Presentation on theme: "Famous Football Quotes"— Presentation transcript:
0 Keeping Score: KPIs and Metrics to Measure and Manage Contractor WC Claim Programs Joe Picone, Claim Consulting Practice LeaderJeff Seibert, National Director Casualty ClaimsSeptember 17th 2014
1 Famous Football Quotes Who said it?“Winning isn’t everything, but it beats anything that comes in second.”“Winning isn’t everything, it’s the only thing”“When I played pro football, I never set out to hurt anyone deliberately - unless it was, you know, important, like a league game or something.”“Success is not forever and failure isn't fatal.”“The road to Easy Street goes through the sewer.”“When we get fancy we get beat.”Don ShulaJohn MaddenPaul “Bear” BryantVince LombardiWoody HayesDick Butkus
4 Lombardi on Winning “If you’re not keeping score, you’re practicing.” “Once you have established the goals you want and the price you’re willing to pay, you can ignore the minor hurts.”“…we will all be judged on one thing: the result.”
5 Overview Metrics & KPIs Process of Establishing Metrics and KPIs Primary MetricsSecondary MetricsKey Lagging/Current/Leading IndicatorsEstablishing Metrics for the ContractorPitfallsTakeaways
6 Metrics & Key Performance Indicators Metrics: A method of measuring somethingKey performance indicator (KPI) is a type of performance measurement/metric:To evaluate performance of particular processRely upon a good understanding of what is important to the organizationDepends on the department measuring the performance
7 Metrics & Key Performance Indicators Lagging KPI: Last year we gave up 32 TDsLeading KPI: This year, through 4 games, we’ve given up 15 TDs. If this keeps pace, we’ll allow 60 TDs this year.DiagnosticPassing Yards Allowed Per GameRushing Yards Allowed Per GamePassing TDs Allowed Per GameRushing TDs Allowed Per GameSacks/InterceptionsSolutions: Data showed that we aren’t stopping the run, we’ll change formation, change personnel, come up with different defensive scheme, etc.
8 Metrics & Key Performance Indicators Lagging KPI: Last year we generated 450 Lost Time ClaimsLeading KPI: Last year at Q1, we were at 113 LT Claims, now at current Q1, we’re at 150 LT Claims. If this keeps pace, we will be at 600 LT Claims.DiagnosticLT Claims per $1,000 payroll last 3 yearsLT Claims By LocationLT Claims by CauseLT Claims By Body PartSolutions: Loss Control, review RTW program, review layoff procedures, determine what happened at Location XYZ.
9 Primary Metrics Direct measurement (usually $$ or #) Clear correlation Normalized for payroll/sales/employeesDeveloped where applicableHistorical data neededExamples:Closed Lost Time Claim Cost at 24 MonthsClosed Medical-Only Cost at 24 monthsDeveloped Cost per $100 of payrollAFR per 100 FTEs
10 Secondary Metrics Indirect measurement (usually %) Unclear correlation - an assumptionFurther mining is neededExamples:Lag Time - 24 hour contactClaim closure ratePercent of PPO penetrationPercent of savings from Medical Cost Containment
11 Lagging Indicators Workers' Comp Experience Rating Modifier Past results without consideration of the activities that influence the results, “after-the-fact.”Workers' Comp Experience Rating ModifierOSHA recordable rateTotal lost workdaysAverage cost per claim
12 Feedback on present activities. Current IndicatorsFeedback on present activities.Daily record of incidentsEnd-of-shift record of incidentsDaily job safety observationsDaily # of claimsDaily # Lost Time Claims
13 Leading IndicatorsMetrics which can predict future performance based upon past and current history.We forecast that claim counts will be 20% greater than last year.Total claim costs, based upon Q vs. Q2014 show that we’ll incur $500K more costs in 2014.
