Paduda: Consolidation in Work Comp Providers: Multiservice vs. Single Focus| Employees Compensation Information

Of Joe Paduda

Friday, August 20, 2021 | 0

I received an email from a colleague asking, “So why should I care who owns who or what strategy you have?”

Joe Paduda

Because your service providers – to whom you pay a shipload of dollars – determine your medical and combined claims ratios. So the best thing to do is to find out if your priorities are the same as theirs.

OK, we’ve scoured the differences between corporate and private employment services providers. Today we focus on multi-service providers and single-service providers and their comparison.

The first group are Mitchell Genex Coventry (MGC), Optum WC, and OneCall. The second is Conduent, ExamWorks, and MedRisk (a consulting client of Health Strategy Associates).

The good thing about being a multi-service company is that you have flexibility, a diverse source of income, and multiple services / products that can interest potential customers and retain customers. You may also be able to use one line to do more business and, depending on your services, maybe even apply enough pressure to force customers to use those other services.

The bad thing is, your businesses are rarely the best in their class. A poorly performing service can devalue your other lines. The other bad thing is that they can be quite different, requiring different skills, systems, processes, reporting, and network development.

Example: Imaging is unique and the customer value is mostly scheduling and price (yes, people talk about the “quality” of reading, but it is almost always talked about). Physical medicine is usage driven as the price per service is much less important than a scan, which often costs 15-20 times more than a PT service. PM also requires lots of data and information feeds, more clinical oversight, a different contract strategy, and continuous monitoring of attendance and progress. Transportation is also different, as is durable medical equipment.

It’s difficult to be really good at multiple services and on a scale where you can get competitive prices and have all of the services delivered wherever the payer needs them.

Single-service providers get really, really good at one thing. This allows them to scale, reduce distractions, and build a lot of business expertise and, if done well, a solid brand.

But – and it’s a hell of a big but – if a big state changes their fee schedule or Medicare does the same, you could be screwed. Example: California introduced a Medicare-based fee schedule that same year in which Medicare cut reimbursement for imaging. Imaging companies have been hammered as California has about 17% of the country’s toilet volume.

Okay, here’s the net: multiline companies are more difficult to manage, but they can protect the owner from regulatory risks and exert an influence on customers. Single service providers are usually very good at what they do, but there’s that regulatory risk too.

That being said, each of these companies is unique in very important ways, with their own strengths and weaknesses, strategies and tactics.

What does that mean for you?

Do your suppliers’ priorities, successes and growth strategies match yours?

Joseph Paduda is a co-owner of CompPharma, a consulting firm focused on improving pharmacy employee compensation programs. This column is republished on his Managed Care Matters blog with his permission.