For many families, life insurance death benefits have become one of the four major asset classes in their financial portfolios.

Unfortunately, life insurance has been treated as a stagnant asset — once purchased, it is only given cursory reviews.

For the affluent family, this is not only ineffective, but also financially imprudent.

A portfolio of life insurance assets needs a fiduciary level review. Families deploy capital into their life insurance strategies and have the expectation of strong future performance.

As with other family financial assets, many factors contribute to the opportunity for "better or worse than expected" performance.

In the absence of regularly scheduled reviews, an under-performing policy may go undetected, and to a point where "rehabilitation" of that policy becomes problematic.

Creating the opportunity for better performance lies in the professional management of the life insurance portfolio and a planned review strategy.

Successful life insurance portfolios are managed to the specific goals and expectations of the client family.

These are found in the family's insurance policy statement, which outlines what the family expects to accomplish with their life insurance. This is of particular importance when life insurance policies are owned in a trust vehicle. Trustees have a duty to exercise prudent fiduciary responsibility in managing the assets of the trust. This includes understanding and evaluating life insurance assets.

Unfortunately, a large number of trustees (particularly in the family and friends arena) do not have stated guidelines and procedures for managing and maintaining life insurance assets.

This not only leads to under-performing policies, but also missed opportunities to increase death benefits, reduce premiums and improve overall performance of the life insurance assets.

2012 — A Year Of Opportunities
The reunification of Estate and Gift Tax exemptions has created new opportunities for fiduciaries to shore up potentially problematic assets. Changes appear to be certain after 2012 so this is the year to review and act as necessary.

As with any part of the financial services sector, the life insurance industry is experiencing changes in products pricing and performance. There are four critical scenarios where a fiduciary review should be a priority:

Variable Universal Life Insurance — Market based investment assets are what support the performance and the long-term viability of this type of life insurance. The interplay of investment results, premium pattern and policy expenses can create, in difficult market times, a very "fragile" policy. This is particularly true where the insureds are age 55 and older. Careful review of policy options, projected premiums and performance assumptions is necessary in all market environments and particularly now.

Policies 10 years and older — Many product enhancements have not been automatically passed onto existing policyholders. Oftentimes a request to the current insurer will cause improved performance and possibly lower premiums. Additionally, underwriting policies has become much more sophisticated. Policies may have only had three classes (preferred, standard, smoker); while today there are as many as five underwriting classes with some insurance companies.

Changes in Lifestyle and Health — In the past, hobbies such as flying or scuba diving may have caused an increase in premiums. The cessation or change in a hobby may allow for a premium reduction. The same is true for many health conditions. Improvement in weight management, cholesterol or blood pressure all can lead to reduced premiums.

Industry Changes — Certain types of polices, some with significant guaranteed elements, are being "pulled" from the market. Life insurance companies are also consolidating, which can cause a block of policies to become effectively a wasting asset pool. This leads, ultimately, to under-performance for the policyholder.

The Review Process
In most situations engaging an independent third party to prepare a review of an existing portfolio of life insurance assets is the Trustee's best course of action.

A fiduciary level review of a life insurance portfolio should examine the following elements:

1. Suitability
   1. What are the needs of the family today versus "at issue" or since the last review?
   2. What is the family's financial situation? c. What changes have occurred in health or other insurability factors?
2. Product & Industry Opportunities
   1. What changes have occurred in the design of life insurance products?
   2. Are there opportunities within the portfolio to consider?
   3. Are there improved underwriting opportunities?
3. Current Portfolio Performance
   1. How has the existing portfolio performed relative to expectations?
   2. How is it projected to perform?
4. Life Insurance Company Stability
   1. Have the current providers had changes in their financial strength?
   2. Are they continuing to support life insurance as a core business?
   3. Are there other factors that need to be considered relative to the current carriers?
5. Tax Law and Federal Regulations
   1. What changes have occurred which could impact the life portfolio structure?
   2. What changes are proposed and/or pending?
   3. Are there new and/or proposed Federal regulations of life insurance that could impact the portfolio?
6. Observations and Recommendations for the Portfolio
   1. Financial Strategy
   2. Death Benefits
   3. Premiums and Premium Payment Methods
   4. Cash Values
   5. Product Strategy
      • Current
      • Alternative

By establishing a fiduciary review strategy for life insurance portfolios, clients gain peace of mind that they are maximizing performance opportunities. Trustees can feel comfortable they are honoring their obligation to the trust beneficiaries.

