Tag Archives: consulting firm

healthcare

Why Healthcare Costs Soar (Part 6)

In most healthcare discussions today, “the exchange” is usually described as a solution to address employers’ health and cost challenges. The exchange model is now being offered by carriers, by consulting firms and by independent companies. Accenture says the enrollment in private exchanges exceeded 6 million in 2015, and it’s projected to be 40 million by 2018.

Since the age of consumerism began back in the early ‘90s, the theory has been that, if we can transform employees into consumers of healthcare services, the free market will drive out the price variation among the providers as patients question the cost of services. But, despite increasing deductibles and pushing more of the cost burden to employees, many employers are still waiting for those employees to become healthcare consumers.

The reality is that healthcare is complex, so individuals have trouble deciphering medical terminology and obtaining the actual price for a specific service, especially because most people access the healthcare system infrequently.

Is the exchange the answer for consumerism to take hold?

At a recent exchange conference, national experts discussed the impact of the exchanges, providing various messages and statistics. It became clearer that the value of the private exchange is basically as an administrative platform to give individuals plan and program choices, so they can make decisions based on their needs.

Now, the concept of giving employees’ choices and allowing them to make a personalized decision is not new–cafeteria plans have been around for 25-plus years. Cafeteria plans in the ’90s had some big problems. The main one was serious adverse selection. When you have big bills planned, you switch to the “richest” plan, and then switch to a low-cost option later. When this happens, the “sponsor” gets shorted on payroll deductions as well the spread of the costs among those not using services.

It will be interesting to see if the exchanges have a better design these days.

When questions were posed to the exchange experts on whether the data was showing an impact to the healthcare decisions and to the health of the population, the consistent response was—we’re not sure.

It’s important not to get caught up in the marketing claim that an administrative platform is going to solve the healthcare challenges confronting employers today. As we discussed in Part 5 of this series, the marketing around value-based contracts/ACOs has also positioned that concept as a solution, when, in reality, performance contracts with provider have also been around for 25-plus years.

Employers continue to be faced with this problem: About 8% of their population consumes 80% of the total healthcare spending, and that 8% changes every 12-18 months.

Is it time to get back to the basics? Should the focus be on finding the right physicians committed to delivering evidence-based healthcare, and then ensuring that patients are accessing care from these providers?

When providers see that employers are truly committed to supply chain management, we can expect the process of care to change significantly, and there will be a commitment to removing the waste from the system. As with many other industries, the ultimate purchaser has the ultimate power, by working with the interested suppliers to improve the process and to increase quality and lower costs.

Helping Data Scientists Through Storytelling

Good communication is always a two-way street. Insurers that employ data scientists or partner with data science consulting firms often look at those experts much like one-way suppliers. Data science supplies the analytics; the business consumes the analytics.

But as data science grows within the organization, most insurers find the relationship is less about one-sided data storytelling and more about the synergies that occur in data science and business conversations. We at Majesco don’t think it is overselling data science to say these conversations and relationships can have a monumental impact on the organization’s business direction. So, forward-thinking insurers will want to take some initiative in supporting both data scientists and business data users as they work to translate their efforts and needs for each other.

In my last two blog posts, we walked through why effective data science storytelling matters, and we looked at how data scientists can improve data science storytelling in ways that will have a meaningful impact.

In this last blog post of the series, we want to look more closely at the organization’s role in providing the personnel, tools and environment that will foster those conversations.

Hiring, supporting and partnering

Organizations should begin by attempting to hire and retain talented data scientists who are also strong communicators. They should be able to talk to their audience at different levels—very elementary levels for “newbies” and highly theoretical levels if their customers are other data scientists. Hiring a data scientist who only has a head for math or coding will not fulfill the business need for meaningful translation.

Even data scientists who are proven communicators could benefit from access to in-house designers and copywriters for presentation material. Depending on the size of the insurer, a small data communication support staff could be built to include a member of in-house marketing, a developer who understands reports and dashboards and the data scientist(s). Just creating this production support team, however, may not be enough. The team members must work together to gain their own understanding. Designers, for example, will need to work closely with the analyst to get the story right for presentation materials. This kind of scenario works well if an organization is mass-producing models of a similar type. Smooth development and effective data translation will happen with experience. The goal is to keep data scientists doing what they do best—using less time on tasks that are outside of their domain—and giving data’s story its best possibility to make an impact.

