Friday, March 21, 2014

Los Angeles And Cost Drivers

Is there any relationship to anything in California workers' compensation?

That was a topic at the 50th annual California Workers’ Compensation Institute meeting yesterday.

I'll give you the short answer so you don't have to read this whole post if you don't want to: No, except for Los Angeles.

I'll explain below.

Richard Victor, president of the Workers' Compensation Research Institute tried to answer the question what makes California different than the rest of the nation. He poignantly answered his own question - "which California?"

The differences between Northern California and Southern California are striking, with most of the activity in So Cal centered in an tight geographic area commonly known as Greater Los Angeles.

The CWCI team of Alex Swedlow and Mark Priven told us that there was no relation between Social Security Disability and costs; that attorney involvement was only slightly correlated to costs (except in Los Angeles); there's no relationship between group health coverage and work comp costs; and while high health care premiums did relate slightly to higher rates, the relationship to severity was mixed.

Higher drug sales correlated with higher medical costs; higher tax status also correlated with higher work comp costs (which makes sense because the more affluent pay higher taxes).

The duo told us there was no relation between unemployment and frequency but that OSHA lost time reporting had an obvious relation to duration of temporary total disability, though curiously had no relation to permanent disability.

Another question was whether frequency was most affected by the characteristics within the work comp system.

Again, basically the answer was no.

There was no correlation between the largess of the bureaucracy running the system, size of the budget or staff; and fee schedules did not necessarily result in lower medical costs.

Put Los Angeles into any of these equations though, and the results are entirely different.

So what makes LA so different besides the fact that there are more attorneys doing work comp litigation there and, presumably more doctors willing to take those claims?

At present, at least, there is no known answer.

The data seems irrefutable - when isolated geographically Los Angeles is a bad boy.

What makes LA such a hot bed of work comp costs?

Part of the answer, I believe, can be found in the recent news of Calderon/Drobot/Long Beach Hospital drama.

There is plenty of research that organized crime tends to be geographically concentrated.

But it took the Federal Bureau of Investigation on political corruption allegations to bust through the Calderon/Drobot/Long Beach Hospital organization.

Want to find the driver of Los Angeles costs?

Take the money away from the local District Attorney's offices and give it to the FBI. Throw in a politician or two and I suspect an amelioration of So Cal cost drivers will occur.

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