We need to focus on the root causes of suicide and help people feel okay about receiving help. There is no better place to do this than in the workplace, and this week is National Suicide Prevention Week, which gives us the opportunity to spread the word. It's important to understand some of the antecedents, like depression, because this is where the cure lies and where, because of our misunderstanding and fear, we often don’t act. Here are some statistics from the American Association of Suicidology that should open everyone’s eyes:

• Nine out of 10 people who die by suicide had a diagnosable mental disorder.
• Only three out of 10 people who die by suicide received mental health services in the year before they died.
• Depression is the most prevalent mental health disorder -- 20.9 million American adults suffer from a depressive illness in any given year.
• Treatment for depression is effective 60% to 80% of the time.

A 2007 study featured in the Journal of the American Medical Association found that depressed employees, who received “enhanced care," defined as care management and optional psychotherapy, worked longer weeks and demonstrated greater job retention than other groups. This led to an annual average value of $1,800 per worker, which is estimated to be greater than the cost of “the outreach program and the roughly 10 additional mental-health specialty visits made by subjects in the treatment group.” I realize that there are a lot of statistics that might make you zone out, so let me make what I am saying perfectly clear. Educating the workforce about mental health and depression so that folks know that it is perfectly okay to seek help should be every employer’s goal. It is the right thing to do. It will also lead to higher productivity and lower safety and healthcare costs. Once people feel comfortable admitting they have a problem, they will be more likely to seek help, which leads to the next thing employers or insurers should do. They need to have some sort of behavioral health service that will do a confidential but thorough assessment so that they can facilitate a referral for the right kind of assistance for each person in need. An employee assistance program (EAP) can help in both aspects of this process; education and assessment/referral/follow up. This year, make National Suicide Prevention week the time when you kick off the process of education -- and make sure that this is the beginning, not the end, of your efforts. For assistance in doing this, visit the National Alliance for Suicide Prevention, Workplace Task Force.

Several drivers of change are compelling insurance companies to re-evaluate and modernize all aspects of their business model and operations. These drivers include new and rigorous expectations from regulators and standards, increasing demands for more relevant and useful information, improvements in analytics and the need for operational transformation. The modernization creates considerable expectations for finance, risk and actuarial functions, and potentially significant impacts to business strategy, investor education, internal controls, valuation models and the processes and systems underlying each – as well as other fundamental aspects of the insurance business. Accordingly, insurers need more sophisticated financial reporting, risk management and actuarial analysis to address complex measurement and disclosure changes, regulatory requirements and market expectations. Three key areas to look at: Regulation and reporting Changes in regulatory and reporting requirements will place greater demands on finance, risk and actuarial functions. Issues include:

• Changing global and federal regulation (e.g., Federal Insurance Office, Federal Reserve oversight)
• ComFrame, a common framework for international supervision.
• Principle-based reserving
• Own Risk and Solvency Assessment (ORSA), the Solvency II initiative that defines a set of processes for decision-making and strategic analysis
• Solvency reporting measures
• Insurance contract accounting

Information and analytics Stakeholders are demanding more information, and boards and the C-suite need new and more relevant metrics to manage their businesses. Issues include:

• Economic capital
• Embedded value
• Customer analysis and behavioral simulation
• New product and changing underwriting parameters

Operational transformation Those in charge of governance are demanding that the data they use to manage risk and make decisions be more reliable and economical. Issues include:

• Updated target operating models
• Centers of excellence
• Enterprise risk management (ERM), model risk management and governance
• New framework from the Committee of Sponsoring Organizations (COSO), a joint initiative of five private-sector organizations that provides thought leadership on ERM, internal controls and fraud deterrence
• Optimization of controls, and efficiency studies

These drivers of change, which affect every facet of the business -- from processes, systems and controls to employees and investor relations -- have significant overlaps, and insurers cannot deal with them in isolation. To meet emerging challenges and requirements, simply adding processes or making one-off, isolated changes will not work. Systems, data and modeling will have to improve, and the finance, actuarial and risk functions will need to work together more closely and effectively than they ever have before to meet new demands both individually and as a whole. Moreover, all of this change is imminent: Over the next five years, leading companies will separate themselves from their competitors by fully developing and implementing consistent data, process, technology and human resource strategies that enable them to meet these new requirements and better adapt to changing market conditions. The insurers that wind up ahead of the game will excel at creating timely, relevant and reliable management information that will provide them a strategic advantage. Legacy processes and systems will not be sufficient to address pending regulatory and reporting changes or respond to market opportunities, competitive threats, economic pressures and stakeholder expectations. Companies that do not respond effectively will struggle with sub-par operating models, higher capital costs, compliance challenges and an overall lack of competitiveness. In subsequent articles, we will take a closer look at those leaders/business units that need to modernize.  Eric Trowbridge, a senior manager, contributed to this article.

