The path to workers’ compensation profitability is digital innovation.


As medical costs continue to soar, traditional approaches to medical management are quickly becoming unsustainable. For many insurers, they already are.

A few US carriers in the approximately $60 billion workers’ compensation market are bucking the trend. They are taking advantage of digital technologies, analytics, and evidence-based decision-making tools to recoup some of the profits lost to medical inflation. By focusing on minimizing waste in six areas of medical management, these insurers are poised to reclaim economics, grow market share, and win over customers with better service. Others would be wise to follow their lead.

Benefits of digital medical managment


Medical inflation has been running at 6 to 7 percent per year, outstripping general inflation by 4 to 5 percentage points. Medical costs now account for up to 60 percent of workers’ compensation claim costs.

Accenture Strategy analyses have found that carriers that apply digital innovations and healthcare best practices can drive greater efficiencies, better outcomes and better financial performance. Specifically, they have the potential to:

  • Capture short-term savings of 15 percent.
  • Improve their bill paid versus bill charged ratio by five to seven points. That translates into approximately $10 million for each point improvement per $1 billion of indemnity.
  • Recoup 10 to 12 percent of unaddressed medical provider fraud. Based on industry estimates, that represents a $7 billion opportunity.

Carriers´#1 cost drivers for workers´compensation claims: medical cost


To reclaim profitability that has eroded over time, insurers can take the following actions (ranked from highest to lowest benefit potential):

Medical Necessity Review

Use analytics to embed code-driven, digitally automated medical necessity reviews.

Network Utilization

Apply digitally enhanced procurement practices and a holistic approach to ecosystem management to optimize the network.

Provider Fraud

Use analytics, artificial intelligence and machine learning to eliminate provider fraud.

Enhanced Administrative Review

Adopt digital tools to improve administrative fee review processes.

E-bill and Electronic Payments

Introduce or strengthen e-bill and electronic payment capabilities.