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Chief Medical Officer
Paradigm Management Services
Concord, Calif.

Systematic Care Management hastens recovery from catastrophic injuries and lowers workers' compensation costs as well.

Of the three million work injuries that occur annually, only about 25,000 are catastrophic. But while catastrophic injuries represent less than 1 percent of all workers' compensation claims, they represent about 20 percent of those costs. That's because appropriate management is not provided to ensure that care is expert, timely and efficient, said Dr. Nathan Cope, chief medical officer of Paradigm Management Services in Concord, Calif. Most of the cost for catastrophic injuries occurs because of complications that arise, he said, from rejected skin grafts and lumbar surgery that fails.

Cope founded Paradigm Management Services some 20 years ago to change that. The proprietary Systematic Care Management procedures he designed have assisted more than 10,000 cases for more than 100 insurers, third-party administrators and employers.

An analysis by Seattle-based Milliman, the actuarial firm, found that conventional cases returned to work about 8 percent of the time, while Paradigm cases returned to work 40 percent of the time. Lifetime costs of conventionally managed injuries averaged three times those of Paradigm's clients' injuries.

Paradigm's typical cases involve such things as spinal cord injuries, traumatic brain injuries, severe burns and major traumas--or a combination thereof.

"When you have something like a broken arm," said Kelly Wilson, chief marketing officer of Paradigm, "there are medical guidelines. But they don't exist in catastrophic cases.

"With catastrophic injuries, there are multiple hand-offs," she said. "There can be five or six primary care physicians, multiple facilities and multiple surgeries. And a lot of the cost comes from complications--things like skin grafts that are rejected or lumbar surgery that fails.

"The way our medical system works today is great. There are experts in everything. But what is missing is someone who looks over the whole thing."

That's what Dr. Cope brings to the equation--a systematic scope of care, hands-on and implemented by experts.

Every case has a specialist physician assigned to oversee care and coordinate medical needs over the sequence of injury and recovery. Nurse case managers work on-site with the injured person and his or her family and/or caregivers to coordinate treatment and costs.

Paradigm has a vast database of medical experts from around the country who are fully versed in the latest techniques, as opposed to carriers' medical people who render decisions over the phone.

"What's the good of a former OB/GYN making telephonic decisions about care for a burn victim?" Wilson asked. "We bring in experts from the leading centers of excellence who stay with the case from beginning to end. The attending doctors are very receptive to that."

In addition, Paradigm bundles payments so that all payments go directly to Paradigm and Paradigm pays all the bills, including those for sometimes nonstandard but proven techniques known to produce better outcomes.

For instance, family support and help, often an underappreciated aspect of care, is something that Paradigm considers seriously when developing recovery protocol. "The strength of family relationships isn't part of most doctors' records," said Wilson. "But family support isn't just a nice thing. It's a huge thing.

"So if we have to fly a family member out in order to get a better medical outcome, we'll do it," she said. "No carrier will do that.

"But it can reduce costs because the patient gets better faster."

The innovations in care pioneered by Dr. Cope are based on the premise that when you do the best thing medically for a patient, the financial benefits will follow, she said.

"People looking at healthcare reform today are looking at things he started 20 years ago," said Wilson. "No one else is doing systematic care management like this. They're struggling in group health insurance now. They're looking for ways to measure outcomes.

"But we've been doing it for years. We have both medical and financial metrics for everything. And the combination makes the parts greater than the whole."

--By Julie Liedman

There's a small group of catastrophic injuries that, too often, are written off, costing employers and insurers huge, ongoing medical expenses and confining injured workers to a life far more difficult than they ever expected.

It's those really tough injuries--severe brain trauma, spinal cord injuries and severe burns--that are the focus of the work of Dr. Nathan Cope. With missionary zeal, Dr. Cope has refused to accept that these cases are beyond help. Instead, with his focus on a unique team treatment program, his patients return to work about 40 percent of the time, rather than the 8 percent that is usual for these kinds of injuries.

The philosophy behind his program is that if you do the best for a patient medically, the financial benefits will follow. And it's this idea of "doing the right thing for the patient" that's behind much of the movement today for the reform of the U.S. healthcare system.