Mary Barra’s historic appointment as General Motors;  CEO was almost immediately mired by the firestorm over the Chevy Cobalt’s faulty ignition switches. To her credit, Barra has dealt well with the crisis. But preventing future tragedies only helps GM recover lost ground. Barra now needs to define a forward-looking leadership agenda. That agenda should include the biggest technological disruption that Barra will face in her tenure as CEO: driverless cars. GM is working on driverless cars but, like most automakers, is taking an incremental approach aimed at semi-autonomous cars where a human driver is always ready and able to retake control. GM executives argue that fully autonomous, i.e., driverless, cars might someday be possible and become a competitive threat but that that day is a long way off. GM, therefore, does not consider itself in a race with Google. While the imperative to beat Google is applicable to every major automaker, Barra and GM face a particularly stark moment of crisis and opportunity. Here are five reasons why Mary Barra should change gears and make beating Google (and every other contender) in driverless cars a CEO-level strategic imperative. 1. Hedge the downside. As I previously wrote, there are five scenarios that automakers should fear if Google beats them to fully autonomous cars. One scenario is that Google amasses a significant lead in differentiating intellectual property (IP). Two scenarios deal with how Google might deploy that IP -- either as a dominant supplier or to power competitive offerings. Two other scenarios examine how traditional automakers might be precluded from new markets, such as driverless mobility for the young, elderly, handicapped and other non-drivers, and from new business models, such as Uber-like driverless car services that displace private car ownership. The best way to hedge against these downside scenarios is for GM to have its own serious contender in the race to build fully autonomous cars. GM already has many of the strategic assets required for this challenge. It has a wide range of relevant expertise, both internally and at research partners like CMU. GM has also been working for years on the EN-V, a small electric vehicle concept car that now incorporates autonomous driving technology. GM’s strongest advantages over Google, of course, are the car-building capabilities that will be critical in the transition from prototypes to production vehicles. Even if a non-incremental thrust does not ultimately produce a fully autonomous car, there would be immense learning benefits. By tackling the more challenging driverless problem, GM would gain greater insights and build capabilities in software, sensors, user interface, car integration and other key component technologies that should be relevant for semi-autonomous cars, as well. GM could enhance its own IP portfolio with key technologies that are likely to shape the industry for decades. This learning would also be important in helping GM deal with potential partners and suppliers. 2. Buy an option on the upside. Ramping up efforts on driverless cars is not just about defense. It would also allow GM to go on offense -- and even potentially change the game. By accelerating the development of driverless cars, GM could put itself in a better position to take advantage of the potential business model innovation and inevitable creative destruction. Driverless cars could spark the biggest revolution in transportation since the Model T. They could revolutionize private and public transportation -- including car ownership and the nature of mobility. In the U.S. alone, more than $2 trillion flows each year through the car-related related economy, including parts, sales, financing, service, maintenance, insurance repairs, rentals and energy. The worldwide revenue stream is many times that amount. For example, how might GM’s combination of product warranty expertise and GMAC Insurance assets open up new opportunities for GM as driverless cars wreak havoc on the $200 billion U.S. auto insurance industry? What other downstream opportunities might arise for driverless car providers, such as mobility-on-demand services, location-based advertising, infotainment and so on? How might GM beat other automakers in understanding the implications of driverless cars on its complex supply, logistics and distribution networks and gain a head start in understanding the retooling implications? Buying options on the future has paid off for GM before. Take its OnStar telematics platform. GM made an aggressive decision to install OnStar across most of its fleet in the late 1990s and has since leveraged OnStar to improve product development, enhance customer loyalty and earn billions in product warranty savings and subscription revenues. OnStar is also an example of the increased profits that are available further downstream from GM’s current position. OnStar's margins are five times higher than the margins of the overall GM business. 3. Control GM’s own destiny. More and more experts agree that driverless cars are not a question of “if” but “when.” With so much at stake, GM needs greater control over its own destiny. Whether GM beats other traditional automakers in the race for semi-autonomous cars depends on the success of its own efforts. Whether it beats Google, however, is currently dependent on Google’s failure—since GM doesn’t even consider itself in the race. Given the progress that Google has made and Google’s clear ratcheting up of its investments, betting on Google’s failure is not wise. GM should worry that Google might actually succeed. To control its own destiny, GM needs to have its own entry in the race. 4. Create a rallying point for GM’s larger transformation. Investigations into the roots of the Cobalt ignition problem revealed the depth of the cultural transformation that Barra must still engineer at GM. Barra herself told investigators about the “GM nod”: "When everyone nods in agreement on a proposed plan of action but then leaves the room with no intention to follow through." Cultural change, however, is immensely difficult. Corporate edicts and slogans sound good but have no lasting effect. It is easy to imagine, for example, how poorly GM’s cultural change efforts might fare against the “GM salute” described in the Valukas report: “a crossing of the arms and pointing outward toward others, indicating that the responsibility belongs to someone else, not me.” In my experience, corporate cultures only change in the context of explicit actions and measurable goals. A mission to beat all others to develop, build and dominate the world of driverless transportation would create a forward-looking aspiration around which to rally the organization. Attacking such an audacious goal—an achievement that by historical rights should belong to GM rather than Google—would provide a crucible within which Barra could prototype and evolve new behaviors. Progress would be measurable, and success would provide a beacon for the rest of the organization. 5. Make the world a better place. Cars changed the world. The benefits of mobility and transportation to modern society are undeniable. Cars, however, are also a leading cause of death, injury, pollution and resource consumption. For example, while estimates of fatalities attributed to the Cobalt ignition switch failures range from 13 to 74, those fatalities are dwarfed by the more than 1.2 million road traffic deaths worldwide each year. What’s more, global transportation infrastructure will require many additional trillions of dollars in the coming decades. Rather than just pushing to address its own safety shortfalls or to build incremental semi-autonomous cars that have more limited secondary benefits, GM could help reimagine cars and car-related transportation. Driverless cars will be one of the biggest enablers to such a reimagination of transportation. The societal benefits could be enormous. They could save millions of lives and tens of millions of injuries. They could save billions of hours and trillions of dollars through more efficient resource utilization. But there are also unanticipated secondary effects to be considered, such as the impact on jobs, public transportation and urban sprawl. Rather than taking a back seat to these monumental changes, GM could apply its expertise to help understand and shape these changes. It could be a monumental do-well-by-doing-good effort.

