Hospital partners with workers’ comp insurer
Hospital partners with workers’ comp insurer
Deal creates financial incentive for prevention
In what they bill as a "first-of-its-kind" arrangement, Nashville, TN-based Baptist Hospital and Brentwood, TN-based Providers Assurance Corporation are jointly offering a managed care workers’ compensation insurance product to employers in middle Tennessee.
What makes the arrangement unique, they note, is that the hospital will share in the financial success or failure of the program.
"This comes into play on the performance of the policy," explains Phillip Goodrum, MBA, vice president of business development at Providers. "If the policy makes money at the end of the term, those profits are shared. If it loses money, that is also shared."
A policy makes money, he explains, when insurance losses (claim payouts) decrease. "In other words, the hospital will actually be making money for preventing injuries," he observes.
Filling a market need
Clearly, such a financial arrangement makes the partnership more attractive for Baptist Hospital. But Baptist also sees the opportunity to create a new market niche. "We recognized a long time ago that employers especially those assigned to a risk pool can’t get a financial break anywhere," says Joanne Knight, vice president of Baptist Affiliates, the arm of the organization that oversees all operations outside the main facility. "So, we have an opportunity to get in there and get involved in controlling cost."
However, Baptist will not work with every employer who wants to control costs; both parties must be committed to change. "The employer has to take responsibility for some dynamics in the workplace," she asserts. In what Knight describes as a "shared risk" relationship, Baptist doesn’t sign any agreement until the employer ensures that it provides a safe workplace.
The due diligence process works like this: Baptist representatives visit the work site and conduct assessments that include ergonomics, hazardous materials, etc. It then tells the employer what steps need to be taken to make the workplace safer.
"The employer has to step up to the plate," says Knight. "We won’t sign any agreement until the changes we recommended are completed."
The entire system benefits the employees of member organizations "because basically, everything is geared toward achieving a safer workplace; we would much prefer to prevent accidents from occurring," says Knight. Of course, if an employee happens to be injured, there is a financial incentive for the hospital to see that he or she return to work as quickly as possible.
The key element
From the insurance company’s perspective, this arrangement adds a vital element missing in many managed care plans: a "home team" provider.
"Finding the most efficient occupational medicine provider that’s the driving factor here," says Goodrum. "There are a lot of [insurance] companies doing loss prevention, loss control, and using new, innovative managed care techniques." The difference in the Providers/ Baptist alliance, he explains, is that the provider also shares financially in the workers’ comp risk, and is thus incentivized to help reduce costs.
When covered employees are injured, he notes, "They know they will get the best treatment, from real occupational medicine doctors."
Employees also benefit, he adds, because both the hospital and providers are incented to have the same goals preventing losses. "Physicians at Baptist are now focused on preventing an injury before it occurs; it’s a much more efficient system," he argues.
What, me worry?
Knight is not overly concerned about the financial risk in the program. "We have a program we call Com Plus our PPO network that manages workers’ comp injuries," she explains. "When a worker is injured, he is managed through our system. A case manager manages the individual, knows where he or she goes, so no unnecessary off-time occurs. Indemnity costs often come from people sitting around not doing anything but waiting for a doctor; sometimes they’ll have a week off or more. We can see them within 24 hours."
"As a concept, I don’t see a problem with it," observes Bonnie Sypolt, RN, BSN, product manager for Florida Hospital Compnet, a managed workers’ comp network in Orlando. "How much risk you assume can vary on the hospital and the product. Hospitals have done this for group health for some time, so it’s just another area of coverage."
To truly evaluate this program, she says, it would be important to examine what coverages it offers, how the plan is set up, how easy physician access is, and the availability of second opinions and independent medical evaluations. "You can’t just make a blanket judgment," she asserts. "Also, [in the future] you would want to look at customer satisfaction."
Providers Assurance is already sold on the concept. In fact, it is looking to duplicate it in other areas. "We’re working with Johns Hopkins in Baltimore with the goal of implementing it there, and we are in discussion with numerous other providers," says Goodrum.
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