Historically, in the U.S. Healthcare system, a primary way to differentiate oneself as a healthcare provider has been to have impressive physical assets such as newly built clinics/hospitals/wings and medical equipment. This is logical when the legacy reimbursement model has incentivized activity (procedures, tests, prescriptions) instead of positive health outcomes. Anything that can be done that will create more activity creates more billing opportunities.

However, the DIY Health Reform movement has recognized that the flawed fee-for-service reimbursement model has been responsible for healthcare's hyperinflation. Some of the most interesting healthcare provider startups such as MedLion, National Surgery Network, and One Medical Group are using information technology (IT) rather than expensive equipment/facilities to differentiate themselves and affordably deliver superior health outcomes.

In an earlier article — Healthcare Disruption: Pharma 3.0 Will Drive Shift from Life Science to HealthTech Investing — I discussed how Health Information Technology has primarily been applied to administrative functions such as claims processing rather than core clinical functions such as decision support. In contrast, today's innovative healthcare providers recognize the changing dynamic of healthcare requires a fundamental rethink of the customer experience as has happened in many, many other industries.

With one third of the workforce being permanent freelancers, contractors, consultants and entrepreneurs, individuals are compelled to directly buy healthcare rather than rely on their employer as they have in the past. The percentage of people directly buying their own healthcare will approach 50% as more employers opt out of providing health benefits as they get priced out (most have already reduced the percentage of the health premium they cover). Thus, consumerism is beginning to pervade healthcare like never before. In response, the aesthetic of providers' websites matters much more. For example, the website of Benchmark Capital-backed One Medical Group would make Philippe Starck proud (see screenshot below).

Of course, it needs to go beyond aesthetically pleasing websites. Whereas technology has historically brought incremental administrative efficiency in healthcare, organizations such as Qliance and OneMedical have utilized technology for radical transformation. It's no coincidence that they are backed by the founders of Amazon, aQuantive, Dell, Expedia, and venture firms such as Benchmark — all organizations that used technology to disrupt entire industries. Qliance evaluated 240 different U.S. based electronic medical systems before rejecting them as too billing centric rather than patient and health outcomes focused. Instead Qliance is creating competitive advantage by custom developing their software systems using off-the-shelf and custom-built software.

The aforementioned organizations are all disruptive startups bringing dramatically lower costs and better outcomes. What's going on at the large health system level where there's greater complexity including legacy processes and systems? Let's look at one example from the heart of Silicon Valley — Stanford Hospital & Clinics.

This was our opportunity to come up with ideal ways of working, not simply to replicate our very poor processes when we put in the new systems — because that's just a really expensive copy machine.

Stanford Hospital & Clinics is implementing a traditional health Information Technology system from one of the leading Health IT vendors — Epic Systems. Epic is appropriately named as, by all accounts, the implementations and cost are also epic. All the Epic projects I've heard about are eight and nine figures for the cost of the software and implementation. The scale of projects sound similar to the early days of Customer Relationship Management where it could only be implemented by very large organizations. The market leader for Customer Relationship Management was Siebel and those projects regularly ran seven to nine figures (reportedly 10 figures in the case of Epic's Kaiser implementation) which is obviously out of reach for small and medium sized organizations.