* * *

While there are advocates for more aggressively pursuing driverless cars inside every major automaker, including GM, most strategic decision makers are in denial. Take a comment by Maarten Sierhuis, head of Nissan’s driverless research: "As a researcher, I want full autonomy! But the product planners maybe have another answer." This denial mirrors the rationalizations that industry leaders usually offer about disruptive technologies: Customers like the way things work now. We need to invest in the current business instead of risky new technology. New products would cannibalize our current products -- let’s make sure change is very gradual. We’ll miss our numbers if we get distracted. And so on. Like most rationalizations, these denials contain elements of truth. In GM’s case, there are very pressing issues that need its CEO’s attention. In addition to the ignition switch recall and safety issues, GM is facing challenging market issues in Europe, Russia and parts of South America. It is grappling with a sales slump for Cadillac. And it faces great opportunity but stiff competition in the fast-growing China market. GM also has a spotty track record for disruptive innovation. It invested early and heavily in factory automation and robotics, electric vehicles and fuel cells -- and failed to reap significant market benefits from those investments. Given all that, a multitude of internal voices are arguing against escalating GM’s response to Google. The only way to overcome the internal resistance that would otherwise smother a strategic driverless car initiative is for Mary Barra to make it a CEO-level imperative. That’s because the most critical success factor will be CEO attention, not money. No initiative that might so fundamentally change the core business—while also fighting for limited expertise and resources—can succeed without the strategic imperative that only the CEO can provide. Mary Barra must also anoint an internal champion with the resources at his or her disposal to make things happen. She must guard the initiative against corporate antibodies while also asking the tough questions needed to keep it focused rather than coddled. In reference to the Cobalt, Barra observed, rightly, “We will be better because of this tragic situation if we seize the opportunity.” GM will be even better if it also seizes the opportunities of driverless cars. The question is whether Barra can bring GM’s assets together into a strategic imperative that rivals the passion and pace of Google’s self-driving car effort.

