LOOKING BACK – 2003 IN REVIEW
By Donald A. Smith Jr.
President & CEO, SCF of Arizona

Another year has passed. It’s hard for me to believe that I’ve been part of SCF of Arizona for nearly four years. We’ve had many accomplishments, but is it possible to meet or exceed 2003 in terms of performance, challenges and excitement?

During 2003, we implemented our Metro-Phoenix service delivery teams, which operate from our home office in Phoenix. This change was prompted by the recognition that 70 percent of our business flows out of Maricopa County. So we now pair our account services teams with customers based not on geography as much as inherent business characteristics.

Once this change took place in Phoenix, we followed it up by expanding the concept to our other large customer base managed out of Tucson. In response to another business phenomenon, we created a team dedicated to the ever-growing professional employment organization business model.

These changes were accomplished in the face of an ever-shrinking competitive workers’ compensation market, which has brought about an increasing demand on our financial and human resources.

During 2003, SCF also moved to new levels of sophistication in our cost containment efforts. The claims division introduced Qmedtrix as a means for reviewing and, when appropriate, challenging the “usual and customary” charges of medical providers that are not subject to the Industrial Commission of Arizona fee schedules.

We also placed all our PCN provider contracts in the upgraded Ingenix system, a new bill payment method that allows for greater processing controls and reporting to assure more accurate and proper reimbursement payment results.

SCF continued its migration to a new information technology platform. This change, when completed, will bring unprecedented, exciting changes to the many services we offer our policyholders and their injured workers. It will provide us with the potential for more and improved future services.

Happily, we can report that SCF’s investment portfolio rebounded in 2003. Following the technology bubble burst, our stock investments took a beating in 2002, but much of that loss was recovered last year. Our next challenge will be to navigate turbulent and uncertain interest rate movements. After all, how long can rates remain at these record lows?

Of course no reflection of 2003 would be complete without recalling Arizona’s budget crunch. In a repeat of events from the middle 1990’s, SCF found itself at the center of much political attention. In spite of our desire to focus on our important mission as Arizona’s sole guarantors of available and affordable workers’ compensation insurance, we were forced to confront a determined number of state officials bent on making SCF one of the solutions to the state’s budget woes.

To say this attention was a distraction would be an understatement, as we found defending your interests and those of Arizona’s workers, a full-time job in and of itself. What a learning experience for a guy whose only desire was to come to Arizona and run a successful insurance company.

We won the initial battle in this fight, thanks to the tremendous support of our policyholders and various business and trade associations throughout Arizona. I’ve said this before and I repeat it here, no one would care whether SCF were sold or transformed out of existence unless there was a real cost to be paid for it. Without a doubt, the key stakeholders in our workers’ compensation system can’t see Arizona without SCF.

We closed 2003 with an outstanding financial performance – a trend that I am proud to say has become more expected than not. Our investment performance, premium growth, operating results and expense controls all contributed to another fine year.

Our challenge in 2004 is to repeat this result and to improve upon it as best we can. No doubt the accomplishments will be different, but I am sure the positive results will be the same.

Copyright 2004 SCF of Arizona. Reprinted with Permission.

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Qmedtrix is one of the nation's leading decision software firms specializing in health care cost-containment solutions. Qmedtrix offers a complete spectrum of systems and services to support the efforts of its clients. The company’s rules engine and proprietary database set the industry standard.

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