Gallagher Bassett We Guide. We Guard. We Go Beyond.

The game is also changing for risk managers. In the relatively innocent past of a decade ago, all you had to worry about was having a proper comp PPO in place, a good medical bill review engine, and the adjuster savvy to keep claimants out of the clutches of the plaintiff's bar and their pet docs. While these three requirements remain important, it's time to redefine them, to get inside provider choice, to monitor provider performance, and to pay for outcomes, not illusory discounts. A stressed out system requires far more consideration and active management to secure proper care for your people.

Are you certain that your adjusters are sending your injured workers to those docs who are still holding to high standards and diligent treatment routines even in the face of the adverse environment of contemporary medical care? Is your TPA on board? Do you and your claims people have a solid strategy in place to deal with the tumultuous future of American healthcare? Business as usual is unlikely to work. Consider this blunt summary from the report and ask yourself, "are we and our TPA prepared to maintain the integrity of our comp and other medical-related risk programs in this new world?"

Delivering safe, patient-centered, high-quality, and high-value health care requires a clinical workforce that is functioning at the highest level. However, there is growing recognition among health care system experts that clinician well-being, so essential to the therapeutic alliance among clinicians, patients, and families, is eroding because of occupational stress.

 

Blame It On Ohno

Who? After WW II Taiichi Ohno at Toyota was one of the primary developers of "just in time" (sometimes called kan ban) supply lines for highly efficient manufacturing. In the 70's the "Ohno system" was popularized in the US and later in Europe. Manufacturers tried to build a combination of supply lines and manufacturing processes that minimized accumulating parts inventories and synchronized deliveries with assembly line (and ultimately market) needs. The seamless melding of supply and assembly came to be called "the Japanning of America" by many efficiency experts.

A generation later we have a tiger by the tail. A new survey by FM Global shows that some 90% of manufacturing managers have growing concerns about breakdowns in factory and related systems, in part because we are now so tightly coupled. Risk & Insurance summarized the dilemma neatly in its review of the survey: "The healthy economy and the demands of just-in-time delivery mean that equipment, much of it aging, is working at or near capacity. The talent gap is also playing into this. An aging workforce, lack of proper training for equipment operators and increased operator turnover are all adding to the risk."

In other words, there is a rich, ripe potential for a routine Oops Event to become a serious and lasting business interruption. "Any suspension of a production line with the economy running this hot can mean business interruption and a loss of market share to competitors." In addition to our crazy weather issues, electric grid problems, and lurking hackers, our business interruption coverage also needs to be detailed and robust enough to handle a critical component failure that cascades into a material stoppage.

Hey, so old Number One, a mechanical veteran of your assembly line of many years, breaks a left-handed frammis and a replacement has to be fabricated from scratch. What's the worst that could happen? Well, among survey respondents, 54% of them said a decline in earnings and/or revenue was their chief equipment breakdown fear. Next highest on the list, at 51%, was the fear of increased scrutiny from investors. Introduction of regulatory compliance problems was next on the list at 50% of survey respondents. That enough?

OK, OK - your systems are all well-oiled and clicking perfectly. What about the factory that makes one of your most critical parts? You know, the part that only a few 80 year old gnomes in the Black Forest know how to make. Yeah, that one.

Our point? Business interruption is a non-glamorous, workhorse kind of cover that is often carried over from one renewal to the next with no one - you, your broker, or your carrier - asking enough pointed questions unless the rate pops. Have you reviewed business interruption recently, looked critically at your potential for non-trivial failure cascades, penciled out the lasting impact of an inability to deliver your best-selling product line for a month - or more? Check out this issue's Words to remember below. Oh, the title of that FM Global report? When Failure Is Not an Option.

Quick Take 1:
HIPAA Risk and Regulatory Updates

Your employer is not a hospital or a clinic. You're not in the business of medicine, you're not a Covered Entity or a Business Associate (as defined under HIPAA), so the mare's nest of HIPAA regulations are none of your concern. You're sure about that? Maybe you should double check. Does HR handle your FMLA program in-house? How involved do your people get in working with your comp TPA? With your Short Term Disability administrator? Your ERISA regulated group health benefits? Do you have Employee Health Nurses on staff or a corporate Medical Director? If you use vendors for these functions, do your contracts shield you in the event of HIPAA-related regulatory fines?

We ask because our electronic in-box here at the GB Journal's World Headquarters has been stuffed recently with communications announcing webinars and new resources for updated HIPAA compliance, especially in using electronic communications like email and SMS. Broadly speaking, the standards for handling Protected Health Information (PHI) are going up a notch or two. For example, including a morsel of PHI in an SMS text pursuant to, say, an FMLA question, may get you in Federal hot water.

One resource we like is the ongoing blog, HIPAA Journal. The name has a ring to it. The HIPAA Journal and similar publications help you to plug into collateral resources for help and guidance with this complex and growing area of regulation and the compliance headaches that go with it.

Yes, HIPAA compliance is primarily a function of your friends in HR, but making certain that they have these bases covered and the company has appropriate risk covers in place may well fall into your bailiwick, especially if a finger-pointing occasion should arise.

 

Quick Take 2:
The Last Word on Brexit?

Of course not, but let's ask a key question - will Brexit, now that it's happening, have any impact on risk for your organization? The broad answer is: don't be too quick to say "no." Even if you don't do business in the UK or the EU directly, you may be brushed by the Brexit whirlwind of changes.

Let's start with an excellent article on Forbes.com last week. Here are a few issues Forbes lays out:

 
Our humble point: you may be warmly ensconced in central Kansas and vaguely bemused by the antics on the other side of the pond, but few enterprises in 2020 do not intersect the UK/EU economies at some place or another. Survey your entire process map, all sources, suppliers, and destinations. Brexit looks to be the gift that goes on giving for quite some time.

 

Words to Remember

From Poor Richard's Almanack:
"For the want of a nail the shoe was lost,
For the want of a shoe the horse was lost,
For the want of a horse the rider was lost,
For the want of a rider the battle was lost,
For the want of a battle the kingdom was lost,
And all for the want of a horseshoe-nail."