Risk Insider: Grace Crickette

Hungry for Collaboration

By: | April 25, 2016 • 2 min read
Grace Crickette, a leader in enterprise risk management, is special administrator, Finance and Administration for San Francisco State University. She can be reached at [email protected]
Topics: ERM | Risk Insider

Fresh from another great RIMS in San Diego, I want to report on some of the great work that the RIMS Enterprise Risk Management Committee did in the past year and is planning for the future.

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Also, I want to encourage readers to volunteer for RIMS or other professional groups. Though my time is stretched to the max, I find that the reward of working with others towards a common goal without any compensation or promise of reward is a pretty cool and liberating environment to work in.

Risk knowledge with an actionable outcome is powerful.

You don’t have the restrictions that can come with your job or work environment and you can really stretch your thinking and be innovative.

Take the RIMS ERM committee’s recent work on risk appetite and tolerance statements and actions: The Steps to Successful Risk Taking: Developing Effective Risk Appetite and Tolerance Statements

We were feeling pretty hungry … hungry for a risk appetite and tolerance framework that could  provide a holistic view and process to manage a company’s willingness and ability to take risk, and encourage better corporate governance, and help management make better strategic decisions.

We put together examples of how different organizations are using risk appetite and tolerance as well as a Risk Appetite Tolerance & Action Index that we intend to keep adding to and revising.

The added element of actions tied to risk appetite and tolerance provide the accountability that is needed to make the effort of enterprise risk management really valuable. Risk knowledge with an actionable outcome is powerful.

So if you’re hungry too….and if you are a member of RIMS,  you can contribute to the Index on OPIS.

Both the ERM Committee and Strategic Risk Management Committee met at the conference and while there were a number of items for discussion, the subject of the consideration of risk and engagement of the risk manager in mergers and acquisitions (M&A) got some great energy going.

Risk managers are often brought in late to the M&A game and once engaged the focus is often on insurance, which — while important — may not be the critical pain point. So is the “problem” we should solve getting the risk managers engaged earlier? And if so, what work would the ERM and SRM members need to do to influence that?

Maybe decision-making on growing and increasing shareholder value should be the chief area of concern, not the timing of the engagement of the risk manager.

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But growth does not always have to come from acquisition. There needs to be adequate consideration of risk versus opportunity in the development of the growth strategy.

Maybe the problem is that the risk managers are not part of developing the due diligence framework in the M&A process. Trying to figure out what problem we are trying to solve is a great place to start a dialogue, versus thinking there is a ready-made solution.

I’m very lucky to get to volunteer with these very smart people, and I can’t wait to see what we develop on improving the consideration of risk, this time with the focus on M&A.

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Risk Insider: Jack Hampton

Cyber Security: We’re Blind, Please Help

By: | April 18, 2016 • 2 min read
Jack Hampton is a Professor of Business at St. Peter’s University in New Jersey and a former Executive Director of the Risk and Insurance Management Society (RIMS). He was named a Risk Innovator in 2008 by Risk and Insurance®. He can be reached at [email protected]

A popular video shows a blind man sitting on the ground in a plaza hoping to receive money from those who pass by. His cardboard sign says simply, “I’m blind. Please help.” A few individuals drop money into a cup.

A young woman stops and changes the man’s sign. Suddenly many more individuals give money to the man.

The woman returns and the blind man asks, “What did you do to my sign?”

Her answer is, “I wrote the same but different words.” The changed sign read, “It’s a beautiful day and I can’t see it.”

With the Darknet and throwaway cell phones, terrorists do not need iPhones. Apple versus the FBI is not only about privacy or terrorism. It is about further destabilizing an already vulnerable world of communications.

In our cyber security discussions, we often use the wrong words. This happened in the recent public debate when the FBI demanded an Apple iPhone backdoor to allow law enforcement to track communications among terrorists. In a TV broadcast, “60 Minutes” framed the argument as stopping terrorism versus protecting privacy.

Tim Cook (Apple CEO) and John McAfee (anti-virus guru) argued that law enforcement and the media were missing the point. If Apple complied, terrorists would immediately change tactics.

