For decades, the status-quo benefits renewal process has involved HR departments choosing a benefit plan from among a stack of broker-provided carrier rate spreadsheets, and then bringing it to the C-suite for a rubber-stamp approval. Because of where the process generates, the emphasis is typically not on lowering and controlling future costs, but rather finding a plan that HR thinks will bring the least amount of heartburn to their employees — and themselves.
The problem is, a company’s healthcare spend is among its top expenses and “a top three-to-five spend should always be dealt with by someone with P&L responsibilities,” says Randy Hansen, president of PSG Washington, Inc., in Everett, Wash.
That’s why PSG has made it their practice to take the benefits planning process directly to the C-suite from the start. In changing where the conversation originates, PSG has transformed their approach to the market. “We have found that our conversations with the C-suite require a much more detailed analysis, not simply talking about benefits and premiums,” says Nick Hansen, Randy’s son and senior benefit consultant at PSG.
This means encouraging the C-suite to demand to know where their company’s benefits dollars are going; to manage their healthcare supply chain the same way they’d manage their business supply chain. Often, Nick says, they don’t even know how much they’re paying annually for their broker’s services, let alone healthcare costs. “We suggest that they set an expectation of lowering and controlling costs — with transparency,” he says.
A new approach
In order to reach the C-suite from the get-go, PSG changed their pitch. “If we were phoning them and talking about quoting 12 carriers and trying to come in with the best price, the C-suite is going to shut us off quickly,” Randy says. “They want to hear about lowering the cost of the plan so that money can be used elsewhere within the company.”
The Hansens often get a foot in the door by sending a CEO or a CFO a copy of the book they co-wrote, “Breaking Through The Status Quo: How Innovative Companies Are Changing the Benefits Game to Help Their Clients AND Boost Their Bottom Line.” It lends credibility to the strategies PSG would like to discuss with them, Randy says.
Next is a 30-minute conversation to ensure the prospect and PSG are on the same page. Explaining to clients that the problem of rising healthcare costs stems not from insurance but rather the cost of the care itself, PSG makes it a priority to find employers’ specific cost issues and learn how to manage them. In the process, they’ve been showing mid-sized companies plan management options that they’ve never seen before, Nick says. Most employers don’t know that the “technology is there, and the information is available to them” to monitor these costs, he adds.
Medical insurance “is a huge expense” for PSG client All Battery Sales and Service in Everett, Wash. Vern Allen, vice president, relies on PSG for money-saving strategies and getting the most out of his plan’s coverage. “The decisions made for medical coverages can alter the medical insurance expense dramatically so it’s important for C-suite people to be involved,” he says. “Randy and PSG are always bringing new ideas.”
It’s not always an easy discussion, but the results are worth it, says Nick. “Our conversations with the C-suite about healthcare supply chain management are many times an uncomfortable discussion. We are talking about how the system is broken, but also bringing solutions,” he says. “Their history is years and years of trend increases and little-to-no numbers to back it up. We are finding the C-suite has a strong interest in becoming more engaged in the details of managing the healthcare supply chain.”
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