CEO
LoJack Supply Chain Integrity
Forney, Texas

LoJack SCI's cargo tracking and recovery system is filling the holes in the supply chain.

In 13 years as a senior vice president at Ingram Micro, Robert Furtado developed the company's logistics and supply chain programs. The difficulty in building sophisticated technology for the largest computer products manufacturer in the country was watching the product go out the door.

"The most frustrating part for me was that, as soon as I turned it over to a carrier, I lost all visibility and control and assumed all risk," Furtado said.

Perhaps that's why it's so rewarding for him to embark on his most recent venture as CEO of LoJack Supply Chain Integrity. In 2004, Furtado became a founding investor and director of a company called Supply Chain Integrity, in which LoJack began investing in 2006. Last year, the stolen vehicle recovery experts became a majority shareholder in the company, creating LoJack SCI.

As a major investor, Furtado has achieved a certain satisfaction in overseeing a product that enables logistics providers to maintain control of their cargo as it moves through the supply chain. The InTransit system, combining GPS, cellular and radio frequency technology, offers covert cargo tracking with real-time surveillance and Web-based monitoring, all integrated with law enforcement for dispatch and recovery. The tracking device is typically implanted somewhere in the cargo, not in the transport vehicle. A 24-hour monitoring center keeps a close watch on the goods.

"Most of the time with thefts, the cargo is long gone after the truck is recovered, and the value is worth much more than the truck or trailer," Furtado said.

Success stories with the cargo tracking are compelling. In one case in Texas, Furtado said, there was a hijacking at gunpoint of tobacco products. The movement of the load was monitored, police were notified and the million-dollar load was secured in 40 minutes. In another case, a cell phone manufacturer's cargo was stolen, and when LoJack SCI helped authorities secure the valuable load of cell phones in a warehouse, law enforcement also discovered an additional $4 million worth of stolen goods and tied the thieves to organized crime in the Miami area.

Dan Greenberg, new product manager at Fujifilm, is a client of LoJack SCI. Fujifilm manufactures cartridges that are used by large corporate IT data centers, which are required by law to back up data. LoJack SCI created a customized product called Tape Tracker, essentially a mock tape cartridge housing the tracking technology that fits in with the rest of the cargo being moved.

"We had evaluated a couple other players, some defense contractors and other tracking companies, but no one could offer the level of customer service and real-time monitoring that was backed by LoJack," Greenberg said.

Furtado said there are already hundreds of customers with thousands of devices deployed.

"Most security money is spent in guarding facilities and not in the supply chain," said Furtado. "There is an increasing awareness about risk management in in-transit operations as opposed to goods sitting in a warehouse, and I'm trying to bring a higher level of protection to the part of the supply chain that is the most vulnerable."

--By Erin Gazica

Robert Furtado developed a solution to a problem in the supply chain that persisted without a solution--the theft of in-transit cargo, mostly expensive cargo. An answer could give his company, LoJack Supply Chain Integrity, a competitive advantage.

But Furtado believes in sharing, and he has become something of an industry advocate offering help with solving a difficult, industrywide problem and developing a set of best practices. He defines part of his job as raising the awareness of the problem even among his competitors, but certainly among the industry at large.

In particular, Furtado works with the Supply Chain Information Sharing and Analysis Center to help the industry become far more knowledgeable about the vulnerabilities of cargo during the actual in-transit process. The results are exciting: millions of dollars worth of cargo recovered while "on the road."

Port Enterprise Risk Manager
Port of Oakland
Oakland, Calif.

Risk manager for the Port of Oakland reels in an environmental deal worth bragging about.

When it comes to managing risk in the country's ports, the West Coast poses some unique challenges. Narrow in on the San Francisco Bay area of California, and environmental issues are particularly troublesome.

"Environmental is a major issue in West Coast ports," said Jane Keegan, risk manager for the Port and Airport Enterprise Department of the City of Oakland. "The biggest threat for our development can be environmental litigation, and I don't think it's anywhere near what it is on the East Coast. You're really doing risk analysis every day with environmental issues."

