Coventry Work Comp PPO Strategy
As stated in other posts, it continues to amaze me the changes in 2007 for the workers’ compensation PPO market. This week brought more changes.
From my discussions with many different people, it seems that Coventry has now entered a new strategy. What I am hearing is that they are now going to offer a “Super Network” (not a very creative name) consisting of Focus, Aetna, and Coventry. For this “Super Network” the payor will get all 3 networks but at a much increased price. We shall see if this ends up holding true, but it seems to be the understanding of a lot of industry people. I imagine we will all know much more after the National Work Comp Conference held next week in Chicago. Also, it sounds like the plan from my sources is for Coventry to cancel all of the reseller agreements they have in place to drive everyone to them as a total solution (thus cutting out all of the resellers including software companies and bill review companies). If this is the strategy, it will only work if they term all of the resellers.
PPO percentage of savings have just gone to low, so the market is about to adjust itself with Coventry’s plan if it holds true. In a sense, I think this is a good thing as PPOs can’t continue to offer full coverage at increadibly low prices. Payors always underestimate what it really cost to run a PPO.
Whatever the strategy ends up being, the payors just needs to understand that options exist like Prime Health Services. No one has to be cornered by Coventry or any other company. The free market always wins in the end. New companies will emerge and existing ones will rise to the top to take on the “super network”
November 3rd, 2007 at 9:48 pm
Going to market with no resellers for Coventry is definitely the buzz this week. I’ve talked to a couple of them and they are expressing a desire to refuse to give in to Coventry’s bullying. One even expressed a desire to create a reseller alliance. Meaning, no Coventry implementation even if a large payor requests them. In my opinion, this will only work if all of them agree and none of them ever give in. This will require some serious risk on their part, but it would work.
Rates for access will definitely go up, with Coventry leading the increase. The payors can only blame themselves for this, as most of their eggs are in one basket. I keep wondering what it will take for some PPO/Payor diversification. Will it be increased rates by Coventry? Or will the payors just adjust to it?
November 4th, 2007 at 8:46 pm
yes Bethany, you are very correct in that the payors can only blame themselves to some extent. The options have always been in place, it’s just a matter of them not believing that Coventry is the only answer. Most of the people in the comp industry tend to be very conservative, thus making it hard for them to make quick decisions.
November 9th, 2007 at 3:51 pm
I like the concept of a reseller alliance. It is time for resellers to do two key things to secure their position within the industry. First, recognize the new paradyms that are shaping up, particularly with the Coventry/Aetna alliance. The day of doing business with networks that now have units directly competing for the same business the reseller is hoping to hold onto is over. A reseller alliance makes perfect sense to block out those networks who are trying to form the “monopoly” of the marketplace. Second, and this is key, resellers have to form tighter alliances with their clients to refer to the networks that they are using for repricing! The day of repricers just taking the hit when it happens is over. Technology and innovation in how we deliver the information to adjustors, case managers and UM nurses is such that the industry should be able to deliver real time information to make sure that referrals are going to those providers that are in-network and offering savings. The resellers that learn how to do this effectively will be the successful ones long term.