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Published on
Mon, 04/22/2019 - 10:29
An abundance of data accumulates in the claims management process. And while that data relays critical facts about each claim, that’s not the only insight it can provide. Data, no matter how seemingly unimportant, has the power to unleash valuable insight into your overall claims strategy. As the article Effective Data Discovery Can Be A Difference Maker For A Company's Long-Term Success says, “Data that you may not even take into consideration can end up giving your company great insight after using proper analytics and data discovery techniques to make sense of it.” The failure to engage in data analytics means your organization may miss out on potentially rich data that sparks innovative strategy.

Benchmarking is one of the most powerful forms of data analytics. Used to measure competitor success and find areas for your organization to improve, benchmarking thrives on an abundance of data. With the right risk management information system (RMIS), you’ll not only be able to seamlessly collect troves of essential data, but also use benchmarking and other data analytics tools to extract meaning from it.

How does benchmarking make your data meaningful?

Data analytics can improve claim outcomes and, in some cases, help to prevent future claims by identifying trends and outliers that may otherwise go unnoticed. Benchmarking, specifically, involves comparing your data and performance against the industry’s best, which helps identify opportunities for improvement and establish long-term goals.

For example, risk managers, insurers, TPAs, and others who work with workers’ comp claims benefit from the annual Workers' Compensation Benchmarking Study, conducted by Rising Medical Solutions. The study goes beyond merely reporting how claims payers are conducting business and outlines “how organizations turn the challenges identified in the prior studies into solutions and action.” The report’s mission is “to advance claims management in the industry by providing quantitative and qualitative research that identifies what high performing claims payers are doing differently than their peers.”

Another example is policy benchmarking for brokers. As part of their enhanced expectations for customer service, clients are looking for as much evidence as possible that their broker is offering the best products and processes. According to a 2015 study by Zywave, “89 percent [of health insurance employers] said that it’s important that their brokers provide plan design benchmarking information.” Zywave continues: “It’s more important than ever to provide an amazing experience to clients and to differentiate yourself from your competition. Using benchmark reports in your next prospecting or pre-renewal meeting is a simple, yet powerful, strategy to do just that.”

Bryan Lynch, senior broker and leader of the association/non-profit practice at Ames & Gough, echoes that sentiment. He told Insurance Business, “We keep track of all our similarly sized and scoped non-profits and what insurance they’re purchasing, and we take that information with us to every renewal or prospect meeting… I often run into prospects that are way over- or under-insured and it’s my duty as a broker to try and get them covered properly.”

Although Lynch’s statement speaks directly to brokers, it can apply to any type of risk manager hoping to improve their claims management process and explore policy options. Deciding to use benchmarking is a powerful first step.

Getting started

Benchmarking requires the aggregation of the right data to be an effective tool, making it a daunting endeavor for many organizations. However, by leveraging existing data and the right RMIS, you’ll be well on the way.

Start with what you have

If your organization already has access to broad industry data sets, Origami Risk can integrate those into the system. As written in Growing your business through analytics—Getting started,

“More than simply harnessing the power of your historical data, Origami Risk also provides the ability to leverage your data in conjunction with external sources. The Origami Risk data import center is a powerful tool for converting data from legacy claims administration, underwriting, policy administration, and billing systems. System conversions are supported by a team of data transformation experts, each of whom has years of experience working closely with clients to analyze, map, and load data.”

Make competition internal

Benchmarking doesn’t always have to involve comparing one organization to its peers. Internal benchmarking can treat individual departments or business units as friendly “competitors”, with the top-performing department’s strategies studied and shared broadly to replicate improvement. Or, your organization’s aggregate data could serve as the benchmark that individual units strive to meet. Origami’s flexible and scalable RMIS allows for data collection from anywhere within an organization—any department, any office, any line of business.

Claims comparison reporting

Internal benchmarking can become even more granular, by undergoing claims comparisons within an individual business unit or department. Origami’s Claims Comparison Report compares data elements from similar claims within the system and displays the results on a scatter chart. This allows adjusters to see claims with a standard deviation, above and below, and make informed decisions about next steps.

Integrated workers’ compensation claims benchmarking

Origami has integrated the Official Disability Guidelines (ODG) into its claims administration platform for simplified benchmarking in the workers’ comp industry. The ODG integration provides access to evidence-based medicine (EBM) data, including more than 10 million cases and decades of research by a team of physicians, nurses, methodologists, and external reviewers who value data-driven science. Each claim has duration guidelines and reserving statistics that include a best-practice number and benchmark numbers based on actual claims data (with and without outliers). The difference between the best-practice number and the benchmark number represents an opportunity for cost savings and quicker return-to-work times, helping set internal process-improvement goals.