In the 20 years that Keegan has been with the port, she's become quite acquainted with its known environmental issues that had not been covered by insurance or third-party indemnification. The port is on 19 miles of property, largely created land on the waterfront that is highly regulated. Issues inherited from prior tenants include heavy metals in the soils from ironwork, military use in the first and second world wars, manufacturing facilities, rail yards and more.

Timothy C. Smith, a senior vice president with Marsh who nominated Keegan for the Risk Innovator award, was impressed by Keegan's vision of a multiyear environmental insurance program. Her plan was for comprehensive coverage for first-party cleanup and third-party liability, as well as enterprisewide coverage for known and unknown environmental liabilities. It was to cover sites ranging from a golf course built on reclaimed land to rental car facilities to abandoned manufacturing sites.

Keegan created a team with representatives from the port's legal, engineering and environmental departments to determine what exposures were out there, the extent of them and how hazardous they were. After conducting studies internally, Keegan met with Marsh brokers to craft a policy that dealt with all exposures affecting the port.

"I think in terms of the depth and the study, the due diligence was certainly exceptional," Smith said. "She was very thorough in the submission she made and in the sharing of information that the taskforce had. The underwriters thought they had a very complete and thorough knowledge of the exposures."

Coverage for known liabilities is a unique feature in environmental insurance policies, particularly for the port, which had substantial liabilities. Convincing the underwriters to take this risk on was no small feat.

Good thing they were all well acquainted with Keegan. She began developing a relationship with all the players 10 years ago when Oakland became the first port in the United States to use risk transfer through an environmental policy for a military base. That decade of good relations made all the difference. Not only was Keegan able to secure enterprisewide coverage for unknown and known liabilities, she did it at a competitive price.

Smith said it helped that Keegan is a leader in the risk management community in the San Francisco Bay area. "Her respect in the risk management community was a major plus. She has been at the job for 20 years, she is very active in RIMS and an officer in the California Port Authority. She has a very high professional reputation and image."

The icing on the cake? Keegan was able to develop an effective cost-allocation system to recapture much of the cost of the premium for this environmental coverage by allocating it to developers and tenants of enterprise land covered by the insurance. In doing that, she helped ensure the financial sustainability of the port, which is heavily indebted, and secured funding for remediation of known and unknown environmental hazards that could be detrimental to the health of thousands of employees as well as local residents.

Transferring costs to the private industry makes a tremendous impact and not just in terms of creating bottom-line profit but in saving and creating jobs. Keegan also helped community relations, which had suffered due to publicity about the port's lack of commitment to improving the environment.

It was the cost and community benefits that led Smith to refer to Keegan as a "visionary practitioner."

"This was creative in the sense that you have a public entity engage in a practice you would expect to see out of private industry," said Smith. "In getting the cost-allocation system, she was able to assist the port in its own cash-flow position, which had become very critical."

In the end, Keegan's initiatives sent a strong message, which is that the port is serious about environmental cleanup.

--By Erin Gazica

Environmental problems are ripe for public controversy, especially political controversy. They have just the right mix of factors that can torpedo a solution even before it gets off the ground. And a port is among the most common locations to find controversial environmental issues.

Enter Jane Keegan, risk manager for the Port and Enterprise Department of the city of Oakland. She's been at the port for more than 20 years and has worked diligently to cultivate the trust and support of a slew of leaders in different government jurisdictions, along with trust of the neighborhood and city surrounding the port. Keegan found an unusual solution--insuring the known environmental risks on the site.

During this time, she also developed a reputation as a leader in the San Francisco Bay risk management community. Then she was able to sell the insurance risk transfer solution along with a unique cost-allocation process among all the players. And it was her abilities and respect that made it possible to get it done.

Risk Manager
Foster Farms
Livingston, Calif.

Solving a decades-old problem in the poultry industry that often disabled workers with a unique testing program.

Ernie Machado, risk manager at Livingston, Calif.-based Foster Farms, is revolutionizing safety standards and practices in the high-risk poultry-processing business.

"I really believe that if Foster is successful in sustaining its post offer of employment testing (POET) program, it will change the poultry industry," said Gary Pohlmann, senior vice president, director of risk consulting in Marsh's Atlanta office.

