Risk Insider: Rachel Fikes

3 Critical Steps Claims Organizations Need to Take Now

By: | June 1, 2018 • 2 min read
Rachel Fikes is Vice President and Program Director of Rising Medical Solutions’ annual Workers’ Compensation Benchmarking Study. Under Rachel’s leadership, the study is the industry’s largest survey of claims leaders and validates how high performing claims organizations differ from the average. She can be reached at [email protected]

In the past five years, I’ve learned a lot from the 1,700-plus claims leaders who’ve participated in our annual Workers’ Compensation Benchmarking Study. Now the study team has distilled five years’ worth of study reports into the top three distinguishing characteristics of successful claims organizations. Adopting these traits is critical for closing the claims performance gap — or organizations risk falling further behind.

Study results indicate 24 percent of claims payers are “high performers.”
How do the other 76 percent catch up?

  1. Best performers focus more on what’s most important.

Study participants define an employee’s return to the same or better pre-injury functional capabilities as the number one classification of a “good claims outcome.”  They also consistently rank medical management, disability/return-to-work management, and compensability investigations as the top three core competencies most vital to successful claim outcomes.

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But high performing claims organizations are five times more likely to measure their performance in core competencies, six times more likely to measure claim outcomes based on evidence-based treatment guidelines, and 10 times more likely to measure claim outcomes based on evidence-based disability duration guidelines.

The study graded “performance” by ranking respondents by their claims closure ratio – a common industry benchmark of operational effectiveness.

  1. Best performers invest more in people.

High performing claims organizations better equip and better capitalize on their most important asset: their claims talent. Here’s some proof. Top performers:

  • Arm adjusters with decision support tools known to improve claims outcomes four to five times more often
  • Invest in career-long training of their staff at seven times the rate of lower performers
  • Adopt advocacy-based claims models four times more than lower performers

The best claims organizations use an outcome strategy (versus a process improvement strategy) for success. They measure outcomes, equip their claims talent to better influence outcomes, and allocate more financial resources to outcome management tools.

  1. Best performers invest more in advanced tools and techniques.

When it comes to technology, the most successful claims organizations are far more likely engage in numerous activities. Here are a few:

  • About half of all organizations use a data warehouse today, and usage among high performers is five times the rate of lower performers.
  • Forty-one percent of organizations leverage various outcome-based systems/data, and top performers do so six to 10 times more.
  • Only a third of claims operations use predictive analytics, yet high performers use it eight times more.

How to Close the Performance Gap

With 24 percent of industry payers achieving top performer status, what steps can the remaining 76 percent take to advance their operations?

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Taking stock of the above three differentiators, the commonality is clear. The best claims organizations use an outcome strategy (versus a process improvement strategy) for success. They measure outcomes, equip their claims talent to better influence outcomes, and allocate more financial resources to outcome management tools.

We know employers are predominantly interested in outcomes. Injured workers are only interested in outcomes – theirs.  Millennials entering the claims field today want an environment that helps injured employees with health, functional, and work outcomes. For those claims organizations that choose to close the performance gap, the data and path to success is clear.

More from Risk & Insurance

More from Risk & Insurance

2018 Risk All Stars

Stop Mitigating Risk. Start Conquering It Like These 2018 Risk All Stars

The concept of risk mastery and ownership, as displayed by the 2018 Risk All Stars, includes not simply seeking to control outcomes but taking full responsibility for them.
By: | September 14, 2018 • 3 min read

People talk a lot about how risk managers can get a seat at the table. The discussion implies that the risk manager is an outsider, striving to get the ear or the attention of an insider, the CEO or CFO.

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But there are risk managers who go about things in a different way. And the 2018 Risk All Stars are prime examples of that.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Goodyear’s Craig Melnick had only been with the global tire maker a few months when Hurricane Harvey dumped a record amount of rainfall on Houston.

Brilliant communication between Melnick and his new teammates gave him timely and valuable updates on the condition of manufacturing locations. Melnick remained in Akron, mastering the situation by moving inventory out of the storm’s path and making sure remediation crews were lined up ahead of time to give Goodyear its best leg up once the storm passed and the flood waters receded.

Goodyear’s resiliency in the face of the storm gave it credibility when it went to the insurance markets later that year for renewals. And here is where we hear a key phrase, produced by Kevin Garvey, one of Goodyear’s brokers at Aon.

“The markets always appreciate a risk manager who demonstrates ownership,” Garvey said, in what may be something of an understatement.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Dianne Howard, a 2018 Risk All Star and the director of benefits and risk management for the Palm Beach County School District, achieved ownership of $50 million in property storm exposures for the district.

With FEMA saying it wouldn’t pay again for district storm losses it had already paid for, Howard went to the London markets and was successful in getting coverage. She also hammered out a deal in London that would partially reimburse the district if it suffered a mass shooting and needed to demolish a building, like what happened at Sandy Hook in Connecticut.

2018 Risk All Star Jim Cunningham was well-versed enough to know what traditional risk management theories would say when hospitality workers were suffering too many kitchen cuts. “Put a cut-prevention plan in place,” is the traditional wisdom.

But Cunningham, the vice president of risk management for the gaming company Pinnacle Entertainment, wasn’t satisfied with what looked to him like a Band-Aid approach.

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Instead, he used predictive analytics, depending on his own team to assemble company-specific data, to determine which safety measures should be used company wide. The result? Claims frequency at the company dropped 60 percent in the first year of his program.

Alumine Bellone, a 2018 Risk All Star and the vice president of risk management for Ardent Health Services, faced an overwhelming task: Create a uniform risk management program when her hospital group grew from 14 hospitals in three states to 31 hospitals in seven.

Bellone owned the situation by visiting each facility right before the acquisition and again right after, to make sure each caregiving population was ready to integrate into a standardized risk management system.

After consolidating insurance policies, Bellone achieved $893,000 in synergies.

In each of these cases, and in more on the following pages, we see examples of risk managers who weren’t just knocking on the door; they were owning the room. &

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Risk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, clarity of vision and passion.

See the complete list of 2018 Risk All Stars.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]