Beware of mindless benchmarking

Benchmarking is a powerful tool for making business or process improvements. But, as they say, with great power comes great responsibility. Benchmarking can backfire if done in excess or done improperly. “The more benchmarking companies do, the more they look alike,” Michael E. Porter warns in his Harvard Business Review article What is Strategy? “As rivals imitate one another’s improvements in quality, cycle times, or supplier partnerships, strategies converge and competition becomes a series of races down identical paths that no one can win.”

Here are several ways to make sure you don’t head down that path.

Identify—and stay true to—your unique strategy

Benchmarking is only useful if it’s tied to your organization’s strategy. The Entrepreneur article How to Not Benchmark Your Way to the Bottom, puts it concisely: “Strategy is the most important element in the skill of competing… Nothing else matters if the strategy is wrong.”

But this doesn’t mean you can simply copy-and-paste what another organization does well and get similar results. If you seem to be doing everything right but aren’t moving the needle, then you may be chasing the wrong goal. (Compaq found this out the hard way.) Ultimately, what works for your organization may not be revealed by the most obvious revelation from a benchmarking exercise. The article The Pitfalls of Benchmarking states that in order to use benchmarking successfully, you must ask yourself, “are you on track to meet your goals or objectives? This has almost nothing to do with over- or underperformance in terms of beating a market-based benchmark.”

Instead, consider solutions that make sense for your organization, specifically. This means determining differentiators. “Competitive benchmarking...calls for magnifying differences, not eliminating them,” says the Entrepreneur article.” When you move beyond emulating the practices of your most successful competitor, you’ll spot important differences that reflect the greatest opportunities for growth. Perhaps your claims process takes slightly longer than those of your peers, but your claims adjusters spend more time directly interacting with customers. If bringing the human element back to the claims process is your organization’s overall goal, claimant satisfaction scores may critical metrics.

Make sure data is meaningful

Another potential downfall of benchmarking is taking the results at face value, without knowing how the data was generated. A TARP Worldwide article titled Beware of Benchmarking: Bad Data is Worse Than No Data warns that “outcome does not reveal [the] process used to get the outcome.”

For example, the TARP article points out that a benchmarking study could indicate short customer service call times for one company. On the surface, a competitor might assume that means customer problems are being solved quickly. But a closer inspection could reveal that service team members are racing to achieve short call times, forcing them to give incomplete and unsatisfactory answers and, consequently, leaving customers more frustrated. In this case, shorter call times doesn’t indicate happier customers.

Without careful consideration, competitor data could lead its organization astray. The data-driven risk manager notes:

“Not all data is equally valuable. ‘Creating a data-driven culture starts with being able to accurately measure and present reliable and actionable information,’ says Scott Busse in a Risk Management Magazine article. Leading indicators, metrics that foretell potential risks or negative outcomes, tend to be the most actionable type of information. Rather than looking at the after effects of actions taken in the past, leading indicators predict events in the future.” Origami helps make sure you’re using valuable data. With features like the ODG integration and Advisen integration, you have access to comprehensive, vetted data that gives a more complete picture of how you compare to others and how those conclusions were reached.

Never stop looking for ways to improve

If a benchmarking exercise indicates that your organization is performing better than your peers, or it reveals areas for improvement that were corrected subsequently, it may be easy to think your work is done. But as TARP warns:

“[S]ome companies become complacent when they are the best in their industry or even across several industries… [E]ven in those last few percentage points of dissatisfaction, there may be simple changes that will enhance satisfaction while cutting costs. To declare victory risks leaving money on the table that would be easily captured. Also, the fact that you are the best in your industry does not mean that the law of diminishing returns applies.” Success today doesn’t guarantee success tomorrow. Industry variables change constantly, so complacency could mean falling behind. To maintain success in your claims management process or when renewing policies, continue to strategize and schedule future benchmarking exercises.

Origami Risk can help you launch into benchmarking

Benchmarking, when used strategically, has the potential to improve the claims process. Besides gaining on your competitors, benchmarking can help your organization parse its trouble spots and deliver on internal goals. Origami Risk’s ODG integration, Advisen integration, Claims Comparison Report, and other data analytics tools can get you well on your way to a robust claims benchmarking program that works for you.

Trying to move the needle on metrics that never seem to budge, regardless of resources expended, can lead to resignation and acceptance of problematic conditions as just "the way things are." Many of these challenges, however, simply require a new approach.