Many insurers aren’t yet large enough to employ or attract data scientists. A data science partner provides more than just added support. It supplies experience in marketing and risk modeling, experience in the details of analytic communications and a broad understanding of how many areas of the organization can be improved.

Investing in data visualization tools

Organizations will need to support their data scientists, not only with advanced statistical tools but with visualization tools. There are already many data mining tools on the market, but many of these are designed with outputs that serve a theoretical perspective, not necessarily a business perspective. For these, you’ll want to employ tools such as Tableau, Qlikview and YellowFin, which are all excellent data visualization tools that are key to business intelligence but are not central to advanced analytics. These tools are especially effective at showing how models can be used to improve the business using overlaid KPIs and statistical metrics. They can slice and dice the analytical populations of interest almost instantaneously.

When it comes to data science storytelling, one tool normally will not tell the whole story. Story telling will require a variety of tools, depending on the various ideas the data scientist is trying to convey. To implement the data and model algorithms into a system the insurer already uses, a number of additional tools may be required. (These normally aren’t major investments.)

In the near future, I think data mining/advanced analytics tools will morph into something able to contain more superior data visualization tools than are currently available. Insurers shouldn’t wait, however, to test and use the tools that are available today. Experience today will improve tomorrow’s business outcomes.

Constructing the best environment

Telling data’s story effectively may work best if the organization can foster a team management approach to data science. This kind of strategic team (different than the production team) would manage the traffic of coming and current data projects. It could include a data liaison from each department, a project manager assigned by IT to handle project flow and a business executive whose role is to make sure priority focus remains on areas of high business impact. Some of these ideas, and others, are dealt with in John Johansen’s recent blog series, Where’s the Real Home for Analytics?

To quickly reap the rewards of the data team’s knowledge, a feedback vehicle should be in place. A communication loop will allow the business to comment on what is helpful in communication; what is not helpful; which areas are ripe for current focus; and which products, services and processes could use (or provide) data streams in the future. With the digital realm in a consistent state of fresh ideas and upheaval, an energetic data science team will have the opportunity to grow together, get more creative and brainstorm more effectively on how to connect analytics to business strategies.

Equally important in these relationships is building adequate levels of trust. When the business not only understands the stories data scientists have translated for them but also trusts the sources and the scientists themselves, a vital shift has occurred. The value loop is complete, and the organization should become highly competitive.

Above all, in discussing the needs and hurdles, do not lose the excitement of what is transpiring. An insurer’s thirst for data science and data’s increased availability is a positive thing. It means complex decisions are being made with greater clarity and better opportunities for success. As business users see results that are tied to the stories supplied by data science, its value will continue to grow. It will become a fixed pillar of organizational support.

This article was written by Jane Turnbull, vice president – analytics for Majesco.

What Coverage Does a Consultancy Need?

Insuring a consulting firm can pose a challenge. Many professionals start a firm today out of necessity — creating their own employment. You take years of expertise and open a consultancy, often out of your home or in an office suite. This means a tight budget.

Insurance is one of the areas where entrepreneurs may try to cut costs, but, to protect your business, you need to have your insurance agent evaluate all the exposures you face and offer solid coverage solutions.

What does the professional liability policy cover?

The consultant and its employees provide a service or offer advice, but what if it is faulty? Any professional consultant needs professional liability coverage, also called errors and omissions.

The professional liability policy may be worded as follows:

“The company will pay on behalf of the insured any loss excess of the deductible not exceeding the limit of liability to which this coverage applies that the insured becomes legally obligated to pay because of claims made against the insured during the policy period for wrongful acts of an insured or because of personal injury arising out of wrongful acts of an insured.”

In addition, the policy may say, “Coverage for allegations of bodily injury, sickness, disease, or death of any person, or damage to or destruction of any tangible property, including the loss of use….”‘

This wording shows the limited scope of the professional liability policy. The intent is to cover only negligent professional or “wrongful” acts. The policy also provides limited protection for personal injury, such as libel or slander, committed by the insured against a third party.

What does the commercial general liability (CGL) policy cover?

