1/3/2012

Stuck in the Stone Ages?

Nearly one in five litigation executives have put some kind of national records retrieval program in place, according to Revere Advisory, which conducted the 2011 National Litigation Management Study for the CLM. Find out why.

By Steve Schumacher

Records retrieval and review services are getting a lot of industry buzz right now. Nearly one in five litigation executives have put some kind of national records retrieval program in place, according to Revere Advisory, which conducted the 2011 National Litigation Management Study for the Claims and Litigation Management (CLM) Alliance. To understand the reasons behind the rapid growth of the records retrieval industry and the industry’s increasingly rapid adoption of these services, we need to understand the two primary economic drivers behind the process—time and money.

While you may not be chiseling records retrieval requests onto stone tablets, if you are not taking advantage of the latest advances in this area, you might as well be. Implementing a formal records retrieval program can reduce your retrieval costs by 11 percent internally, while freeing your claims professionals up by one to two hours per record requested. Utilizing a records retrieval program for litigated files can reduce expenses by 27 percent. Add a records review service and you can reduce costs by 48 to 78 percent over what is typically paid to a law firm for the same service.

Driver One: Time

Claims organizations need records quickly. The faster they can obtain records, the faster the claim can be adjudicated and resolved. Cycle time is a key indicator of overall allocated loss adjustment expense (ALAE) ratios and executives are interested in all solutions that help to resolve cases more quickly. An improvement in retrieval time of five to 10 days per record has a big impact on overall cycle time.

Driver Two: Money

Claims organizations are looking for ways to reduce the overall cost of obtaining records. Traditionally, the retrieval process is managed in one of two ways: Front line adjusters (usually with some administrative support) process authorizations, contact providers and wait for the requested records; or they rely on their defense firms to do so. Most use a combination of both methodologies.

When internal resources are used to retrieve records, the work is principally administrative. That is, the process of getting the record does not substantively contribute to the adjusting of the claim itself. Adjusters or administrative staff time could be much better spent on determining liability and damages to resolve the claim. Executives who quantify the number of hours involved in the retrieval process are amazed to find how quickly it adds up.

When law firm resources are utilized, the internal claims staff feels less pain in terms of their time commitment, but costs are increased significantly. Law firms are happy to manage the records retrieval process, but it is not a core competency or a money-making activity for them. However reasonable they would like to be cost-wise, firms need to charge hourly at either a paralegal or associate attorney rate simply to break even on retrieval time. While some firms may see this as an opportunity to make money on this activity, that is probably the exception.

Even when firms provide their most efficient rate for this activity, they are still higher than what a records retrieval company would generally charge. While a law firm typically charges on an hourly basis, retrieval firms largely charge a flat fee—giving executives predictability, cost certainty, and the ability to budget based on the number of claims they are managing.

On to the Review

Those involved in the claims management process know that obtaining the records is only half the battle. Once the records are in hand, they must be reviewed and analyzed. Getting the records accomplishes little without analyzing the story they tell.

The economics of review are quite similar to those involving retrieval. One distinguishing aspect of the review process, however, is that claims staff is even more likely to rely upon law firm staff to organize, analyze, and review records. For example, in the absence of a large staff of nurse consultants (increasingly rare in today’s claims environment), adjusters have traditionally delegated this responsibility to their law firms.

Again, from a core competency standpoint, law firms may not be the most effective solution. The vast majority of records require an initial review to determine their content long before there is a determination made that they need to be analyzed and used by an attorney in litigation. This is most often done by paralegals or junior attorneys. The initial review may be done more quickly and effectively from a cost standpoint by a company whose core competency is records analysis and summarization.

From the perspective of managing costs, firms commonly (and appropriately) charge an hourly fee that can vary widely, depending on the record. The hourly nature of these reviews, however, leads to uncertainty as to total overall cost. By contrast, when a records review company handles the review, they will most likely charge a per page fee, making it easier to budget on a per-case basis.

If you feel that your processes might be stuck in the stone ages, in terms of how your organization currently retrieves records or analyzes them once you have them, here are some quick steps you can take:

  1. Quantify how many records you obtain annually. Determine how much time your internal staff spends on retrieval versus review. Look carefully. Make sure not to overlook all the little activities that add up.
  2. Determine how much you pay your law firms for these activities. Given the complexity of legal activity codes, this can be challenging. Review sample invoices and determine how often “records” are referenced and the nature of the associated activities.
  3. Evaluate whether a national retrieval or records review program could be right for you. Even organizations with very little retrieval activity often find that not only do they save time and money, but they can free up internal staff to do more with less and to be more successful at their core activity—resolving claims.

Out with the Old, In with the New

When examining your records retrieval program, it’s important to take a look at your current processes. Here are two scenarios.

Records Retrieval, the Old Way:

  1. Obtain authorization and validate accuracy.
  2. Mail authorization to facilities.
  3. Repeated follow‐up calls (coordinated with diary).
  4. Send payments to facilities.
  5. Receive unorganized records.
  6. Organize records.
  7. Scan records to claim file.

Records Retrieval, the New Way:

  1. Place order with records retrieval service.
  2. Receive alert when records have been obtained.
  3. Download indexed records in easy‐to‐review format.

The second option requires less money outlay, is paperless and more efficient. As everyone tries to do more with less, saving time and money for services allows claims professionals to spend their time savings on skilled work, not administrative tasks.

Records that require a subpoena for retrieval can be a real headache, but you do not need a law firm to prepare a subpoena and retrieve records. A competent records retrieval service can subpoena records at a fraction of the cost. Once a signed release is completed by the individual to whom the records pertain, preparing the subpoena and retrieving the records is an easy process.


Steve Schumacher is principal and senior vice president of sales for Keais Records Service. He may be reached at www.keais.com.



Steve Schumacher is principal and senior vice president of sales for Keais Records Service.

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