If you’re a Business Owner, CFO, or HR Professional that views your employees as assets and investments…
When it comes to your company’s health plan spend, of course, everyone would like to see a reduction in their current costs. Whether it’s your annual rate creeping higher each year or paying for coverage that doesn’t seem to match employee needs, very few companies can say with confidence that they’re getting the most out of their health insurance coverage.
But there’s a big gap between wanting to reduce costs and actually taking the steps necessary to implement a cost-saving strategy for your company. Unfortunately, this is why very few ever do anything about it.
The truth is that in order to be successful at reducing healthcare costs for your company, you’ll need to make some adjustments to your current benefits approach. And part of that adjustment is a mental one, such as how you handle new information, the way you address challenges, and whether you’re open to new possibilities.
Keep this in mind as you read through our 29 Ways to Reduce Healthcare Costs for Your Company.
1. Approach things with the basic premise of humility. There might be things you just don’t understand or know about yet.
2. And just because you have not heard about something before, does not make it not true.
3. Allow a small sliver of space in your brain to maybe consider that you can do something about lowering your healthcare costs.
4. Now ignore anyone after this point that tells you it’s not possible.
5. Oh, and if that person pushes back, just say this phrase… “What if?”
6. Acknowledge that you don’t know everything.
7. Have tough skin because some of what you might read in this article may make you mad.
8. Realize that there might be some new ideas you’ve never heard of before.
9. Come to grips with the fact that just because you’ve opened your mind, this does not make you seem less intelligent to your boss.
10. Having a great ego is good if you are a UFC fighter but not so good as a fiduciary on your health plan spend.
11. Be OK with maybe stepping on a few toes in your organization to make things better.
12. Don’t sweat it when you run into a roadblock because you’re learning something new.
13. Have the guts to even realize that things may be or not OK.
14. Don’t take it so personally that you developed the benefits package so it must be the best.
15. Understand that things are changing at a very rapid pace, and healthcare is no different.
16. You’ve passed the test at this point. If you’re still reading, you haven’t gotten pissed off at hearing the truth.
17. Lucky 13.
18. Be totally OK with getting others feedback but understand at the end of the day there’s only one coach.
19. Look up what the word fiduciary means.
20. Now look up the definition of personal liability related to ERISA.
21. After reading those, I hope you have a different perspective on managing your healthcare benefits.
22. WHY? Why did I spend time talking about things that are not related to medical plan design, funding, prescription coverage, etc? Because the strategies and tips I’m about to share will be worthless if you don’t come to the mental realization that (1) you can do something about it, (2) you will face resistance, and (3) it will not be easy. But I guarantee you it will be worth it! Are you ready now for the secrets that only 3% of most customers really understand?
23. Put a stake in the ground. Before you can change something you need to know where you are. Without exception every single employer I talk to always tells me, “We have a really good benefits package.” Really? Every single company out there has a great plan? Bullshit! You have told that story to yourself to make yourself feel better about the decisions you’ve made in the past. I can tell you because I have seen hundreds of plan designs, and most are crap. Either the plan has no coverage so the employees never want to use it. Or, the plan is so rich in benefits that nobody can afford it. I suggest you get someone to run a PEPY analysis on your plan. This will give you a benchmark. Now we have the stake in the ground of where you are.
24. What is the purpose? What is the purpose of your benefits package? This is a question we ask right up front on our introductory call. Here is the typical response we hear: “We have to offer benefits because our competitors do.” “Our employees ask for them.” “ The benefits are really for me and I also allow my employees to enroll.” “I have to pay an ACA penalty if I don’t.” Most executives have never been asked this question by their broker (I can tell you why). If we ever get a chance to talk I would love to hear your answer, so I don’t know exactly what you’re thinking, but I can tell you what some of the answers are from top quartile execs: “The people that work for me are my greatest asset.” “Without exceptionally great people I will never achieve the goals of the company or the mission of our organization.” “Truly, truly care about the people that work in our organization and want to do the best for them.” “In order to attract talent in today’s marketplace I need to differentiate myself other than salary.” “Retaining good people can be impacted in various ways, but I understand benefits can I have a tremendous lever on them staying.” There are countless others but I think you see the point. Now you understand why you’re doing what you were doing.
