Digital Platforms for Workers' Comp

Jargon Alert! According to Accenture, the consulting firm, “82% [of executives] believe that digital platforms will be the ‘glue’ that brings organizations together in the digital economy.” As of 2016, the top 15 platform companies had attracted an “unprecedented level of capital investment through the value-creating power of their platform ecosystems and digital assets.”

What does this mean to workers’ compensation? They are worth testing. The green shoots have already appeared.

Platform companies include e-Bay, Uber, Airbnb, and online job sites. Platform companies use the cloud for data storage. They apply software rules to assume virtually all handling of transactions such as selling and collections. They keep staff numbers and brick and mortar investment very low. To be sure, they may need a lot of cash to support 30% - 50% annual growth while they build networks of customers and suppliers.

To gauge how digital platform companies differ from conventional ones we can compare the economics of Uber with that of a hypothetical case management company. There is an outstanding contrast in expenses and agility. Take this comparison with a grain of salt but pay attention to the radical differences.  

Using 2017 figures, Uber had one wage employee per 187 drivers (all of them non-employees). Its revenue, net of the cost of drivers, was about $400,000 per wage employee. The company was growing upwards of 50% a year.

A conventional case management firm hires case managers and other staff. It would employ about one other worker for every 2.7 case managers. The revenue per each other worker, after subtracting the case managers’ cost, would be about $175,000. Compared to Uber, the firm has a much more difficult time in shifting and scaling its operations.

The contrasts in reality will not be as large. But a platform company in workers’ comp would deliver a more competitive, lower cost service than do conventional companies.

Among the types of platform companies today, two basic types make sense for workers’ compensation.

One is the “match-maker” model, such as Airbnb and job sites. They bring together those wanting to purchase a certain kind of service with others wanting to sell the service. 

Some claims operations today dip their toe into the match-maker model when they engage Uber or Lyft to provide transportation for injured workers.

I have identified two match-maker firms in workers’ comp. One is Medical Service Quotes, or MSQ.  Its claims payer customer asks for bids for a specific service or product, such as a DME device for an injured worker in Des Moines. MSQ posts the request on its platform. Vendors submit bids. The customer selects a vendor. The selection is based on criteria which can be a combination of price, availability, customer ratings, and other factors.

MSQ says that it earns a commission from the winning vendor.  It tells me that any vendor can participate, including regional and national aggregators as well as solo local area vendors.

Staffmark, out of its Cincinnati office, has used MQC for several years. It has purchased transportation, translation, TENS supplies, IMEs, DMEs, nurse case management, and diagnostics. Staffmark may not select the least expensive, but it has the option to do so. It might select on the basis of past experience. It uses MSQ about 800 times a year, and averages about five bids per time.

Transparent Health Marketplace is another match-maker firm. It aims to match claims payers and medical providers. It expects to launch its services this year.

The second kind of platform service most appropriate for workers’ comp is a collaborative platform. Google Docs is a simple collaborative platform, where people with access rights can help create and edit databases and documents.  An example of an emerging collaborative platform is what is now called telemedicine. A more appropriate name is telepresence.  

Why is telepresence worth considering? Because in its generic form it provides a means for people to collaborate whenever visual observation is valuable. The technology is suitable for initial triage, return to work assessment, physical rehab, vocational rehab, case management, and account management. When I read of Concentra, Medrisk, and Medcor using this technology, I think of more than delivering clinical services.

Whatever type of digital platforms, they call encounter a “network” challenge on their path to success. They need to be used to be proven, for only once proven can they grow. The participating parties have to find it in their interest to engage. It takes time to learn, refine and fit into existing operations.

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