Foster Farms, Machado's employer for the last 29 years, processes about 1.2 million chickens and turkeys daily. The seemingly unattainable Holy Grail for Machado and others in the poultry industry is how to reduce upper extremity accidents, which Marsh's Pohlmann said had long been considered "almost a cost of doing business." It's very tough work, Pohlmann added.

Machado's search for a solution gained traction when Marsh introduced him to Denver-based BTE Technologies Inc., which custom builds equipment and software that tests protocols and sets up clinics where applicants can be tested. Machado hired BTE and the POET program was kicked off in June of 2008 at the company's Livingston plant and it is now in place at all of the Foster Farm plants.

Like other major poultry processors, Foster Farms had worked hard to install the best possible ergonomics-friendly machines and workplaces.

But upper extremities repetitive motion injuries were highest on the injury chart.

Machado knew that if Foster Farms could better understand the physical requirements of a job and then hire job applicants who demonstrate the physical capacity of the job, the frequency of injuries--particularly in the first year of employment--would decrease.

What attracted Machado to BTE was that it had helped "dozens" of companies build protocol-testing equipment. BTE is a leader in functional evaluation technology and rehabilitation technology. If Machado could pull off a POET program at Foster Farms it would be a first in the poultry industry.

Machado underscored that the POET testing is open to all employees--incoming and those who have worked for more than a few years and aspire to a better position. With POET they now have a chance to scientifically demonstrate their ability to handle a different job.

"Prior to this, much of the job hiring and job advancement work, as well as expediting back-to-work cases, was done very subjectively," said Machado.

To launch the POET program, a six-month-long job-site analysis was completed, test protocols were developed and validated and testing was implemented. One of the early challenges was a conundrum--how can you afford to screen out potential new hires when it is already difficult to recruit qualified candidates?

The solution was to classify all jobs in three tiers of physical demand requirements, thereby facilitating selective placement. This procedure also reduced the potential risk of reverse-impact for females and older workers who can't handle the most physically demanding jobs.

In addition, an important benefit of the analysis identified a number of ergonomic risks. Machado worked with plant supervisors and BTE's clinical team to implement equipment and process changes to mitigate the risk issues.

Although both Foster's human resources department and organized labor leaders were skeptical of POET, they now are fully supportive of the program, said Machado.

Results at the one-year mark last June?

--87 percent of applicants tested were placed in jobs that matched their physical capability to safely perform the job.

--57 percent of incumbent employees tested were able to progress to more physically demanding jobs.

--47 percent of incumbent employees were not transferred to jobs that would have placed them at a high risk of injury.

--In the year since POET was initiated, 100 percent of new claims have been closed.

--A 300 percent reduction in cost in the targeted injury category of new employees, again a huge reduction.

Machado is known to colleagues as very bright but also notably self-effacing. "He is fantastic to work with," said Connie Miller, vice president of business development at GTE. "He knows what he wants but he's flexible about how to get there."

Added Marsh's Gary Pohlmann: "Ernie is the most knowledgeable, well-rounded safety and risk management person I've ever dealt with."

--By Steve Yahn

Ernie Machado asked the "responsible" question: Why does it have to be that way? Workers for poultry producers are prone to severe injuries, especially newly hired, young workers.

This problem was "almost considered the cost of doing business" but Machado, risk manager for Foster Farms, refused to accept the status quo.

After attempts to solve the problem using more standard ergonomic solutions, Machado found that testing new employees for the right kind of physical skills would reduce injuries and lower costs. Machado used testing expertise from BTE Technologies to find a post-offer testing process and then expanded its use to experienced workers who may have been looking for a better job within the company. Machado faced push-back from human resources and organized labor, but he wouldn't give up.

Now the successful results are in and all parties agree it was a classic "win-win."

Chairman
Pension Benefit Insurance Services Inc.
Sparta, N.J.

Burned by incidents in the past, John Martin found a way to prevent retirement misfortunes from happening to others.

John Martin left his job with JPMorgan Chase in 2001 to pursue an idea for a new insurance product that would help protect the retirement assets of "the little guy."

