How brokerage Lovitt & Touché selects clients to participate in its private exchange

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Arizona benefit brokerage Lovitt & Touché has a distinct marketing campaign for its private benefit exchange, ClearPath Prime. The product is not a silver bullet cost-cutting tool, but rather the embodiment of a philosophy that clients fully engage in enhanced communication efforts that will enable them to better deliver benefits to their employees.

The firm’s exchange has 41 clients and almost 11,000 employee lives in it, running with technology from Liazon. EBA spoke with Lovitt and Touché’s Senior Vice President Doug Adelberg to understand how the company ensures clients are the right fit to participate in ClearPath. What follows is an edited version of the conversation.

EBA: How do you position your private exchange?

Adelberg: We think we do it a little different. We sit down with our employers and we have a class they have to go through before we even show them the exchange. For us, it is a philosophical change in how they deliver benefits. We want to make sure this is right for them. We have said no to a number of clients, that this isn’t right for you, this is the wrong thing for you and this is not the way to cut costs. It’s a way to change what you are doing in benefits, and if you are ready for the change, we think this is the right answer. Not every employer is ready for change.

EBA: Tell us more about the class.

Adelberg: We have a presentation we created. We talk with them about how they engage their employees today. It doesn’t just encompass benefits, it encompasses employee communications. In many cases, they have to change how they communicate to their employees.

We have some employers that look at an open enrollment meeting [thinking,] if someone shows up, great. That doesn’t work in a private exchange model; everybody has to be in a room. It is a bunch of steps that we are trying to pre-qualify employers to make sure that this is the right thing for them. We want to get the right employer that is ready for this type of change.

EBA: What lessons have you learned since launching the exchange?

Adelberg: The biggest lesson we have learned out of this is that in most cases the employee isn’t the decision maker or the utilizer of healthcare — it’s the spouse. When we can talk to an employer willing to engage that spouse in this healthcare decision, the results we are seeing are fantastic. We are trying to teach the employee and the spouse that there is a difference between healthcare and insurance. You utilize healthcare, we want to make you a better consumer to utilize healthcare. Insurance just pays for a portion of it. We are trying to separate those two ideas.

EBA: What growth are you seeing with existing clients and new business?

Adelberg: We’ve had our exchange up and running for three years. The first two, two and a half years, it was existing clients moving into it. But, in the last nine months, we picked up 11 new cases specifically because of our private exchange.

Private benefit exchanges expect massive growth in the next few years. These executives from all parts of the industry are leaders in the space, forecasting trends and serving as ushers for what some are calling a new era of health care.
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We sat down talking to a new prospect and the reason they choose us was because of our private exchange. They are ready and they want what we are talking with our private exchange. We have seen a tremendous growth in new business, now we know what we are saying. Two years ago we didn’t know what we were saying, we were selling the tool. We’ve developed more of a model for this over time. When we go out and find the right client, it latches on really quickly.

EBA: What type of cost savings do clients see, and how do you sustain that?

Adelberg: The average renewal for clients in our private exchange is 3.8% over a three year period. The average drop in the medical loss ratio is 14.3%, which includes first year, second year and third year. Our first client that went in, every single year since September 2014, they have seen a 0% renewal. Those are pretty strong numbers.

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Private benefit exchanges Advisor strategies Practice management Employee engagement Workforce management Employee benefits Healthcare costs