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By CYRIL TUOHY, managing editor of Risk & Insurance®

In the workers' compensation claims software space, there's rarely a shortage of complaints about the lack of integration among the software applications necessary to crunch the numbers.

A new study shows why the lack of integration is so pervasive--and the reasons have less to do with software's ability to crunch numbers than with managers' and executives' differing requirements of the technology they buy.

"We get the sense that we're at a stalemate," said Sandy Blunt, an associate with the health benefits consulting Health Strategy Associates, which conducted the survey.

For examples of just how far apart frontline managers are from their colleagues in the executive suite, consider the differences in perception between both groups.

When asked if their current workers' comp claims system was fully integrated with their bill review and utilization review systems, only 12.5 percent of frontline managers said yes, compared with 58.3 percent of executives.

When asked if they wished their current system was fully integrated with their bill review and utilization review systems, 79.2 percent of frontline managers said yes, compared with 29.2 percent of C-suite executives.

For example, 73.9 percent of frontline managers said that lack of flexibility to meet changing needs remains a major issue with their existing claims system. Only 35.7 percent of C-suite executives said this was so.

Frontline managers say they want their systems to be more efficient and operate with smoother workflows. Executives, by contrast, want to see their systems improve in the areas of compliance and incident reporting.

Therein is the crux of the gap. Managers want more flexibility out of their systems because it helps process claims among the multiplicity of parties involved in the process--adjusters, loss-control specialists, claims managers, brokers and the insured's risk managers.

Executives want their workers' comp claims systems to be more rigid and geared specifically to compliance and reporting.

MIND THE GAP

Blunt said that workers' comp claims software experts have been aware of these gaps.

"The reactions have been similar to mine," he said. " 'Wow, there's a gap.' But I didn't know how big the gap was."

Blunt, a former insurance company CEO who has participated in the purchase of workers' comp claims software systems, said it's not hard to see why the gap persists.

The utilization review team builds what it needs and before long develops a silo, he said, and other silos soon crop up.

"Risk and loss control and the people writing the policies tend to be on their own island," Blunt said.

Before long, the claims system has grown into a multiplicity of databases that don't talk to one another, with some even using different treatment guidelines.

Though everybody means well, said Blunt, unless everybody is forced into the same room at the same time to collaborate on their workers' comp claims system, the silos never disappear.

A total of 144 respondents participated in the online survey, 70 percent of whom had 11 years or more in the workers' comp industry, and 55 percent of whom had 15 years or more in the industry.

Survey respondents also said the costs of integrating and maintaining disparate systems were a cause for concern. Current systems have been in place for more than five years, and will likely be replaced or significantly modified within two to three years, the survey also revealed.

In addition, the survey revealed that there was little recognition among potential buyers of the leading systems vendors.

"Clearly, there is an opportunity for vendors to brand themselves and promote integration solutions," said Joseph Paduda, principal of Health Strategy Associates.

Companies most likely to be using workers' comp software systems include insurance carriers, self-insured employers, state funds and third-party administrators (TPA), Blunt said, with some systems costing in the tens of millions of dollars to replace.

June 1, 2011

Copyright 2011© LRP Publications