With the Darknet and throwaway cell phones, terrorists do not need iPhones. Apple versus the FBI is not only about privacy or terrorism. It is about further destabilizing an already vulnerable world of communications.

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In an earlier Risk Insider post, I argued that there were negative consequences to consider should Apple’s “wiper” function be disabled.

The standoff between Apple and the FBI temporarily resolved itself. The FBI cracked the iPhone and withdrew the request to Apple.

In this scenario, we not only used the wrong words…we asked the wrong question. How then can we get the right answer?

Maybe we should ask, “Can Apple help us install a wiper on every computing device and network?” Ten hacker attempts and all the data is erased. We would learn to back up our data real quick.

The feature could help with privacy. Would it have anything to do with criminal behavior? Maybe yes. Maybe no.

Separately, we may be missing the big picture. When Samuel Morse and others developed the telegraph, communications were instantaneously transmitted around the world by wire. Anywhere along a railroad line, hackers could intercept the message. This is the public Internet of 2016.

Is the right question, “What should we do to fix a 21st Century communications system built upon a 19th century telecommunications model?”

Cyber security efforts should not stop with, “I’m blind. Please help.” The words should stir us to action.

We can hope the best and brightest of our cyber security folks help us see a beautiful day by devising a secure Internet that does not impede law and enforcement.

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Sponsored: Liberty Mutual Insurance

To Better Control Total Workers Comp Costs, Manage Physical Medicine

The time is ripe to consider physical medicine to better manage the total cost of risk.
By: | April 4, 2016 • 6 min read

Soaring drug prices get all the attention in the workers comp space. Meanwhile, another threat has flown under the radar.

More than 50 percent of lost time workers compensation claims involve physical medicine — an umbrella term encompassing physical therapy, occupational therapy, work conditioning, work hardening and functional capacity evaluation.

Spending on physical medicine accounts for 20 to 30 percent of total workers compensation medical costs, a percentage set only to increase in the coming years. Despite the rapid growth of this expense, very few employers are engaged in discussions around how best to manage it.

“Now is the time to take a look at physical medicine and think about how it impacts total cost of risk,” said Frank Radack, Vice President & Manager, Liberty Mutual Insurance, Commercial Insurance – Claims Managed Care. “Employers should investigate comprehensive solutions to keep costs manageable and to deliver quality, evidence-based care to injured employees.”

Liberty Mutual’s Frank Radack defines physical medicine and why it is so important in managing total workers compensation costs.

Cost Drivers

Upswings in both pure cost and utilization of physical medicine are driving the spending surge. State fee schedule changes are largely responsible for increases in cost. California, for example, has increased the cost of physical medicine services by 38 percent over the past two years, and will increase it a total of 64 percent by the end of 2017. North Carolina changed its approach to its fee schedule effective June 1, 2015, resulting in an almost 45 percent increase in the cost of the average physical therapy visit.

Increased utilization compounds rising prices. Low severity claims like soft tissue injuries typically involve physical therapy, especially when co-morbid conditions threaten to slow down recovery.

“When co-morbids are present, like obesity, more conditioning is necessary for recovery from injury,” Radack said. “With people staying in the workforce longer, we see these claims more often because these types of injuries and co-morbid conditions become more common as people age.”

De-emphasis on surgery also bolsters physical therapy prescribing as patients seek less invasive treatments that might enable a faster return to work, even in a light or transitional duty role. Sometimes, patients with a minor injury might seek out physical therapy on their own as a precaution after an injury or under the mistaken belief it will hasten recovery, even if evidence-based guidelines don’t call for it in every treatment plan.

LM_SponsoredContent“Now is the time to take a look at physical medicine and think about how it impacts total cost of risk. Employers should investigate comprehensive solutions to keep costs manageable and to deliver quality, evidence-based care to injured employees.”
–Frank Radack, Vice President & Manager, Liberty Mutual Insurance, Commercial Insurance – Claims Managed Care

“Without proper claims management procedures, some physicians might be inclined to prescribe physical therapy as a palliative measure, even when it doesn’t provide much benefit to the patient,” Radack said.

