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James A. Schlueter

How we helped clients dig out of a similar hole in the 1990s

Updated: Jan 30, 2023


While in graduate school in the '70s, I studied organizational change, learning, and development. I became captivated by the ideas of what makes healthy functioning systems within communities, organizations, teams, and people. The idea was that being healthy was more than the absence of illness. It had to do with reaching one's potential and achieving goals. Just like humans, organizations have multiple systems critical to the effective functioning of the entire entity. When one of those systems is attacked by an internal or external disease, that system may falter, likely impacting the organization. When considering organizational health, you must consider humans (individuals and groups) and social and cultural norms as potential diseases.


That background led me to management positions within healthcare institutions. I rose to become a COO within a primary healthcare system in CT. However, after six years of trying to create meaningful change in the traditional healthcare system, I had an epiphany:

I realized hospitals were places for sick people.

So I decided to strike out on my own and started a consulting company serving many businesses I had built relationships with over my career. These included the likes of Bayer, Bic, Conagra, NewsCorporation, Manhattan Shirt Co, Duracell, The LA Dodgers, and several others.


The business opportunity that came my way involved the social and cultural changes that impacted the workers' compensation system in the mid-80s. Workers' compensation costs, especially medical costs, were beginning to skyrocket. My clients asked me to look at the issue and find some solutions.


When I looked at it, I realized the insurance organizations had set up an impossible situation that was impacting not only the bottom line of clients but also the long-term health and well-being of the injured workers. For example, the claim management determinations impacting medical care, were assigned to a claims adjuster. The adjusters tended to hold 2 to 4-year liberal arts degrees with a short course in medical terminology. For what they were being asked to do, they were in the deep end of the pool and didn't know how to swim.


Basically, the injured workers were helpless in a system driven by revenues and self-interested parties from both the medical and legal communities.

The care of injured workers was being delayed unnecessarily; their disabilities were being exaggerated, injuries were exacerbated due to delays, treatments did not have a resolution plan, permanency ratings were unacceptably high for the types of injuries with which we were dealing, and the reserves our clients were hit with our simply outrageous. I proposed to manage these claims with skilled medical professionals (mind you, those were the days before case management). My offer was accepted, and I launched my first company with two well-known national companies.


I hired nurses from the ER and Intensive Care units. These skilled nurses understood that sometimes caring for people requires a steel hand in a velvet glove. When dealing with work-related injuries and disabilities, this was especially true. Which meant our goal was to:

  1. Work directly for the employer. We introduced our nurses as part of the insured's medical team and were to guide the adjuster on all medical issues. Our role was to resolve the social, medical, and worksite matters and get the worker back in business while coordinating our plans with the adjuster. As a result, the benefit to the adjuster was that they could now focus solely on managing the administrative and legal issues and get the claim closed.

  2. Figure out the medical reason(s) why the claimant was not at work, produce measurable results every 30 - 45 days, and get the injured worker back to work on a functional basis as quickly as possible.

  3. We used our talents as nurses to move the injured worker into a more practical course of care or medical provider when needed, even in states where you could not control the direction of care. We accomplished this even in states that "did not allow" directed care.

  4. We used our relationships with local nurses all over the country to identify the better providers for treating specific injuries.

  5. We met with the local providers recommended as being the best and discovered their issues in dealing with workers comp cases. We acknowledged their problems and resolved them, which resulted in an immediate improvement in the care of our workers.

  6. We challenged local PT groups that advertised exercise-based care when their equipment was consistently pushed into a corner and covered in dust.

  7. We created exciting management strategies to keep providers in check with their ratings.

  8. We challenged local supervisors on their beliefs about malingerers and how to manage injured workers upon their return to work. This reduced the volume of re-injuries significantly.

  9. We taught local plant management teams how to initiate and maintain regular safety meetings and accident investigations.

  10. We found even more exciting ways to secure closure on ancient claims thought to be cases that would likely never close.

  11. We challenged the insurers on their reserving decisions when it was excessive, given the progress made on the claim resolution.


The list could go on and on, but nothing we did was that special. It was all just a good management technique designed to address the individual needs of the injured worker as well as the organizational needs of our client. But these were all new strategies in an era that many had difficulty with change -- sounds like today doesn't it?


The root problem was by the late '80s, the social and cultural dynamics impacting the workers' comp system had evolved significantly. However, the claim management procedures that had worked for the past 20 years failed to adapt and created broken work processes. Many current practices were no longer relevant to the day's situation. We were dealing with an aging system as it began to collapse upon itself. Those weaknesses, combined with the profit motive within the medical and legal communities, were bringing out the hucksters who were preying on the injured and disabled.


Unfortunately, the people managing the system before our team were mainly blind to the issues because they were too close to it. They were doing what they had been trained to do, following the established procedures the way they had been trained to do them... But things weren't working in the current environment. Unfortunately, rather than asking why this was happening, they asked how it was happening and looked for scapegoats.

Finding a scapegoat is easier than accepting responsibility

The problem is people can't know what they don't know. Even when good people work under pressure within a closed system, the perceived need to maintain the status quo becomes urgent. Subsequently, they will attempt to shift the focus to an outside party. That is what underlies many issues we face today.


We found it was always best to deal with these issues right at the start. When we engaged with a client at the field location, we gathered our on-site data and identified where the processes failed. The locals often challenged us because changes to their procedures were complex for them to accept. After meeting privately with all the local leadership and explaining our role, one of our nurses loved to walk into the first safety meeting, wearing a western hat, boots, and a badge, and announce, "There's a new sheriff in town now. And we're gonna do things a bit differently." That would get the conversation started on a lighter note.


We were successful because we understood our mission and we had support from the corporate leadership. We respected our professional partners on the claims team. We took each of our roles seriously. We tried to keep attitudes light and convey a sense that together we can do this. But we never hid the fact we considered sacred cows as lunch.

At its core, the current situation facing the claims industry is similar to the 1990s. The social and cultural conditions changed faster than the institutional modes of doing business could keep up. Nonetheless, we demonstrated that situations could be turned around and new systems could be evolved. It just takes the will to push through some new processes that are complex adjustments for certain internal players. Many sacred cows were living in procedure manuals for 20 years that went to slaughter. And the shift to a process-oriented management style created transparency that could be managed. The result was a system where errors could be quickly identified and addressed before they became problematic.


Today's issues seem more complex than problems dating back to the 90s. But that's because they were impacting self-insured employers, not claims folks. Granted, today's issues appear more ominous than the employers were facing in the 90s. At the bottom line, however, the core issues are still about correcting organizational processes that have gone astray. Thus, just as we had to do back then, we need to move multiple systems to adapt effectively to the powerful social and cultural changes underway.


You begin by clearly defining your end goal, what changes are required, and what success will look like. Then you do what you need to make it happen, adapting the plan as you move forward. Finally, aside from the mission to reestablish functional processes and systems that generate value for the corporation, sacred cows become lunch.


Thank you.




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