Workers’ comp is the innovation-prevention industry.

Joe Paduda

As I wrote years ago, many executives, risk managers, “thought leaders” and brokers decry the lack of innovation in workers’ comp, yet they are often the very reason innovation doesn’t happen.

There are a host of reasons — cultural, practical, financial, historical, structural — all hampering, if not outright preventing, real innovation.

Fundamentally, work comp is hyper-conservative, hidebound and traditional. A few notes:

• It’s almost entirely about musculoskeletal injuries, which haven’t changed for about a million years (no, that’s not hyperbole). Cause, treatment and physical recovery are extremely well understood — at least for those who want to understand.
• It’s insurance, which by definition is risk-averse.
• It’s not important to the C-suite. Work comp costs are a rounding error on corporate ledgers, account for less than 1% of U.S. medical spend and are steadily decreasing.

Structural problems, starting with the RFP process, kill off innovation, starving it of light and energy before it can take root.

In most, but not all, cases, the RFP/vendor selection process is just stupid. The entire thing is intended to allow the committee to pick a vendor, to compare apples to apples by forcing respondents to tell how they will deliver a specific, detailed, highly structured solution that precisely meets specs.

That’s fine, but what if you really need an orange?

Instead, the buyer should ask how each vendor will solve his problem, what it does differently, how it can deliver better results and what the buyer must do to achieve breakthrough results.

Coming up: other barriers to innovation, and why you need to blow them up.

Joseph Paduda is co-owner of CompPharma, a consulting firm focused on improving pharmacy programs in workers’ compensation. This column is republished with his permission from his Managed Care Matters blog.