Building Solutions

Brokers and buyers may not be able to do much about fee schedule changes, but they can partner with an insurer that better manages utilization through a multi-faceted claims system, qualified network vendors, data analytics, and peer interventions.

The keys to better managing the soaring cost of physical medicine.

“There is an opportunity to move physical medicine spending into network solutions and partnerships,” Radack said. A strong, collaborative network is key to maintaining direction over treatment decisions.

Liberty Mutual uses a proprietary data analytics program to study its providers’ prescribing and referral patterns and their outcomes. It then builds a network of point-of-entry general practitioners with a proven track record of optimal outcomes.

“The treating physician is a gatekeeper to other services, so it’s important to start there in terms of establishing a plan and making sure evidence based guidelines are followed,” Radack said.

Radack and his team use similar data analysis and partnerships to deploy networks pertaining only to physical medicine, so it can identify physical therapists who understand the occupational space and are focused on effective Return-to-Work (RTW). A provider who doesn’t understand RTW, or even know that the employer of an injured worker has a modified RTW program, may over-utilize PT. Getting employees with soft tissue injuries back into the work place is critical for delivering the best possible medical outcome and a timely recovery.

These therapists know the value of adjusting a treatment plan based on a patient’s progress, which often cuts unnecessary appointments and therapies.

“Our data analytics program is built internally by people who are aligned with the claims organization,” Radack said. “These insights drive our ability to shape networks and direct injured workers to providers with proven outcomes.”

Peer-to-peer interventions also play a big role in adjusting provider behavior and ensuring adherence to evidence-based guidelines. Liberty Mutual’s in house regional medical directors can bring their expertise to bear on challenging claims and discuss how to redirect treatment to meet these guidelines. Liberty Mutual also partners with experts to build networks of physical medicine and physical therapy providers who deliver quality outcomes cost-effectively and to asses a patient’s progress, working with providers to identify and resolve treatment issues.

Sharing information and measuring performance in these settings helps to change the environment around physical medical care. For example, interventions that steer physical therapists back to  established, evidence-based medical treatment guidelines often reduce the use of passive therapy treatments, like hot and cold packs, which are not as effective and can slow down recovery.

“Active therapies that get people moving often help them get them back to work faster and at a lower cost,” Radack said. Utilization review also helps to identify unnecessary treatments and signals the insurer to communicate evidenced-based expectations with the therapist or prescribing physician.

Solutions in Action

Physical therapy offers great value in spite of rising prices — but only if it’s managed carefully.

An example of the benefits of managing physical medicine.

Take for example the case of a worker with a shoulder injury. In an unmanaged situation, a physical therapist may prescribe 12 appointments, and the injured worker will go through all 12 sessions with no pre-approval of the treatment plan and no interim checkup.

In a managed situation, the physical therapist may only prescribe eight sessions, because she understands the benefits of a faster return to work and sees that guidelines don’t dictate a full 12 sessions for this injury. Halfway through the eight sessions, she checks in on the patient’s progress and determines that only two more sessions are necessary given the recovery and the medical guidelines; and so adjusts the treatment plan to a total of six sessions.

In this scenario, managed care saves the cost of six sessions over the unmanaged situation, and the employee gets back to work faster with a healthy shoulder.

Ultimately, workers comp buyers can achieve cost savings by making treatment decisions that optimize patient outcomes, rather than cut pure cost. To achieve that, every player — point-of-entry physicians, physical therapists, medical directors, claims managers and patients — need to shoot for the common goal of shortening recovery time by following evidence-based medical guidelines.

“When medical experts and network vendors work in concert with each other, along with data analytics and research to back them up, we can drive down utilization while improving outcomes,” Radack said. “All of these working parts together are the solution to managing physical medicine costs.”

To learn more about Liberty Mutual’s Workers Compensation solutions, visit https://www.libertymutualgroup.com/business-insurance/business-insurance-coverages/workers-compensation

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Liberty Mutual Insurance. The editorial staff of Risk & Insurance had no role in its preparation.




 

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Liberty Mutual Insurance offers a wide range of insurance products and services, including general liability, property, commercial automobile, excess casualty, workers compensation and group benefits.
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