Subrogation: The Solution to the Economic Crisis?
Boris Senic is the Senior Claims Auditor and Never Events Specialist at the Phia Group. In his 7th year of employment, he has decided to share his views on the industry’s hardships and tries to offer some words of advice on how to approach these tough economic times.
The unemployment rate in our country is the highest since 1982, a staggering 10.2%. That means, for every 10 workers a business employs, one has lost its job due to our ever decreasing economic status. Sitting in a class room in college and listening to the philosophies of micro and macro economics, one may grasp the understanding of why this increase in joblessness is occurring but that is not my concern. My question is more uniform with everyone else’s thought process; I want to know what we can do to stop the bleeding and turn matters in a positive direction.
The healthcare industry, just like any other industry, has been hit with major cut backs. Businesses everywhere are decreasing in size and attempting to weather the storm of this crisis. Everyone is scrambling to preserve their infrastructures even if some of the parts of the establishment are damaged. Well, we all know that the damaged parts translate into hard workers who have lost their jobs. To me, a cut down in payroll is not the solution because the savings are only a temporary fix. A trickledown effect is caused when the number of employees of a company decreases. Although you may believe that one person can do the job of two people, the amount of quality work done is decreased with every firing. With the quality of work diminishing, the company will also see detraction in their clientele. Who wants to stick with a vendor that is becoming under staffed, less efficient, and more inaccurate?
In order to solve the problem of the economic hardship, one should not only look at their staff’s efficiency, but also explore different cost containment options available. People love to spend money but only smart spending allows for a return on investment. In the healthcare industry, the smart return is subrogation. To most, subrogation is a giant like Wal-Mart attempting to steal money from their poor employees. What people do not understand is the money that is recovered by the giant is deposited back into the employee benefit plan to pay future medical claims for every one covered by that plan [see Admin. Comm. of the Wal-Mart Stores, Inc. v. Shank, 500 F.3d 834, (8th Cir. Mo., 2007)]. The media has a never ending hypnosis on the fickle viewers and any contortion of the truth will make people believe the opposite.
Out of all third party recovery cases, subrogation is performed 2% of the time. The vast majority of cases are reimbursements of funds where a claim was already filed with the responsible party. In order for subrogation to occur, a third entity has to literally step into the shoes of the defendant and file the claim on their behalf. Let’s face it people, this is America and we love to sue each other. No one enjoys money coming out of their own pockets in order to pay for medical, vision, dental, and prescription claims that some one else was responsible for paying. So why do we impose strict legislations on matters that deal with being just, accurate, and fair? Why do we keep turning the blind eye on our health insurance when asked to reimburse them for funds they fronted in order to cover our medical bills? Why don’t we allow subrogation to run its natural course and replenish the funds wrongfully lost by the employee benefit plans? This approach would allow a third party administrator to recover funds without depleting their sources. It would create a cost containment strategy that would not only benefit the administrator, but would benefit their clients.
Cutting back is good but being efficiently innovative is better. By using subrogation as a cost containment tool, jobs have not only been preserved but new ones have been created. If you tell me that I will make twenty dollars for every five I spend, I will ask you where do I deposit my pay check. The fact of the matter is making money is the number one goal of every business. But in these harsh economic times, this goal may become slightly blurred or distorted. Hence, it is our mission to create new opportunities and become more cost effective. Businesses have to open their doors to new ideas and accept a little bit of change in order to reap the benefits later and subrogation is a great approach towards this success.
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