The CGL covers bodily injury to a person or damage to the property of others caused by a firm’s negligence. As courts have ruled repeatedly, the CGL policy is not a performance bond. A CGL policy is not intended to cover the quality of a company’s advice or service. This helps constrain the contractor from low-bidding a job, performing poorly and then relying on the insurance carrier to cover that risk.

Look first at CGL policy language under the insuring agreement, the heart of the policy:

“We will pay those sums that the insured becomes legally obligated to pay as compensatory damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.”

Here are a few of the exposures covered under the CGL:

  • Premises and operations liability for persons injured or items damaged while on your business premises or because of your business operations.
  • Additional insured coverage when you sign certain written contracts or agreements such as leases.
  • Tenant’s liability in the event the business operations, for example, accidentally start a fire in rented premises.
  • Host liquor liability if you are not in the liquor business.
  • Defense for covered claims.
  • Bonds and court courts associated with a claim.
  • Limited financial remuneration when assisting your carrier in the defense of a claim.

In addition to bodily injury and property damage, the CGL covers personal injury liability, including libel and slander, as well as advertising injury. The CGL offers consultancies broad coverage and peace of mind. You can run your business knowing that help is available in the event of a broad range of losses.

Althought there is a great deal of uniformity between professional liability forms and commercial general liability forms, all carriers use a variety of forms. Coverage can vary widely from one insurance carrier to another, so an agent should be able to help you determine the coverage differences and help you make a strong choice to protect your growing consultancy.

What are some CGL exclusions?

There are many exclusions under the CGL, and to understand each one is tricky. Forms differ and jurisdictions that hear lawsuits vary greatly. However, here are some general exclusions:

  • Intentional injury — When a business owner acts in self-defense, there is generally coverage. For example, suppose a robber breaks into the darkened firm and brandishes a knife at the owner, who is catnapping. He heaves a computer monitor at the burglar and injures the burglar. Carriers should defend the case unless it appears the insured intended to inflict malicious injury.
  • Care, custody and control of property owned by others — For the consultancy that repairs computers or other equipment, bailee coverage may be necessary.
  • Faulty workmanship.
  • Liability arising from an aircraft, auto or watercraft — If you use any of those conveyances in your business, you’ll require specific coverage to protect your assets. However, if you provide an automobile to an employee who gets in an accident, you may have coverage, depending on the coverage form and the jurisdiction.

While the CGL policy offers the majority of consultancies broad coverage, your agent must evaluate each risk carefully to ensure the CGL adequately protects the consultancy’s unique exposures.

The CGL may still lack scope

As your consultancy grows, the CGL is only part of your coverage solution. The CGL will not cover every exposure you face, especially once you hire employees.

In most states, after you hire either one or a small number of employees, the state mandates workers’ compensation coverage. In addition, employment practices coverage is important in today’s complicated employment arena. There is no coverage under the CGL for most employment exposures like a wrongful termination or a discrimination claim.

Your consultancy may start with only one computer and a printer, but as your firm grows so does its personal property. Don’t forget to insure your personal property, as well.

For firms with even the most trusted employees, crime policies are vital. For example, suppose you hire a bookkeeper to assist with accounting and administrative tasks. Unbeknownst to you, she likes to gamble. Over time, she begins to embezzle funds, and, before you know it, you are short thousands of dollars. Crime coverage is designed to defend and pay these types losses. The Association of Certified Fraud Examiners found that firms with fewer than 100 employees were frequently hit by fraud, accounting for 32% of the incidents they surveyed.

Clearly, the CGL offers broad coverage and peace of mind for any consulting firm, but there are many other risks your business faces that may require specialized coverages. An independent agent can help you sort out the risks.

One easy approach to coverage

If you own a consultancy, you may be confused about your unique coverage needs. The way many agents approach your coverage is to tell every new business owner he or she needs general liability coverage. Then they review the consultancy’s business operations to determine what additional coverage, such as professional liability, employment practices or workers’ compensation are required.

Because most consultants have auto insurance, to some extent you understand liability coverage. The CGL is more complicated, but the general principles of coverage for bodily injury and property damage are similar to the auto policy. For the new consultant, this comparison may be a good starting point to help you understand your company’s need for general liability coverage.

In today’s complex business environment, no consultancy should go without two types of coverage — professional and general liability — at a minimum. An experienced independent agent can help you ensure your business thrives and prospers in the coming years.