Disruptive pricing didn't come from Oracle or other large client-server vendors to extend this important category into smaller organizations. Instead it came from cloud-based Salesforce.com dramatically bringing costs down. Perhaps more interestingly, Salesforce created an open ecosystem inviting 3rd party developers to address the wide array of customer requirements for particular job functions and industries.

Healthcare has a similar diversity of conditions and communities that will necessitate a 3rd party ecosystem. I would predict that as the closed nature of legacy client-server Customer Relationship Management systems created an opportunity for Salesforce, the legacy client-server Health IT vendor systems are similarly closed and will create opportunities for modern, open architectures from a new generation of tech startups.

By definition, the legacy systems have been optimized around the flawed fee-for-service model that pervades healthcare today. In contrast, the disruptive new care and payment models that are exploding around the country require a new ecosystem of technology platforms. Out of necessity, the new healthcare delivery models have demanded custom built software, but this should change as those models reach critical mass. A market for off-the-shelf software for the next generation of HealthTech will develop.

A pharma executive explained to me the need to focus more on health technology. "Based on the 'patent cliff' in healthcare and the need for continued research and development, promotional budgets are becoming tighter; technology offers a less expensive way of interacting with our customers. Simultaneously, while many physician offices have been reticent to adopt technology, the incentives being put before them are now changing their perspective on technology ... pharma companies have an opportunity to take advantage of this." She went on to explain how that "no see docs" (i.e., physicians generally barring pharma reps from meeting with them) may be more open to new technologies delivered through reps that can help achieve better outcomes.

The scale of the plans for new business models emerging from major pharma, health product/device and health plan organizations will have these previously complementary organizations increasingly competing with each other. Perhaps more interestingly, they will begin competing with the very healthcare providers they have offered their products/services to. The notion of coopetition is familiar to those in tech but will likely become a term that is no longer foreign in healthcare. Just as we've seen Media become more like Merchants, I'd expect we'll see healthcare suppliers acting more like providers. We've already seen healthcare providers become health plans.

Newspapers provide a cautionary tale for healthcare providers. It was the non-obvious competitors that have cratered the newspaper businesses. In this related article, I draw parallels between the behaviors I observe today with health systems and the behavior of newspaper companies in the second half of the 90′s. Consider that the byproduct of Denmark's shift to a focus on outcomes over the last couple decades has resulted in half of their hospitals closing as they are simply not needed anymore.

Healthcare providers must reinvent themselves or they'll meet a similar fate to the Denmark hospitals that are now closed. A key part of their reinvention will be enabled by a new generation of technology solutions.

Summary
Last year, the U.S. Department of Labor's Occupational Safety and Health Administration (OSHA) cited Tenneco Automotive Operating Company for 20 safety and health violations at its manufacturing plant in Hartwell, Georgia. Several violations involved hexavalent chromium exposure, which can lead to nose, throat, and lung damage. For more information, read the OSHA News Release.

Analysis
Are we killing future generations in exchange for meager fines? Are hard-working agencies such as the Occupational Safety and Health Administration and other international bodies sufficiently empowered to have the resources needed to inspect all manufacturing facilities on a regular basis and offer decent whistle blowing programs that truly protect the source of disclosure?

The obvious answer in the United States is an astonishing no.

The recent discovery of hexavalent chromium in a Georgia work place and the resulting news coverage has brought this type of danger to the forefront. Yes, hexavalent chromium can have very dangerous human carcinogen effects, has raised lots of awareness through the movie, "Erin Brockovich," and is detectable through analysis of drinking water.

Unfortunately, it is not alone. Numerous other chemicals can also be toxic. Biotoxin abrin, cyanogen chloride, hydrogen cyanide, potassium cyanide, sulfur mustard, nitrogen mustard, ricin, sarin and vx are among other potential contaminants that employees and surrounding citizens can end up facing.

