The major league baseball success story, Moneyball, describes “sabermetrics” – the quest for objective knowledge about the game.
The premise is that the collective wisdom of baseball insiders over the past century is subjective and flawed. In the book, Moneyball: The Art of Winning an Unfair Game, author Michael Lewis describes how Billy Beane, manager of the Oakland Athletics, used evidenced-based measures of player performance to field a team that could compete successfully against teams with much deeper pockets.
During the 2002 season, the Oakland As won enough games to make the playoffs despite a meager salary budget and “inferior” players, demonstrating the validity of a metrics-based approach.
Although the two industries are dissimilar, distinct parallels can be drawn between the Oakland As’ story and the workers’ compensation system. Risk managers and other types of business executives evidently see a correlation. Beane (who is portrayed by Brad Pitt in the movie version of the book) is on the speaking circuit. Last year, for example, he spoke to a packed house at the annual Risk and Insurance Management Society (RIMS) conference.
Resistance to analytics
One similarity between baseball and the workers’ compensation industry is resistance to adopting analytics as a knowledge tool. Long-held beliefs among baseball authorities promoted measures of performance such as stolen bases and batting averages. Beane’s metrics debunked these measures and instead focused on less visible attributes among more affordable players.
Similarly, workers’ compensation industry leaders have relied on traditional medical provider networks and personal preferences to select physicians. They have presumed that if doctors are in a network and offer discounts on medical services, all is well. In reality, performance among network providers is uneven. Studies show that practitioners who are experienced in and understand the nuances of workers’ compensation drive better outcomes.
Finding best performers
The purpose of sabermetrics in baseball is similar to workers’ compensation medical metrics – to find the best performers for the job. In baseball, it is analyzing data that define performance in terms of games won. In workers’ comp the data must be scrutinized to find doctors who drive positive claim outcomes. In both cases, a variety of metrics are used to support the most effective decisions.
As in baseball, the goal in medical management is to apply objective information to decision-making using evidenced-based measures of performance. For both industries, cost is a factor. However, in workers’ compensation, the cost of medical care must be tempered by other factors such as the duration of medical treatment, return-to-work rates associated with individual doctors and providers associated with litigated claims. As in baseball, the list of indicators for performance analysis is long. However, the sources of data significantly differ.
In baseball, all the data necessary for analysis are neatly packaged in games played. Statistics are gathered while the game is in progress. In workers’ comp, the data that inform medical management resides in disparate systems and must be gathered and integrated in a logical manner.
Essential information lives in bill review, claims adjudication and pharmacy (PBM) systems. It can also be found in utilization review, peer review and medical case management systems. These data must be integrated at the claim level to portray the most comprehensive historic and current status of the claim. Data derived from only one or two sources omits critical factors and can distort the actual status or outcome of the claim.
Once the data have been integrated around individual claims, meaningful analysis can begin. Indicators of performance can be analyzed with new conclusions drawn about the course of treatment and medical provider performance. Moreover, concurrent monitoring of updated claim data leads to appropriate and timely decisions.
In baseball, metrics are used as a work-in-progress information tool. Decisions about the best use of players are made daily, sometimes hourly. Workers’ compensation medical managers and employers can do the same. Systems designed to monitor claim details and progress can alert the appropriate stakeholders when events or conditions portend complexity and cost.
Not surprisingly, despite early resistance to the concept, all of major league baseball now relies heavily on sabermetrics. In workers’ compensation medical management, there is a need for more visionaries like Billy Beane. Applying analytics for cost and quality control is relatively simple, affordable and can be readily adopted.
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