"A lot of people in my businesshave made people like you have low expectations of us." Not your typical opening line when meeting with a prospective customer, but David C. Smith is not your typical adviser. The vice president at EbenConcepts is steadfast in his belief that it is time to elevate the way employers think about employee benefits - and the brokers who sell them.
EBA's 2013 Health Plan Adviser of the Year, Smith, 45, didn't set out to change the course of advising. A political science major at the University of North Carolina at Chapel Hill, soon after college, Smith took a job on the political campaign of Dennis Wicker, who was running for North Carolina lieutenant governor in 1992. Talk of "Hillarycare" was hitting its stride, and Smith was assigned to be the campaign staff expert on health care. Once Wicker won and North Carolina passed a small business health care cooperative plan that re-wrote small-group health reform in the state, Smith found he had "inadvertently become an expert on health care."
He helped to establish the state's co-op before leaving in 1997 to work directly in the industry he'd come to love. For five years, he served various roles at Blue Cross and Blue Shield of North Carolina, from setting up a consolidated small-group operation to creating a broker management tool that helped agents track sales goals. Meanwhile, he was attending law school at night, earning a degree from North Carolina Central University. His daughter MK, now 16, was born about half way through the program, son Drew, 13, came just after Smith completed his degree.
Because Smith found that so much of what he was doing at Blue Cross "either directly or indirectly tied back to the law," it was easy for him to make the transition to opening his own practice, David Curtis Smith & Associates, in 2002. A full-time lawyer until mid-2009, Smith's intent was to work with agents and their clients on compliance.
He loved the employee benefits and employment law defense work, but found the endless billing process wasn't for him. He briefly joined a benefits consulting firm in a hybrid sales and compliance capacity before finding his true home at Fayetteville, N.C.-based EbenConcepts.
Chris Harrison, president and CEO of EbenConcepts, has known Smith for more than 15 years, starting with his time at Blue Cross. "Being able to understand each client's individual needs and analyze the best scenario for them is one of David's strengths," he says.
Still, Smith and Harrison were not exactly sure how Smith would fit in.
"Obviously, every insurance agent, sales agent, is very territorial with their clients," says Harrison. "So to incorporate David into that capacity the agents were very leery at first: 'What is his role? How does this affect my client? How does this affect the relationship that I have with my client?'
"To understand that David was there to really support them and enhance what they were doing took a little bit of time, but all of our agents have embraced that process and have embraced the role that David can play."
Going out with an agent for one of his first meetings with a client, Smith knew he was home. "I got in there and I just felt it. I could talk to people and explain their issues and everything else in a way that really just felt right," he says. "It felt like the first thing in my life in a way that I think we all just wait for when everything just feels right - this is where I'm supposed to be."
Risk management model
EbenConcepts has about 150 agents in three states, North Carolina, Virginia and Georgia, that are either direct employees or part of Keystone Insurers Group, a large property & casualty aggregator. Smith's day-to-day job involves assisting agents who have honed their skills in the small-group market to acquire larger group clients.
The key, says Smith, is to turn the conversation away from selling insurance and toward developing a risk management approach to benefits.
The idea came about three and a half years ago from the P&C mentality. "On that side of the house, if you have a client who gets a 5% or 10% increase on workers' comp it's not a little bit of panic. It's a lot of panic. And the reaction is, 'Why? Why did the rates go up and what are we going to do to keep it from happening again?' It's all about risk mitigation," he says.
And large groups in particular are starting to demand it. "A lot of those larger groups have come to the realization that their agent is just telling them the same thing every year and nothing that's unique about their situation," says Smith. "So what they're looking for is not somebody who's going to slap you on the back and say, 'Hey, here's your renewal. It was 15% but I got it down to 12%.' ... Instead what they want is somebody who's actually going to actively look at their benefits and say, from the risk management side, how can we keep costs down?"
This analytical focus of Smith's is one of his greatest strengths, says Harrison. "Certainly one of David's strengths is being very analytical at shifting away from that standard spreadsheet approach that has been prevalent in the market for 25-plus years and going more toward a consultative risk management approach," he says. "Everything is analytical."