All of these chemicals have such levels of lethal toxicity that they are posted on the Emergency Response Safety and Health Database by the Centers for Disease Control and Prevention (CDC) as used as part of chemical terrorism. Although some of these chemicals can cause relatively immediate allergic reactions, exposed individuals are often affected over a longer period of time, and the result can be a much more painful and grueling death. Most of the time, contamination through water, food and air/vapor gets absorbed in our bodies without us detecting their immediate presence. An international reform of the various laws appears to be required, as current U.S. fines for serious violations can be limited to $7,000 per incident.

Organizations such as the United Nations and the World Economic Forum have already created committees to study topics such as energy, water and food security. Their assessment of the economic and medical impacts of improper resource handling predicts negative bottom-line economic growth. It is rather unfortunate that instead of an initial investment of a few dollars on proper gloves and boots, current practices are to cut costs instead of saving lives of hundreds around the world.

Operational Safety
Yet, the problem remains that acceptable practices vary from one country to another, fines are low, and enforcement agencies need to be properly empowered and be equipped with more staff and resources for ongoing inspections at all relevant facilities.

For example, at the Port of Oakland in California, where evidence of the impact of toxicity has been measured in direct relation to the increased occurrence of serious medical issues, the choice between immediate economic gains to businesses versus long-term medical costs to individuals becomes a decision that profit-minded executives no longer second guess.

Although more and more of us try to exercise daily and eat healthier, what is the point if many of us are going to be exposed to any of these chemicals while trying to make a living?

The Environmental Protection Agency, the Food & Drug Administration, Occupational Safety and Health Administration, and the Department of Homeland Security cannot possibly be the sole source for ensuring safe conditions and compliance. Instead, each organization must truly prioritize safety and hold themselves accountable.

Here is a list of safety practices that can be easily implemented in nearly all facilities:

1. Ensure that all fire extinguishers are tested quarterly.
2. Test the ongoing air quality and test employees' exposure to chemicals.
3. Provide proper ventilation, A/C, heating and roofing.
4. Ensure that all personnel change gloves, footwear, masks, clothing and other protective gear based on the toxicity and frequency of the materials to which they are exposed.
5. Offer weekly security training to staff and, for heavily concentrated areas, ensure rotation of the exposed staff
6. Develop a plan to limit the exposure to all chemicals and work with local resources in offering ongoing compliance to exceed regulatory requirements.
7. Develop, practice and update emergency plans in case of a disaster on a quarterly basis.
8. Provide a separate change area for all personnel.
9. Provide separate storage facilities that are tested frequently to ensure avoidance of lethal leaks.
10. Adopt intense cleansing practices.
11. Share inventory listings of all chemicals onsite with your local fire department in case of extreme contamination, explosion or fire.
12. Maintain emergency kits, safety showers and eye washers within 300 feet of your staff.
13. Dispose of toxic waste using sealed containers on a timely basis and at authorized locations.
14. Ensure that all electrical equipment that handles toxics is equipped with on/off power switches.
15. Equip your facilities with plant-size surge suppressors at breaker boxes.
16. Test and maintain all equipment on a weekly basis, including but not limited to forklifts and other mobile equipment.
17. Test and maintain alarms on all boilers to identify challenges with pressure and water cooling systems.
18. Properly dispose of all contaminated and unused containers that are not going to be used; otherwise, ensure proper decontamination of units.
19. Equip your staff with proper communication devices such as hand-held radios so they can alert one another in case of incidents.
20. Test and calibrate measuring equipment frequently such as outdoor truck scales, etc.
21. Maintain a secured lab to verify on-site the toxicity of all products manufactured and sold.
22. Provide covers to all electrical mounts; chemical dust can easily penetrate exposed electrical plugs.
23. Provide guards on machines, along stairs and multi-level facilities to prevent falls.
24. Have extra safety gear that visitors (including suppliers or customers) can use.
25. Place appropriate health/safety posters in highly visible areas.
26. Consult with medical professionals and have employees get medical evaluations on a regular basis to ensure that toxicity levels are non-existent or low. First thing would be to perform a baseline level of their body upon pre-employment. Then, upon employment, test their blood quarterly for chemical levels.