There are many reasons why workers' compensation managed care is so difficult, ranging from general economic cost pressures to the regulatory complexities faced by many large employers with multi-state work locations. Issues such as the ability to direct medical care, fee schedules, dispute resolution and the use of treatment protocols and provider networks vary from state to state.

Workers' comp medical costs have continued to outpace overall medical inflation for years. Twenty years ago, the typical ratio was 60/40 indemnity costs (lost-wages benefits) to medical costs. Today, that ratio has reversed.

Furthermore, workers' comp has always been susceptible to considerable cost-shifting both by injured workers and medical providers. Many injured workers without health insurance or with limited coverage have been suspected of submitting claims under workers comp to receive 100% "first dollar" coverage with no co-pays or deductibles. This is often known as the "Monday Morning Syndrome" -- weekend injuries from recreational activities get reported first thing Monday morning as "work-related." The support for this theory is that for years it was documented that the No. 1 time of reported injuries is between 9 and 10 Monday morning. In addition, if an injury or illness is reported as work-related the employee may be entitled to lost-wage replacement benefits, which results in a double incentive.

Medical providers also historically have had an incentive to shift costs to workers' comp. The best example are HMOs financed by pre-paid capitated rates for group health benefits. Work-related injuries are not included in group health plan coverage, allowing HMOs to bill additional charges on a fee-for-service basis. My former HMO had a large sign at the registration desk that read, "Please let us know if your medical care is work-related."

I was once hired by a major defense contractor during a competitive bid process and was told that all the other consultants had recommended it run its workers' comp program through its HMOs. My response was, "That is the last thing you want to do." The risk manager had a big smile on his face.

Many people in the industry were hoping that the ACA and the goal of universal coverage would eliminate the incentive for cost-shifting in workers' comp. In theory, that may be true. In reality, the ACA may have limited impact or, worse, actually create more incentives for cost-shifting.

The ACA has no direct impact because the various federal mandates for health insurance do not apply to workers' comp laws. Unlike Clinton-era health reform efforts, the ACA did not attempt to roll workers' comp into "one big program."

The ACA may exacerbate cost-shifting if health coverage costs will rise significantly for both employers and employees, which is widely predicted. The ACA premium rating factors virtually eliminate experience rating in favor of community rating for small employers, which helps pay for the added costs and mandated benefits. This will significantly drive up costs for many employers, with estimates as high as 50% above normal yearly premium increases.

Employees are also faced with the prospect of narrower networks and increased incentive to cost-shift, including the growing trend of consumer-driven health plans with high deductibles and other out-of-pocket costs.

Medical providers under intense cost pressures under the ACA may very well continue to cost-shift to the state workers' compensation systems and "first dollar" coverage to increase revenues. I fear that the high hopes that the ACA will help eliminate cost-shifting may go the way of "if you like your current health plan you can keep it."

One prominent proponent of the ACA just predicted that 80% of employers will actually eliminate company-paid health benefits by 2018 in favor of directing employees to the state exchanges because paying the $2,000 fine under the ACA for not providing health coverage will be cheaper than providing coverage.

Workers' compensation managed care is far more complex than managed care in group health benefits for many reasons, including; 50 different state laws and jurisdictional requirements, cost-shifting, fraud and abuse, overutilization of unnecessary or even harmful health services, excessive litigation and friction costs, historical animosities between labor and management, bureaucratic state agencies and an insurance industry and claim administrators who get a grade of C+ from many industry analysts.

If employers think the answers in containing workers' comp medical costs are in Washington, D.C., or the various state capitals in which they operate, they need to think again. The answer is in the mirror. Many employers are still searching for the cheapest claims administrator and not the best. Remember that "you get what you pay for."

The same goes for the overwhelming popular use of PPO "discount arrangements." If employers think they are saving money by looking for the cheapest doctor in town they couldn't be more misguided. The treating physician plays a key role in diagnosis and treatment, helps determine causation, degree of impairment and the length of disability and return-to-work. Family physicians and other primary care providers are rarely trained in occupational medicine or workers' comp laws and requirements and are notorious for granting indiscriminate time off work.

Employers must take a much more active role and provide the best and most appropriate medical care for sick and injured workers from the moment of injury or illness and establish better real-time communications between injured workers, medical providers, work supervisors and insurance companies and claims administrators.

Unfortunately, there is no magic bullet. But there is a rule of thumb: Do not even discuss medical cost containment with outside vendors or consultants who recommend broad-based group health networks and strategies. They simply do not apply to workers' comp and will do nothing but hurt an employer's ability to address the real cost drivers and complexities of state workers' comp laws, requirements and systems.

