatment, as well as cost for effectively medically managing injuries. How are costs differentiated by injury type and severity? The same questions should be asked about specialty providers. The answers to these critical questions often remain unknown and choices are made based on personal preference. So often, continuing business as usual is just easier. But that could fly in the face of cost control.

Technology as a management tool
The Workers’ Compensation industry, unlike most other industries in this country and others worldwide, has not embraced technology and data analysis as an effective cost control strategy. Many still do not grasp the potential power of analytics. Computer-aided cost management will make the greatest and most consistent impact on costs, with or without available leadership resources. Configured appropriately, computer-aided cost control is an automated cost control tool.

Current data required
To be effective as a cost control tool, data analysis (analytics) must draw on current data. The data must be collected and analyzed concurrently, making timely intelligence available to operations. Users are alerted of potentially complex and costly events in claims in near real time, not at the end of the month or quarter when it’s too late to intervene. A system that monitors current data continuously can pick up subtle indicators of risk in the data otherwise overlooked by manual monitoring. Analyzing current data for computer-aided cost control is critical, as is linking the analytics to operations.

Analytics alone are not enough
Many are now implementing analytics, but analytics alone is not enough. Colorful graphic presentations posted on the wall or in a summary report will never impact costs. Use of analytics in this way guarantees they remain soft cost controls because a leader is required to translate the information to operations. For analytics to become a powerful and practical cost control tool, they must be actionable.

Actionable analytics
Actionable analytics require the analytics be linked to operations so they are automatically acted upon. Claims examiners and medical case managers are alerted and informed early of negative conditions in a claim so the focus is placed on claims needing the most attention. Actionable analytics provide quick lookup of comparative provider performance in a geo-zip region or an alert of a claimant’s diabetic condition. Actionable analytics can make timely, automatic and appropriate referrals. Actionable analytics do not require a manager to interpret the intelligence, mobilize action and sustain it.

Good management
Good management is making sure what you did stays done.
Soft cost control measures require excessively vigilant and consistent management. On the other hand, computer-aided cost control removes the management burden and guarantees consistent oversight with measureable results.

Learn how to implement computer-aided cost controls.