There's no more just taking renewals and not asking why, Smith says, "and if we can't get answers to the questions why, we're going to actually push back and keep pushing until we get answers."
For example, he cites an employer group in Virginia that just recently received a renewal increase. At first, the agent didn't have an answer for them as to why. Then Smith dove into the details.
The group has an HRA that pays the last $2,000 of participants' deductible. He confirmed that the HR person and company owner get a list of who is getting the reimbursement. Smith looked at those claims and found only five people went above the deductible level in the last year. Further, two of them no longer work at the company and are past their COBRA election period, and two others had a one-time temporary medical issue. Only one remaining employee has an ongoing medical problem.
Breaking the data down in such a manner, "clients are blown away because no one's ever thought that we could actually do something with this data - we could actually ask questions," says Smith. "You know who hates us for that question? The insurance company underwriter. Because they've never had anybody pick up the phone and say, 'Nah. It's not going to work that way.'"
Smith is not afraid to dig deep when it comes to wellness, either. He has another client, a self-funded group, that found they always have someone in the high-dollar claims realm every year. But instead of focusing on that person, as most people want to do, he showed the client where they really need to pay attention: the people who have $10,000 to $40,000 claims year after year.
"Ninety percent of those people have one thing in common: They all have at least one chronic medical condition," says Smith. "They've got diabetes. They've got heart disease. They've got pulmonary. Whatever it is, they've got high medical costs because they've got a chronic disease and most of them are not managing it well."
Naturally, the employer asked for a wellness plan. A long-time member of the National Association of Health Underwriters, Smith helped write the wellness certification program for NAHU (along with their HIPAA privacy and health care certification programs - "It's one of those things I do on the side," he says, modestly).
"I've started saying to agents three or four years ago, 'If you get a group that says, "I want to do wellness," the next question out of your mouth ought to be, "Now, do you want wellness because you have a specific thought in mind about what you want to do, or do you want to do wellness because it's a check item on your annual performance money?"'" he says. "Because they're two totally different things."
It wasn't a performance issue for this group. Serious about implementing a program, Smith suggested the company offer that every employee who gets a physical before a certain date will pay less for their health insurance next year than the ones who don't. Ninety-eight percent of employees got a physical.
It might seem like a physical would be more expensive than having employees complete a health risk assessment, but Smith found three things to be true:
1) The physical identifies more medical conditions than an HRA, even one with biometrics. "The doctor found out that person has something five times more often than they did with an HRA," says Smith.
2) The data is better, "because the person filling out a form is answering the question very much from the perspective of where they sit in that second," he explains, whereas a physician is talking and listening to a patient. "That kind of empirical information is really important in terms of helping people and getting them on the mindset of what they need to do," he says.
3) Emergency room visits for the group dropped. The No. 2 reason people visit the E.R. in the U.S. each year is for primary care purposes, not a true emergency. In the case of this group, now that they've been to a primary care physician, "They know a doctor. So they don't think about going to the ER for that need, they go see that doctor they went and saw for that physical," says Smith. "Was that an intent in the beginning? I'd love to say, 'Oh yeah, that's what we thought would happen.' Total accident."
Coming from the risk management approach, the next step was to ensure everyone in the group with a chronic disease - it has 16 people who between them had 23 medical conditions that accounted for about 40% of their paid claims in the last two years - has someone to talk with at least six times a year.
"In this case it was pharmacists, but doctors and nurse practitioners work too," says Smith. What such an approach does is "create non-spousal guilt," he says. "They've now created a relationship with someone who's checking on them," who's goal is not to save their employer money but to help them live longer.
In fact, Smith made clear to the client at the start of the wellness plan that the objective was not to save any money. "I specifically said to them, 'I'm not going to guarantee you any savings. We're going to spend money. But if we have an objective, it's to get your claims costs back to where they were two years ago.'"