A recent report from Towers Watson shows that the world is making steady progress toward usage-based insurance (UBI). That steady growth is poised to become explosive if insurers can move faster and deal with privacy concerns while delivering UBI via smartphone apps that consume little of the battery's charge. The report says market penetration has nearly doubled in less than a year and a half -- reaching 8.5% of U.S. drivers in July, up from 4.5% in February 2013. UBI has reached a milestone, with all 50 states now having programs available. Consumers want the discounts that they can get by having their usage quantified and verified. Consumers are more willing than ever to work with carriers that offer UBI programs -- meaning they will leave carriers that don't. An effective UBI program may prove to be a once-in-a-career opportunity for auto-insurance executives to resegment the market and claim a bigger share. The last time there was a change even approaching this magnitude was in the 1990s, when insurers discovered the importance of credit ratings in assessing how risky a driver is. It's time that we stopped measuring with a 12,000-mile-long tape measure -- that being the distance that old-school insurers assume someone drives each year -- and started measuring with a ruler. The mileage bands used to determine risk need to become so small that a single tank of gas could put a consumer into a new one -- and the consumer needs to know that in advance so she can make a fully informed decision about how much to drive.

Past wisdom in software development held that the proper sequence of events should start with perfect requirements, followed by perfect design and planning, ending with implementation. The flexibility promised by agile methodologies of software development, according to that view, is as costly as allowing for the possibility that the kitchen in a half-built house is not in the desired location. Besides, what is the meaning of software “architecture” if we allow for shifting designs and evolving features? To answer the criticisms about agile developments, one must examine the underlying concepts supporting traditional, sequential "waterfall" development:

• Perfect planning is possible;
• Change is inevitably costly;
• Architecture must result in unchangeable results

But perfect planning isn’t possible. It is a disservice to the client to require a perfect plan. In the real world, knowledge of the business is dispersed among many stakeholders; concepts suffer from varying degrees of vagueness; and the desired outcome often begins to crystallize only after the work has begun. It is therefore more cost-effective to have  technical talent that can function in an interactive environment with the stakeholder and adapt the work to an evolving plan. Change isn’t always costly. The cost of change can be minimized if enough flexibility was implemented in the first place. Planning must therefore allow for the ability to make changes. The extra initial cost reduces the risk of a higher cost being incurred later. Architecture does not equal rigidity. Proper software architecture makes use of techniques that reduce dependencies, generalize software components and anticipate changes in the design itself. To continue the half-built-house analogy: The ceiling is not resting on too many walls, and the infrastructure for the kitchen is in many places in the house. The practice of writing flat, unidirectional software, based on the theory of the “perfect plan” has resulted in legacy software that is hard to change, maintain or understand. The evolution of the software engineering discipline is in part a response to that problem. The common threads in modern software design concepts indicate that. For example, the concept of encapsulation in object-oriented languages, where the inner workings of a software entity make that entity a black box that can be replaced without having to change its context, directly serves the need for flexible architecture at the lowest level. The concept of “pure functions,” in functional languages, where a function is by definition unable to change its environment (making the function easy to “unplug” and replace), also serves the same end. Proper architecture makes use of established and proven design patterns, selects the right patterns for the task at hand and adapts them when needed based on the specifics. This increases the effectiveness of the planning stage by a) avoiding reinventing the wheel and b) greatly reducing the number of possible paths that need to be explored. It takes a certain attitude to embrace the agile approach: one that thrives on innovation, freedom and work that never stops improving.

