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Investment and Market Trends in Workers Compensation Ancillary Services

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Published September 2020

The Workers Compensation (WC) industry has grown to approximately $64 billion spread across two sub-segments: Indemnity and Medical.  The Indemnity segment covers employee reimbursement for lost wages while recovering from a work-related injury. The Medical segment, comprising 58% of the total WC market, or $37 billion, covers all expenses associated with patient recovery from a work-related injury. WC Ancillary Services fall into this bucket, comprising $7.5 billion (~20%) of the total WC Medical segment .  The WC industry is mature, placing a greater emphasis on scale and cost preservation to protect margins in a competitive environment.

Ancillary Services represent a diverse and growing portion of the WC market. The scope of services provided to patients is broad, ranging from Durable Medical Equipment (DME), home care, physical therapy, prosthetics / orthotics, transportation, home modification, and translation services. These services tend to be highly specialized. Providers of these services offer a substantial value-add both to patients and workers compensation payors in the form of a streamlined care experience and cost containment.

Report Summary

•Executive Summary
•Key Trends and Observations
•Consequences for M&A Activity
•Current M&A Environment & Valuations

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