Building The Perfect Health Plan Part 1: Quit Accepting Predictably Bad Outcomes
Andy Neary, Healthcare Strategist at VolkBell
In Part 1 of a 3-part series on Building The Perfect Health Plan, we are going to focus on a problem plaguing most employer-sponsored health plans in America today…accepting predictably bad outcomes. In order to head down the path of building the perfect health plan, a change in mindset must occur. Employers must stop protecting their #1 asset (employees) with an operational expense. Employers have to quit budgeting for “less bad” rate increases. The health plan must become an investment that creates revenue for the organization and fatter wallets for the employees. However, to do this, the behavior around health insurance decision making has to change. We must stop celebrating the status quo.
What does status quo decision making look like? Well, let’s look at an excerpt from a typical renewal conversation between employer and broker.
Broker: “Well, [insert insurance company name] is requesting a 12% increase to your rates.”
You: “How can that be? We have performed fairly well this year. This is unacceptable. Go back to [insert insurance company name] and get them to lower the increase.”
Broker: “This is unacceptable so we did go back to them and negotiated the increase from 12% down to 5%. That is 2% below the industry average so I suggest we lock it in and wrap up the renewal.”
Sound familiar? By having this conversation with your broker, you are making his or her job way too easy. By asking your broker, “What kind of rate increases are you seeing this year?”, you are taking the pressure off him or her to go above and beyond. Flip the script and start looking for ways to reduce costs. Hold your vendors and your broker responsible for making this happen. If you are tired of having the same renewal conversation year after year, seek out consultants who are bringing different solutions. I found it ironic that on the same day the City of Kirkland, WA was in Denver delivering “next practice” healthcare strategies to a captivated audience, a broker competitor was down the street delivering the results of their annual survey. Listen, I get it. Accepting a predictably bad outcome comes with little work and little disruption. It is easy. Heck, predictably bad often wins out over predictably good when it comes to making health insurance decisions. However, the rising cost of your health plan is the biggest financial threat your organization faces so a focus on predictably good cost-containment strategies is imperative.
Negotiating a “less bad” rate increase is a cost-containment strategy of the past. It no longer works. It is the equivalent of putting a band aid over a gaping wound. Except, this gaping wound will not go away. By negotiating “less bad” rate increases, you are accepting a predictably bad outcome. Your band aid approach is only going to protect you for so long because the gaping wound, the cost of your health plan, is going to continue bleeding. Before long, it will become an infection spreading across your company eating away at both profits and wage increases. Change your mindset, quit accepting the status quo, and stitch up the wound forever by shifting your focus to building the perfect health plan that your employees and your bottom line love!