Last fall, I wrote about board oversight of cybersecurity and derivative litigation in the wake of cybersecurity breaches.  In this post, I’d like to focus on cybersecurity disclosure and the inevitable advent of securities class actions following cybersecurity breaches.  In all but one instance (Heartland Payment Systems), cybersecurity breaches, even the largest, have not caused a stock drop big enough to trigger a securities class action.  But there appears to be a growing consensus that stock drops are inevitable when the market better understands cybersecurity threats, the cost of breaches and the impact of threats and breaches on companies’ business models.  When the market is better able to analyze these matters, there will be stock drops.  When there are stock drops, the plaintiffs’ bar will be there. When plaintiffs’ lawyers arrive, what will they find?  They will find companies grappling with cybersecurity disclosure.  Understandably, most of the discussion about cybersecurity disclosure focuses on the SEC’s Oct. 13, 2011, “CF Disclosure Guidance: Topic No. 2” (“guidance”) and the notorious failure of companies to disclose much about cybersecurity, which has resulted in a call for further SEC action by Sen. Rockefeller and follow-up by the SEC, including an SEC Cybersecurity Roundtable on March 24, 2014.  But, as the SEC noted in the guidance, and Chair White reiterated in October 2013, the guidance does not define companies’ disclosure obligations.  Instead, disclosure is governed by the general duty not to mislead, along with more specific disclosure obligations that apply to specific types of required disclosures. Indeed, plaintiffs’ lawyers will not even need to mention the guidance to challenge statements allegedly made false or misleading by cybersecurity problems. Various types of statements -- from statements about the company’s business operations (which could be imperiled by inadequate cybersecurity), to statements about the company’s financial metrics (which could be rendered false or misleading by lower revenues and higher costs associated with cybersecurity problems), to internal controls and related CEO and CFO certifications, to risk factors themselves (which could warn against risks that have already materialized) -- could be subject to challenge in the wake of a cybersecurity breach. Plaintiffs will allege that the challenged statements were misleading because they omitted facts about cybersecurity (whether or not subject to disclosure under the guidance). In some cases, this allegation will require little more than coupling a statement with the omitted facts. In cybersecurity cases, plaintiffs will have greater ability to learn the omitted facts than in other cases, as a result of breach notification requirements, privacy litigation and government scrutiny, to name a few avenues. The law, of course, requires more than simply coupling the statement and omitted facts; plaintiffs must explain in detail why the challenged statement was misleading, not just incomplete, and companies can defend the statement in the context of all of their disclosures. But in cybersecurity cases, plaintiffs will have more to work with than in many other types of cases. Pleading scienter likely will be easier for plaintiffs, as well. With increased emphasis on cybersecurity oversight at the senior officer (and board) level, a CEO or CFO will have difficulty (factually and in terms of good governance) suggesting that she didn’t know, at some level, about the omitted facts that made the challenged statements misleading. That doesn’t mean that companies won’t be able to contest scienter. Knowledge of omitted facts isn’t the test for scienter; the test is intent to mislead purchasers of securities. However, this important distinction is often overlooked in practice.  Companies will also be able to argue that they didn’t disclose certain cybersecurity matters because, as the guidance contemplates, some cybersecurity disclosures can compromise cybersecurity. This is a proper argument for a motion to dismiss, as an innocent inference under Tellabs, but it may feel too “factual” for some judges to credit at the motion to dismiss stage. As this analytic overview shows, cybersecurity securities class actions, on the whole, likely will be virulent. Companies, of course, are talking about cybersecurity risks in their boardrooms -- and they should also think about how to discuss those risks with their investors. The best way for companies to lower their risk profile is to start to address this issue now, by thinking about cybersecurity in connection with all of their key disclosures, and enhancing their disclosures as appropriate. Perfection and prescience are not required. Effort matters most. Companies that don’t even try will stand out. As I’ve written in the context of the Reform Act’s Safe Harbor for forward-looking statements, judges are skeptical of companies whose risk factors remain static over time, and look favorably on companies that appear to try to draft meaningful risk factors. I thus construct a defense of forward-looking statements by emphasizing, to the extent I can, ways in which the company’s risk disclosures evolved, and were tailored and focused. I predict that the same approach will prove effective in cybersecurity cases.