14 Benefits of Establishing the Correct KPIs/Metrics Better outcomes when combined with solutionsBalance sheet protectionSupports the continuous improvement modelKPIs/Metrics + “0” Change in Process = “0” Change in Results
15 Factors To Consider When Setting KPIs/Metrics What?Why?How will it benefit me?Who?How difficult is it to accomplish?Is the data valid?
16 Clear as Mud!By Department by Total Incurred Claim Conversion rate from MO to LT By Treatment Type PPO Providers Spend Specialty Network Spend Non-network Spend/Treatment Lag/Strat. Non-network spend, % total paid Non-network spend, % of annual spend Non-network spend, % of first 90 day spend Non-network spend, MPN/HCN State Physical Therapy Paid DME Paid Diagnostic Imaging Paid PBM Paid: Brand PBM Paid: Generic PBM % Brand to Generic PBM Paid Physician Dispensed PBM % Physician Dispensed PBM Paid Outside Formular PBM% Paid Outside Formular PBM Opiods Paid PBM Opiods Paid as % of total PBM Hospital Paid Outpatient Hospital Paid Inpatient % Hospital Paid Outpatient to Inpatient TCM Paid Average TCM Paid Per LT Claim FCM paid Average FCM Paid Per LT Claim UR Fees Paid Average UR Fees Per LT Claim Peer Reviews Paid Average Peer Reviews Per LT Claim LTWD Per LT Case RWD Per LT CaseEMR Total Claims By Year LT claims per $1K payroll #Open LT Cases Per $1K payroll at Medical only Claims per $1K payroll Total Incurred By Year Total Paid By Year Total Medical Incurred By Year Total Indemnity Incurred By Year 18 Month LT Incurred vs. Final Incurred: Goal 80% Total ALAE Incurred By Year Total Medical Paid by Year Total Indemnity Paid By Year Total ALAE Paid By Year Average Cost of Medical Paid Average Cost of Indemnity Paid Average Cost of ALAE Paid Average Cost of Lost Time Claim Average Cost of Medical Only Claim # LT Claims vs. Medical Only Claims Indemnity Inc. vs. Medical Incurred Indemnity Paid vs. Medical Paid ALAE Incurred/Total Incurred By Year Closing Ratio Total Claims By Year with Savings from Frequency Reduction AFR/$1MM Payroll Last 5 years AFR/Occupation% LDFs: Comparison at Months for both Paid/Incurred LDFSMonth by Month or Quarter by Quarter Variance Report= Change in Developed Losses by Year vs. Change by Quarter.Repeater AnalysisObesity Analysis.Aging AnalysisAverage Claim Cost by Commuting DistanceComparison Developed ALAE + Medical + Incurred as % Pie Chart Comparison Medical as % by YearComparison ALAE as % by Year and Total and Average: Broken down into Categories: Legal, Surveillance, etc.Comparison Indemnity as % by Year and Total and Average: Broken down into Categories: TTD, TPD, PTD, etc.Lag Time AnalysisLag Time Average Cost by Group, 0-3, 4-10, 10-30, over 30 daysLoss Stratification By Average Cost of Claim.Tenure, Average Cost by Group, 0-1, 2-5, 5-10, 10 and over# claims reported per by Tenure Group, 0-1, 2-5, 5-10, 10 and over.By Body Part by Average CostBy Body Part by CountBy Body Part by Total IncurredBy Cause by Average CostBy Cause by CountBy Cause by Total IncurredBy Department by Average CostBy Department by Count
19 The Pitfalls Skip metrics Skip to metrics Fail to consider impact Too many metricsNot measuring correct thingsNot understood by usersYou don’t have solutions
20 What are the 3 reasons for having fewer measures? It's less workIt's more effectiveMore people will read it
21 The game is a week away, what can you do tomorrow to get ready? What results is team producing in the past, today?What’s the line…what does the leading KPIs look like?What’s important based on a review of all the data?What’s not important based on a review of the data?What solutions will you implement, what’s your plan?When are you going to debrief on the game?