25. Have a five-year benefits mindset. Why is it for most companies you will do a 3-5 year projection on many aspects of your business. But when I ask executives to show me their five-year healthcare projection, they can’t show me anything? Is it because all of the advice you’ve been receiving from your broker is that there’s nothing you can do year over year. So a 6% renewal is good? Did you ever realize they have an incentive to not show you because they make more money the more your spend goes up? The average annual premium increase over the past 20 years according to the Kaiser foundation is 12.6%. That means your health care cost will double every 6 years! This is where an advisor separates themselves from the rest of the pack. Now you will not worry about fluctuations for one year when you know your five-year strategy is on target.
26. Take back control, learn how your plan functions. Stop relying on your broker to tell you and educate you about everything. It’s your money. It’s your employee’s money. It’s your company. It’s your responsibility to understand how your health plan works and functions so that you can optimize it. This starts with a basic understanding of the Four Healthcare Strategies: fully insured, level funded, reference based pricing, and consortiums. Please do not be intimidated by these. It’s just a matter of getting you educated on where they make the most sense and where they do not. These are your four options to consider going forward. I am sure there will be more as time goes on. One quick example to prove my point. Most people think level funded or self funded health plans are more risky than fully insured plans. It’s actually the exact opposite. You just don’t know what you don’t know. This increase in knowledge will give you more confidence. It will allow you to brainstorm creative ways that others are using to address these issues.
27. Understand risk. What if the shit hits the fan? For most things in life risk is a bad word. But in the healthcare industry and benefits industry risk is something that you need to get comfortable with. Fast. If you worry your $500,000 house might burn down someday you buy insurance for pennies on the dollar. To protect against that risk. Putting money aside in your checking account to someday rebuild the house if it burns down would be stupid. Healthcare has insurance you can purchase, as well. And I’m not just talking about major medical insurance: specific stop loss, individual specified limit, aggregate stop loss, aggregate specific loss, pharmacy layering, secondary coverage, gap insurance, indemnity plans, expense plans, deductible based gap plans etc. etc. etc. A good advisor again separates themselves from the rest of the pack by understanding risk and how to use current and upcoming leverage tools, like insurance, to protect your risk for pennies on the dollar. Insurance isn’t always the answer, sometimes it’s being smart about plan design, having certain exclusions or things included. Sometimes risk is mitigated with direct contracts to facilities. I could go on and on but the main point here is do not be afraid of risk. Anything you are afraid of we can protect using many different tools. Now you will sleep like a baby not ever worrying about what-if scenarios for your health and benefits program.
28. Don’t be cheap. Be willing to pay. Do you know what they say about free information? It’s not worth that much. Sometimes information from a sales person is excellent. Actually probably a lot of the times it’s excellent. But we’ve all been in a situation where the information we get from the salesperson is not in our best interest; it’s usually in theirs. Don’t be mad at the situation, it’s just the way it is. Instead, make smarter choices starting from here on out. Be open to having an independent advisor analyze your situation, not your broker. Get some data and get a truthful look at where you stand and what you can do to improve. I am absolutely not talking about getting quotes sent out on your behalf to many different companies. Brokers do this every year as part of their free information to get your business. Heck, I’ve even been guilty of this in the past. I’m talking about paying someone a fee, typically 0.5% to 1% of your total annual medical spend, to get a detailed analysis of where you are down, realistic options moving forward, strategies to improve with actual rates and names of the vendors. A playbook if you wanted to implement it yourself. Assume a $5 million spend. Would you cut a check for $50,000 (1%) to be shown exact strategies, vendors, plans and rates that would save you 10X your fee? …$500,000 savings over the next 12 months? And to protect your investment what if there was a guarantee on this 10X savings. What if the savings did not account for a 10X savings you got your fee back? It’s pretty much a no-brainer, isn’t it?
29. Your move. You made it this far. I hope you found it valuable. If not, I’ll ship you a box of Omaha steaks for your time. You and I both know that knowledge is useless unless it’s acted upon. The Cost Modeling Analysis you read about in #28 is something that we can provide if you’re interested. Just reach out.
If you’re a Business Owner, CFO, or HR Professional that views your employees as assets and investments…