In case you missed it, saving lives and preventing injuries on the job is now the duty of the human resources department. So is the choice of employee management tactics used to achieve safety. Civility is in; grumpiness is out. Insurers should be concerned, because the shift in responsibility and tactics has grounded the safety ship they worked hard to launch two decades ago. Safety, the social movement The takeover by HR was foretold by Samuel Greengard in his bold 1999 Workforce magazine cover story on zero tolerance. “Saving lives. . . requires careful thought and action—usually spearheaded by HR,” he wrote. Not the safety department. HR. A cursory glance at the organizational charts of mid- to large-size companies confirms the shift. Safety professionals have been dispossessed. Their authority to determine the overall tenor of safety management programs has largely been handed to those who think that relational development between employees is safety’s missing link. The new core belief guiding safety is simple: Unless safety is accomplished civilly—with first priority given to employee management policy—and produces harmony between workers, it is not done properly. As a result, it is no longer sufficient for workers to solely focus on accomplishing traditional safety objectives; they must also dedicate precious energy to ensuring tolerable relationships with each other. As Greengard says, “preventing harassment and avoiding discrimination” share the same priority as “saving lives.” Bottom line? The way workers treat each other in conducting the safety mission has become as important as the mission itself. Safety has become a social change movement. Alarm from safety professionals The change in focus has its detractors. Under the guise of zero-tolerance policies toward what Greengard calls “unacceptable and detrimental behavior,” some wonder if the real purpose of safety is being overlooked. Others express a deep concern that safety has merely become a powerful vehicle through which HR can effect social change. Safety professionals have long been wary of the potentially detrimental influence on risk management that such an emphasis can bring. They are quick to point out that risk control and incident prevention often involve critical, confrontational and sometimes blunt dialogue on the job site—behavior frowned upon by HR. Safety professionals' greatest fear is that there may be a purge of workers whose temperament is vital to risk management but whose behavior is deemed to be uncivil, therefore non-compliant. This includes a large percentage of workers currently employed in safety-sensitive jobs. One report published in Insurance Thought Leadership indicates that three-quarters of skilled and semi-skilled frontline workers exhibit primary personality traits that may be described as crusty or unfriendly. The traits include: task-focused, emotionally withdrawn, hostile and unsympathetic. Airline pilots, surgeons and most professionals whose job includes continuous risk-based decision-making bear the same characteristics. Opening the door for intolerance In research circles closely followed by HR managers, the rhetoric against those inclined to this prickly temperament has increased dramatically. In one study, researchers classify less personable workers as “negative mood” employees who harm the “positive affective states” of “positive mood” individuals. Experts say gruff and grumpy workers easily negate any good generated by people-oriented positive-thinkers. That’s tame compared with the harsh term used in a prestigious 2014 university research report on worker dispositional attitude. In this study, the word used to describe workers whose temperament is typically found in high-risk jobs is "hater," as in the opposite of "liker." Haters tend to initially dislike many things and to focus on tasks rather than people. Considered standoffish, they are not as popular as social-butterfly, anything-goes likers. (Social media is not meant for haters. If so, "dislike" would be their favorite button.) In the wrong hands and for the wrong purposes, "hater" is a derogatory categorization that could be used to isolate, shame or potentially terminate those whose only fault is that they occupy the wrong side of the behavioral spectrum preferred by leaders in the social safety movement. Part 2 of this series explores what insurers can do to stop the slide down this slippery slope.

The question of whether, under the Affordable Care Act (ACA), there will be a physician shortage is not as simple as everyone would like. The most correct answer is yes -- but it depends a great deal on where you live and what kind of care you are trying to access. Based on pre-existing macro economic trends, the shortage was already here -- the ACA adds pressure to the system. The effect of the Baby Boomers The largest trend related to healthcare in the U.S. is the aging of the Baby Boomers. Estimates indicate that more than 10,000 citizens per day will turn 65 for the next 16 or so years. Meanwhile, the ACA is estimated to add an additional 30 million citizens to the ranks of the insured over the next five to 10 years. Between the millions of Baby Boomers heading toward Medicare and the ACA enrolling millions of individuals in the expanded Medicaid plans and state and federal exchanges, there will be challenges to accessing primary care in a timely fashion. Anyone attempting to deflect the reality of these trends is being political. Another macro trend is that nearly half of the 830,000 practicing physicians are currently over age 50; 16% are now age 65 or older; and more than one third of physicians are expected to retire in the next 15 years. Where will all the new physicians come from who are needed to help the millions of new insured individuals and the millions headed toward Medicare? There are even more questions. Today, 30% of physicians are primary-care doctors, and 70% are specialists because that’s where the money has been for the last 30 years. You see, sickness has been the revenue model for the medical treatment system we call healthcare. Like many things in life, the answer is money – what’s the question? Medical schools are incredibly expensive; residency training can take three to seven years; and the entire system has been set up to reward specialist care. Consequently, the ratio of practicing physicians in the U.S. has changed from 70% primary-care physicians and 30% specialists as healthcare has adapted its business model to disease management, prescriptions and treatments of chronic diseases. Where you live also plays a big role in your physician shortage experience. Health Professional Shortage Area maps produced by the government indicate that more than 20% of Americans live in such an area. Affected states include Alabama, Louisiana, Mississippi, Arizona, New Mexico and Wyoming. What does the future of our healthcare system hold? The major change created by the ACA is the beginning of refocusing healthcare from a disease-management to health-promotion model and from a business based on quantity of treatment and fee-for-service to one based on quality of treatment, with compensation bundled and based on outcomes. Today, outcomes have limited financial consequences. Tomorrow, we will pay providers to care about the patient both before and after treatment, to improve outcomes, lower costs and emphasize the prevention of as many claims as possible. The industry is slow to change, and there are many constituencies that prefer evolutionary change, to maximize potential profit margins along the way. We will have more internationally trained physicians entering the U.S. to assist with the shortage. And, as healthcare emphasizes primary care, we will see more nurses, nurse practitioners, pharmacists and physicians assistants handling some of the routine preventive care. Many of these expanded roles for non-physicians will be determined on a state-by-state basis. What are the key challenges of a physician shortage? The challenges for the providers are many. The actual practice of medicine is slowly changing as the incentives are realigned to focus more on the patient and the quality of their outcomes. Hospitals will have to change their old-school business models of the one-stop shop or become obsolete. Many hospitals will go out of business because they are unwilling or unable to change. The specifics will depend on how many competing hospitals are in a particular city, how big the population is and what kind of insurance is paying the bill. Once again, location will play a large part. The ebb and flow of physician availability will be affected by decisions from medical schools, Congress expanding budgets for more training, Medicare revisions and more changes coming from the ACA. On a more personal note, physicians will be influenced by quality-of-life choices, income needs, debt loads from medical school, entrepreneurial spirit, need for security and location. Insured individuals, whether covered with Medicaid, group insurance or an individual policy, all have to change their coverage and, in many cases, their physician. As we will witness over the first three years of the ACA, nearly every insured person will have less coverage if they get sick, as a result of having more "skin in the game." Many previously uninsured individuals will experience the illusion of the low-priced insurance policy, especially if they qualify for subsidies, only to discover that getting sick can be very expensive and that they will likely not receive care from the provider they anticipated. Just as there are no one-size-fits-all healthcare solutions, there is no single answer to the problem of a looming doctor shortage. The experience will depend on where you live, what medical care you need and the kind of insurance plan through which you access your medical care.