Another client, John Butler, executive leader, business services, Baptist State Convention of North Carolina, has worked with Smith for about four years, when the group was first planning to move to a self-funded plan for its several hundred employees.
"He was instrumental in helping us put together the figures and particularly for me to help me fashion a presentation to help sell my board of directors on the idea," says Butler. "Because any time you're dealing with 120 church pastors who don't understand this stuff anyway, moving from a fully insured plan to a self-insured plan is a major step."
Smith not only helped put the presentation together, but also negotiated on pricing with the stop-loss carrier.
"Why is David such a good adviser? It's his knowledge. There is so much change taking place in the benefits and health care industry right now that there's no way, unless you are spending all of your time in that field, that you can keep up with all the nuances and those types of things. That's what he does. He is more knowledgeable than anyone I have ever worked with, and understands the practical implications of changes in the law, changes that we might want to make to our health care plans that I didn't get from other advisers," says Butler.
"He really took the time to get to know our business, what it was that we were trying to accomplish, what our parameters are of what we could do because of the advantages of being a ... religious non-profit."
Butler talks with Smith once or twice a month, and sends emails on a regular basis - some of which come back with a 2:30 a.m. response, he's noticed.
"I don't have any doubt that if I don't understand something ... he'll understand it and be able to understand if it does or if it doesn't impact us and what we might want to do to take advantage or mitigate risk in any situation," Butler adds. "We have him because he knows what's going on. That's the greatest benefit - his knowledge. He stays on top of things and I couldn't be happier with him."
Compliance through knowledge
Smith credits compliance as the biggest reason for EbenConcepts' success in recent years. Sure, everyone is "doing compliance" these days, but it's about taking ownership of that compliance; not asking clients to be the expert.
For example, for the marketplace notices that needed to be sent out before Oct. 1, many brokers simply sent an email answering frequently asked questions, provided the model notice, "then in really tiny letters at bottom said, 'Please don't call and ask me questions because I can't answer them,'" says Smith. "About three years ago we said, 'Nah, we're not going to do that.'"
EbenConcepts' clients not only received their notices, but also found all their information had already been printed on it. "So that the client literally only had to open the document, print or email it out, and they were done," he says.
The same goes for Part D notices, early renewal groups - everything. "We're going to do the work because you're hiring us to be your benefits consultant," Smith says. "Why should you also have to become a benefits expert? Because then why do you need us?"
Smith is frequently called upon to conduct Web seminars, conference calls and in-person meetings, but demurs at the "expert" label. "I wouldn't call myself an expert or anything. I would say what we try to do as an organization is empower our agents to feel comfortable and confident in answering questions," he says.
His clients sure think he is one. "The first thing that comes to my mind is how expansive his knowledge of the field is. It's really amazing. He is constantly apparently reading and staying up on everything that is happening and going on. I've teased him before that his knowledge is so expansive that about half of it goes over my head when he's initially talking to me about it," says Greg Duncan, director for administration, Center for Child and Family Health in Durham, N.C.
Because Smith takes the time to make sure Duncan does understand everything they discuss, "it gives me a really strong sense of confidence that what we're doing is the right thing," Duncan says.
Duncan has known Smith since his law firm days, and appreciates his proactive approach to benefits.
"He and his staff just did an incredible job on stuff that we, as his clients, would have had no clue what to put on there," Duncan says of the health exchange model notices. "He immerses himself so much in this information. It was just a real gift to receive that email from him with that letter and to be able to send that out to our folks and know that the bases were covered."
Sandy Hamilton, head of benefits at Commercial Insurance Services in Roanoke, Va., has worked with Smith for about three years. She finds qualified potential clients in the large group market in particular, then brings Smith in to help with the sales presentations.
"When you go in with a client - and I don't care how small they are or how large they are or how much they know or don't know - he relates to them," she says. "He has so much knowledge about the plans and the systems that people use to run their employee benefits and he just gets comfortable with those people and talks to them and listens to them."
