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Is innovation in workers’ comp an oxymoron?


We can agree that much has changed about the world of workers' compensation, yet the question of effect remains open. On one hand, many employers have substantially improved their "results" in this realm, particularly over the last five to ten years. "Rates per" have fallen dramatically in many cases. Still, I continue to wonder what the real drivers are for this improvement and, moreover, to what extent intentionally driven "real change" was the source. In other words, how much of this improvement has been helped along in a material way by economic conditions, including rising unemployment, heightened focus on safety and loss prevention, competition among medical providers, more attention to outcomes versus compliance, etc.?

Don't get me wrong, most of the change in workers' comp has been good, especially if it produces fewer and/or less-severe injuries, but the question of "real change" hangs in the balance. After all, there are still far too many on-the-job injuries and fundamentally unsafe workplaces to rest on our laurels. In fact, I like the idea of zero tolerance for accidental injuries. A few employers over the years, having made this not just a mantra, but a measured, incentivized priority, have at least temporarily achieved long periods of accident-free work. Is this objective, commonly found in higher hazard industries, truly achievable or simply a vision that is more of a "one off" than possible for the many?

Some would say that as long as humans are involved, there will be errors. Yet, every time any one of us boards a plane and puts our life in the hands of the pilots, we hope and pray for an error-free journey, at least free of errors that could kill or maim us. Is it, then, risk level or the potential for serious injury or death that motivates a greater commitment to accident-free work? Perhaps severity is the biggest motivation for some, but I believe the reliable answer remains elusive.

If we can agree that innovation by definition is about doing things in completely new and different ways (courtesy of Steve Jobs' opinion) and not incremental or continuous improvement (though this is also not a bad thing), then I would argue little real innovation has occurred in the workers' compensation realm over time. Since innovation typically involves investment, commitment of resources and risk taking, all are real hurdles to true achievement. That begs the question: is innovation in workers' comp really necessary for success and, by extension, is it unlikely to be realized as a result of (among other things) the regulatory climate that envelops this exposure? Since this is a blog, I will resist answering the question and ask you to weigh in with your opinion. This should be good...

Chris Mandel, SVP, Strategic Solutions

  • Jim Galletly

    Chris, in a word, yes. Using your (Job's) definition, a radical change requiring $, resources, and risk is unlikely with 51 WC regulatory bureaucracies firmly entrenched that abhor radical change. Ongoing loss experience improvements thru innovative approaches to skilled hiring practices, alternative RTW, proactive medical recovery strategies (a la sports medicine), and loss prevention are possible, and perhaps this is the goal to strive for.

    • Chris Mandel

      And so perhaps a continuous improvement approach is more applicable to highly regulated exposures like WC. It may be like reforming Medicare or Social Security in magnitude and difficulty, but I like ot thinkn anyting is possible with time and the right strategy. Meanwhile, if loss rates continue to decline, who's going to look a gift horse in the mouth over that?

  • Brian Stewart, Dpt

    There are folks in the industry that are attempting everyday, through the use of technology and concepts like Big Data analysis, to change the way decisions are made in the healthcare process. We would do this by developing standardization in programming, selecting only the providers that provide the best outcomes (as defined by those most invested in the WC process- Employers) and transparency....all of which have bee lacking in my industry- Physical Therapy- and every other piece of the healthcare process that is involved in returning injured workers to their jobs. Until we get past the very narrow-minded viewpoint that costs and discounts are the best means of selecting a provider and start applying metrics to data that is readily available to make better healthcare decision....we will at best continue to "spin our wheels" in our attempts to be more efficient and effective in the return-to-work process.

    • Chris Mandel

      Brian, i like your thinking. Indeed, having spent the last six months with over 100 of Sedgwick's clients and prospects, the more effective use of big data for better decisions that drive meaningful results, was a key shared opinion about what the TPA industry should focus on to help drive next level performance. Thanks for your thoughts.

  • Kimberly George

    The question regarding innovation in workers' compensation is valid. At Sedgwick we like to believe that change occurs when the collective comes together. The Oklahoma opt out opportunity is an example. Many years ago we began the discussion of the need to focus on quality health care rather than traditional managed care. Today the industry is abuzz with the benefits of quality health care initiatives and evolving advocacy models. These are just two of the innovative, new and different solutions which are helping us to reengineer the workers’ compensation claims model for improvement.

  • Kathryn Tazic

    I agree that it's a good idea to think about and act on whether we've made changes quickly enough that address two key issues in workers' compensation risk management- severity and spend. On the employer side we see very aggressive changes in safety and loss control policies made possible by technology in some respects and due to need in others. The increased number and aggressive strategies of OSHA inspections also has impacted our client’s attention to pre-loss areas.

    As far as post-loss strategies, we’ve made a lot of great strides over the years from a claim and legislative perspective. Opportunities created by the ability to talk with a nurse prior to treatment to determine whether care is needed, advances in technology allowing for earlier and more rapid return to work, and the advent of the use of "big data" to identify cost drivers and how they are trending have allowed us to focus on the kinds of solutions that today's American business needs- including volunteer return to work opportunities, a focus on quality healthcare up front, and identifying ways to both avoid and mitigate unnecessary litigation for employers.

    On the legislative front, Kimberly mentions the recent Oklahoma changes which came about by long-term efforts to really revise the system. In my state our changes are slower to come and it's incumbent upon us to help employers take advantage of the best opportunities for cost savings and be early adopters of every possible opportunity like our PPP legislation- without execution on them the changes have a lesser impact which doesn't help anyone involved in the system. Overall we have a lot of commitment to ongoing innovation under the constraints of state systems - working to make sure we get healthy workers back and also understand the best ways to do that quickly and less expensively. We are making progress!

    Has it been fast? Probably not. We do though have a lot of committed employers and industry leaders constantly using what we learn and applying it so that we make the system work for all of its stakeholders

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