Exposure to chemicals is an unnecessary occurrence that has incredible long-term costs. Let's work together on prevention and always trust, but verify!

Using Data To Define Quality Performance Based Networks
People in Workers' Compensation are beginning to power up their data to gain insight and objective decision support to structure their provider networks. To do that, physician and other provider performance is evaluated based on actual performance evidenced in the data. That seems simple enough on the surface, but it is fraught with challenges. A few are described here, along with a case description of fraud by data proliferation.

Primary Provider
Evaluating the data to determine provider performance quality is tricky. For instance, who among those treating a claimant should be held most responsible for claim outcome? Which provider is the so-called primary provider? Is it the first provider to see the claimant, the provider who has charged the most money, or the one who saw the claimant most frequently? There is no specific indicator in the data denoting primary provider, nor do providers generally self-identify in that way unless they are involved in a formal gatekeeper arrangement. Consequently, for analytic purposes a decision must be made regarding provider influence in the claim, aka, primary provider.

Distinguishing Individual Providers
Another common problem is that individual providers are often not differentiated in the data. Many payers accept bills "as is," meaning they do not require the billing entities to specify individuals. Typically, individual physicians and other providers are camouflaged under the organization's Tax ID. In the past, that was adequate because the purpose of the bill was to pay and record the transaction. But that is no longer good enough because of the demand for analytics.

Bills are now a significant piece of the data required for provider performance analytics. Therefore, for individual treating providers, the National Provider Identification number (NPI) or state license number is needed to recognize single medical doctors or other professionals treating claimants. Unfortunately these identifiers are usually not included in the data. Withholding payment is the most powerful method of generating compliance and payers have that power.

Moreover, among data issues, deliberate identity proliferation is even more damaging to accurate provider performance analytics.

Identity Proliferation
Medical fraud surfaces in many forms. Duplicate billing, up-charging, and optimizing charge codes and diagnostic codes (up-coding) are among the most common, but now newly creative methods are being employed by a few. Perpetrators are obfuscating the data to conceal their poor performance by proliferating their identities in the data.

By altering names or addresses slightly, thereby adding to their number, providers are able to cause the system to recognize each variation as a separate entity. That way, multiple provider records are created in the data, even though they are really all the same individual. Proliferating provider records in a data set effectively skews the results of performance analytics.

A Case Of Data Proliferation
Provider identify proliferation was discovered recently when a monthly billing report for an organization was analyzed. Fifty (50!) different name and address iterations for the same medical provider Tax ID were discovered. This had been attempted previously, but this time, the effort was extreme.

Is this provider representing themselves carelessly? Probably not. The provider knows computer systems consider data literally, so each submission would generate a new record, the hoped-for result. Without investigation, the provider's billing will not be questioned, yet when the provider's performance is analyzed, the results will be distorted and inaccurate.

The provider vendor will be paid because all 50 iterations have an acceptable Tax ID. However, the problem surfaces when executing provider performance analytics. Different claims are attached to the 50 different records for the provider rather than consolidated in one record for the provider. Performance indicators are distributed across the faux entities rather than consolidated for the single provider, thereby distorting performance results, a new-age form of medical fraud.

Real Solutions
As with many forms of fraud, the solution is to discover and subvert the effort early. Evidence-based quality networks composed of quality individual providers cannot be created using such distorted data. Payers should monitor their data to discover and expose such behavior as it occurs.

Payer systems are culpable, as well. Systems should be designed or updated so that multiple record entry is thwarted, either through administrative procedures for data entry or simple technical methods. Including individual identifiers such as National Provider Identification and state license numbers will add to the solution, forcing accuracy in provider records.

For the case described here, an additional solution was implemented. The multiple provider identities were merged electronically by the analytics company, thereby integrating the occurrences for this perpetrating provider. As a result, the provider's performance can be analyzed as a whole rather than in fragments.

