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October 10, 2013

Workers' Compensation—What the Numbers Say

Summary:

As unlikely a model as supermarkets might appear to be, workers’ compensation companies should learn a lot from them.

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Even though people talk a lot about the value of analytics for workers’ compensation, few have actually implemented them in ways that provide their full value.

To improve, insurers should draw on lessons from, of all things, supermarkets. Supermarkets and grocery stores have long automatically documented transactions at the register. When those transactions are analyzed in context with other data, such as inventory turns and factors such as season and weather, conclusions can be drawn about how buying behavior, and predictions can be made. Operational decisions spring from the analytics, such as diverting high-demand inventory to regions that are projected to need it. The result is increased sales and satisfied customers.

Like the supermarket industry, the workers’ compensation industry collects data continually. Bill review systems document medical bills received and recommend payment based on data analysis. Claims systems document medical bills paid, indemnity paid, work loss, legal actions and other factors, all related to the claim. Still more data is collected related to pharmacy, utilization review and other issues.

But, amazingly, the rich data is rarely converted to operational tools like those that drive supermarkets. Most in workers’ compensation neglect to use their data to identify opportunities to mobilize action early and limit, or even thwart, potentially high risk and costly situations.

As with supermarkets that anticipate demand, insurers should analyze all available data in real time, and alerts about workers’ compensation should be sent to appropriate persons to give them the jump on problems. Adjusters and nurse case managers should receive specific information regarding new conditions so they can mobilize action—when a known, high-risk condition occurs in a claim, that information should be automatically transmitted to an appropriate person. A simple example is when multiple prescriptions of opioids are found; a nurse case manager should be electronically notified and take action. 

Besides saving money, analytics can allow for a formal infrastructure for medical management, optimizing efficiency.

So, as unlikely a model as supermarkets might appear to be, workers’ compensation companies should learn a lot from them.

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