On Aug. 5, 2014, the Workers’ Compensation Insurance Rating Bureau of California (WCIRB) released its first-ever “State of the System” report. This was an outstanding, in-depth look at the trends and cost drivers in California workers’ compensation. I encourage you to read the full report here. Given that California now constitutes 25% of the total nationwide workers’ compensation premiums, these issues have a significant impact on larger employers that do business in the state. I have been involved with California’s workers’ compensation system for years, including participating in many discussions on potential legislative reforms. One thing I have always found frustrating is that California has a tendency to evaluate progress on workers’ compensation issues based on its history, alone, without comparing itself to other states. That’s why I found the most compelling information in the report to be the comparative analysis of California to other jurisdictions. This did not paint a pretty picture. According to 2009 data, California ranks eighth in indemnity claim frequency per 1,000 employees, more than 46% higher than the median state. The recent trend makes this even worse because, since 2009, the nationwide trend has been a decrease in frequency rates while California has been increasing. California ranked seventh in 2009 in the percentage of indemnity claims with permanent disability benefits paid – 13% above the median. Once again, the trend makes this much worse as every state that ranked higher than California has passed legislation aimed at reducing workers’ compensation costs. SB 863, passed in California two years ago, increased permanent disability benefits, and there has been a corresponding increase in the percentage of claims receiving these benefits. Finally, California rankedthird in incurred medical benefits per indemnity claim, with costs that were more than 70% higher than the median state. SB 863 focused on reducing frictional costs to the system caused by medical treatment and billing disputes. It did nothing to change the physician behaviors that continue to drive medical costs higher. According to WCRI and CCWC research, nearly half of all pharmacy prescriptions were physician-dispensed, and prescriptions for Schedule II and Schedule III opioid pain medications have continued to rise. Employers looking to open a new manufacturing or distribution facility are looking at comparisons between different state workers’ compensation systems, and other states are using workers’ compensation reform to make their states more attractive to businesses and job growth. My hope is that the WCIRB report serves as a starting point for California to compare itself to other states when evaluating the workers’ compensation system and where reform is needed. We need to move past the thought that things are just done differently in California because that is the way it has always been. Finally, the WCIRB study provides a great lead-in for the California Workers’ Compensation & Risk Conference, which is Sept. 10-12 in Dana Point. You can view the conference agenda here. I will be moderating the opening panel at this conference, which features a variety of stakeholders debating the impact of SB 863 and offering suggestions for improving California’s workers’ compensation system.