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More private sector involvement into ACC


ACC is contracting out more of its front line case management to the private sector. This is bad news for injured workers because the experience of private sector case management in both New Zealand and Australia is that claimants receive an inferior and probably more expensive service than when it is done by ACC front line staff.

In 2008, Research NZ (1) did a comparison of return to work outcomes and claimant satisfaction between claims managed by the private sector case managers contracted by accredited employers and those managed directly by ACC. The research found:

“ACC would appear to have a better performing service delivery model than the Accredited Employer Programme based on claimant satisfaction feedback.”

The same research found that whilst private sector case managers return people to work faster they were subsequently injured again, indicating people were returned to work before they were ready.

In an article the northern branch of the Employers and Manufacturers Association (EMA) proposed that NZ adopt the workers’ compensation system of Victoria, Australia. In Victoria, the management of claims is handled by private sector “Third-Party Administrators” (TPAs) whilst the levy setting and collection is performed by the government.

Proponents of the Victorian system hoped private providers would compete for market share through efficient service delivery and claims management. Instead they found that providers competed for market share in ways that created unhealthy competition. Agents were compelled to impress employers with ‘tough’ claims management and suppression of costs.

The EMA is promoting the idea that private sector case managers have capped budgets. If this approach is adopted, situations will certainly arise where financial concerns will override the health considerations of injured New Zealanders. People will miss out on their basic entitlements to medical care because the case managers have to meet a budget to turn a profit.

Gallagher Basset, a multi-national company that manages claims in Victoria, is one company looking for case management business here. A quick search on the internet shows their name appears on countless consumer watchdog and complaint sites around the world.

If the Government shifts claims management from ACC to the private sector a conflict of interest is created for the financial gain of the business, whilst compromising the welfare of the claimant. The National government has never ruled out opening up ACC to private competition. ‘Not in this term’ is all it has said.

Hazel Armstrong is the spokesperson for the ACC Futures Coalition.

(1) A copy of the Research NZ results are here (PDF file, 156 kb).

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