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Medical management drives TPA's profitability


Crawford & Co., parent of Broadspire Services Inc., a third party administrator for workers compensation and other lines, recently reported that its second quarter net income increased 63% to $17 million.

What I find interesting here is that Crawford is a large claims-management company with lots of brands providing lots of services worldwide. But the operating performance of its Broadspire unit is taking significant credit for helping drive Crawford's second-quarter results.

Crawford said Broadspire “recorded operating earnings of $4.4 million in the 2013 second quarter, representing an operating margin of 7%, compared with an operating loss of $0.4 million in the 2012 second quarter, or an operating margin of (1)%.”

Broadspire's turnaround is expected to continue, company officials said during an earnings call with securities analysts. They cited “client wins,” meaning they are receiving more potential client RFPs and they are taking market share.

But they also said that medical management is driving profitability because managing claims is now so much about medical management. They added that they are doing more of this business “bundled and unbundled.”

So increasingly, workers comp is about managing medical utilization.