Over the years, Martin, now the chairman of Pension Benefit Insurance Services Inc., has seen just how easy it was for "the little guy" to lose everything due to a sudden financial crisis.

Two incidents in particular shaped his thinking.

The first was the death of his father and the forced sale of the Texas cattle ranch where he grew up. It was the early 1970s and Martin, who was 28 at the time, had been in the service and had just resigned his commission. He had hoped to take over the ranch after his father's death. The bank demanded repayment of the mortgage and, unable to do that, Martin was forced to sell the ranch into a bad real estate market at a low price.

"That's where I first started to see first hand that survivors often don't have a lot of options," Martin said.

The second incident was in the 1980s when he was working at Hudson Valley Financial Services, where Martin had been hired by Manufacturers Hanover to start an insurance unit. Hudson Valley was a joint venture of Manufacturers Hanover and Monarch Capital. It fell apart when Monarch declared bankruptcy and Manufacturers Hanover merged with Chemical Bank, which then purchased the assets of Hudson Valley as well.

The bankruptcy of Monarch Capital had a devastating impact on the retirement plans of many employees, who had been forced to invest in the company's stock. Martin, who was a senior vice president and chief marketing officer at Hudson Valley at the time, knew that some employees had taken out loans against their retirement plans and were then forced to repay those loans in spite of the collapse of their retirement assets.

Those incidents, and others like them, inspired Martin to use his insurance expertise to find a way to protect the retirement assets of nonhighly compensated workers (those earning less than $105,000 annually). Those who are highly compensated typically have other assets to draw on in a crisis. It's those lower down on the totem pole who are often in a bind.

In difficult financial times, for instance, nonhighly compensated workers are sometimes forced to take out loans against their 401(k)s. They then repay those loans through paycheck deductions.

If the employee dies or becomes disabled, the surviving family members may not be able to repay the loan and this can result in a forced distribution, which then triggers tax liabilities.

By the time the loan and the taxes are paid out, there may be little or no pension assets left for the worker or the beneficiaries.

Martin's idea, trademarked as Pension Loan Completion, is simply to provide insurance that would pay off the balance of the loan in case of death or pick up the monthly loan payments in case of disability. "The concept was that no pension loan should outlive its maker," Martin said.

This would protect not only the employees and their families from an unexpected crisis, but also would help protect retirement plan sponsors and their fiduciaries, which incur corporate and personal liability in the administration of their pension plans, including plan loan administration.

ERISA, the Employee Retirement Income Security Act, requires that the "duty of loyalty" and the "duty of care" be used as tools in the prudent administration of plans and protection of plan assets. Plans and fiduciaries that fail in these responsibilities face the risk of litigation, and fiduciary liability insurers face the risk of fiduciary breach claims.

The idea was implemented by forming the firm Pension Benefit, filing utility patents on processes, trade marking the program and selecting partners with institutional credibility for implementation in the pension market.

Martin compared the situation of plan sponsors to that of banks making consumer loans. Banks making loans to consumers for big-ticket items like automobiles, for instance, require the borrower to have insurance on the asset. This is a similar concept.

The cost of the insurance could be picked up as a benefit by the plan sponsor or employer, or passed on to the employees, who would pay the cost through a small paycheck deduction.

Martin said he has just started rolling the product out to the Fortune 1000 and is working with Aegon and Aon on the program.

--By Patricia Vowinkel

At the same time that the big money men on Wall Street resumed their multimillion dollar bonuses, John Martin, chairman of Pension Benefit Insurance Services Inc., came up with a way to protect the little guy who may have seen his 401(k) retirement account reduced by half.

Martin pointed out that, in this difficult economy, it's common for employees to borrow against a pension account. Then the worst happens--death or disability--leaving the spouse or the employee without retirement savings.

Martin's solution is fairly simple. An insurance product would pay the balance of any loans outstanding on a 401(k), for example, if the employee died. Or, in the case of a disability, it would cover monthly loan payments for as long as the employee is disabled.

The idea is innovative in its simplicity and "responsible" to its clients, who are the "little guys" who may well be human fallout from a far bigger financial catastrophe.

SVP, Program Director
The Redwoods Group
Morrisville, N.C.