Hamilton recalls a health care reform seminar Smith put on back in May for a group representing more than 50 companies. "I just cannot tell you how many people emailed me or called me or stopped me after the seminar and said, 'I cannot believe in two to three hours how much I have learned about the health care law,'" she says. "I don't care what the question is, he has an answer. I don't think I've ever worked with anybody that I respect more for his dedication to what he does. Truly, it's his passion."
Over the past decade, EbenConcepts has streamlined its technology through a proprietary system comprising everything HR-related, from payroll to compliance training.
"One of the things that we have really tried to streamline for clients is the simplification of the human resource process," says Harrison. "When we were out pitching our technology to prospective clients, David was integral in that process to the extent that everybody was looking to streamline technology: 'How can we simplify the HR process?'"
Smith looks at it as changing the value proposition of the broker, bringing more to the table. "One of my favorite things to do with one of our agents in front of a prospect is tell them what their [current] agent makes every year on commission, and we'd say, 'What are you getting for that?'" he says, referring to data available from form 5500 filings.
As for EbenConcepts, "We actually probably over-disclose," he says. "We think it's important; we want our clients to hold us accountable for the money that we make."
Smith says it's company policy to take out commissions and charge a fee whenever possible. For example, they'll do so in the case of stop-loss coverage for self-funded groups. "We show people our fee. I've had people look at that fee and say, 'Yep, no problem.' I've had people look at that fee and say, 'That's too much money,'" he says. "At the end of the day, this is what we're going to do it for. It's a fair dollar. ... I'd say eight out of 10 clients don't have a problem with it because they understand what our rationale is."
Such a policy makes for a good fit with clients, Smith adds. "It also helps you find the right clients because they're the ones who don't want just the relationship," he says. "They want somebody who's going to be really focused on things getting better for them."
One of those clients who gets it is Erika Koteff, HR director at Direct Distributors in Garner, N.C. "He's awesome," she says of Smith, who she's worked with since approximately 2009. "He really, truly is a guru in the insurance industry. He's a great resource, especially with all the health care reform. That's been a huge undertaking for employers and he is a top-notch resource for that."
Koteff also appreciates Smith's demeanor. Not only does he respond to emails quickly, but also when he visits in person each quarter, "he's tailored his style to my style: come in, give me what I need to know, and get out. ... We don't waste time with all the fluff."
As for Commercial Insurance Services' Hamilton, working with Smith means a greater sense of confidence when recruiting new clients, knowing she'll have him to back her up on sales meetings.
"It's just the relationship, in the short period of time, that he can bond with those clients because of the knowledge that he has," she says. "When we look at peoples' programs, his plan design in particular, so many years we've spent selling things on price, change the deductible, those type of things. Well those days are over. You're not an insurance salesman anymore. You've got to be a consultant."
In the end, it comes down to likability, and "David is one of the most caring people you'll ever meet," says EbenConcepts' Harrison. "He will give you the shirt off his back. ... He wants to dedicate his time and his resources to anybody that asks, whether it's something that we earn money on and get paid to do or whether it's just a favor. David really goes above and beyond."
AT LIFE OUTSIDE WORK
When he's not busy being an expert at employee benefits, David C. Smith pursues creative outlets. His first priority is his children, daughter MK, 16, and son Drew, 13. Activities like laser tag and long drives together are "part of what being a dad is about," he says.
Smith often drives to meet with clients and agents, and he always has his camera at the ready. Over the last several years he's discovered photography to be an excellent outlet. "It lets me not worry about everything else in the world and just focus," he says of his photographic work, which often consists of landscapes and flowers.
Smith even started writing a book based loosely on a workplace joke about plan members with high-dollar health claims and "taking care of those claims that just won't go away," he says. "Our jobs can be very impersonal and at times very personal. I'm trying to capture the dichotomy of that."
Also, as you may have noticed on the cover, Smith is somewhat known for one of his fashion traits: he never wears socks. "A few of my agents make a big deal out of it," he says. "I don't know if it's my 'thing,' I just hate socks."
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