Because claims actually associated with this provider are distributed across the multiple artificial provider records in the data, analysis of performance is inaccurate. Not surprisingly, when this provider's data was merged and re-analyzed, the provider ranked in the lowest performance quartile. Gotcha.

When an employee gets hurt at work, or at least claims that they did, it can be a very stressful time for employers. Sometimes the injury is obvious, the employee is not exaggerating, and the employee simply wants to go back to work as soon as possible. Other times there are conflicting stories about whether an injury actually occurred or whether the injury is as severe as claimed.

In addition to following the applicable reporting requirements, there are several things employers can do to help develop a stronger defense.

1. Write Down The Facts
When you find out that an employee intends to file, or has filed a claim for injury, write down all the facts you know. Talk to any witnesses who might have seen the accident happen. If the employee has not retained an attorney, speak with them. Find out what happened, when, what the conditions were, who was present, and any other facts you believe are relevant.

Be objective when you are discussing this. Your role is to gather information, not argue the case. You want to be careful to avoid a situation where your employee could claim that you discriminated against them for filing or threatening to file a workers' compensation claim. In California, your insurance company has 90 days to admit or deny a claim from the employer's first date of knowledge, so this information will be very important.

2. Make A Timeline Complete With Relevant Documents
Sometimes a workers' compensation claim is filed soon after an employee is denied a promotion or raise, is placed under disciplinary warning, or has an interpersonal conflict with a co-worker or supervisor. This information is highly relevant, particularly when many cases filed for injury to other parts of the body systems eventually include a psychiatric component.

In many cases, if a person claims psychiatric injury and the defense can demonstrate that it is at least partially related to a good-faith personnel action, the degree of permanent disability or even compensability of the psychiatric portion can be challenged.

Keep any doctor's notes, job applications with applicable history, disciplinary warnings, wage information, notes, and other documentation and present it to your claims adjuster or the insurance defense attorney. Include everything you have. A separate timeline will also be useful in defending your claim.

3. Take Photographs
Photographs of the scene of the incident, or alleged incident, taken from various angles can be very valuable in establishing whether a claim is credible. This is particularly true in cases involving vehicle accidents, the use of equipment, or the physical attributes of a building. Without photographic evidence, it is difficult to challenge an employee who might testify under oath or tell his doctors that the ladder was taller, the fall was further, or that something that was physically impossible occurred.

A few years ago, an employee claimed that the vehicle he was driving had struck a forklift, causing severe injury to his left leg and back. He had been terminated soon after for reckless driving and then decided to file his claim.

At deposition, I was able to produce a copy of a "parts cart" on four caster wheels that had simply rolled out of the way when struck. He reluctantly admitted that this cart was the "forklift," and the case settled for a nominal amount. A simple photograph saved thousands of dollars.

4. Attend The Deposition
If your defense attorney or insurance company schedules a deposition of the employee, if at all possible, you should attend. You will not be asked to testify, or say anything at all on the record, but you can listen to the testimony. Before the deposition, you can consult with the attorney or insurance hearing representative regarding the facts of the case. You know the situation and can provide valuable insights and help clarify any of their questions about the facts or the people involved before the deposition starts.

During breaks, you can speak with them about the testimony, give ideas about what they should ask, and suggest areas that could be clarified with the employee. Your presence will also help the employee realize that their version of facts may be challenged and can encourage them to be more truthful in their testimony. It will also give you an idea of what they may testify to at trial.

5. Keep In Communication
As a workers' compensation defense attorney, I always appreciate it when employers communicate with me. If you need an update, call your adjuster or attorney. If you learn new facts through the rumor mill that the employee is working somewhere else, or that the facts of the injury are not accurate, let the defense team know.

Of course, the best thing is to avoid injuries in the first place through promoting workplace safety, but when they happen or are alleged, these are a few ways that employers can proactively address these claims.