Joey Huang was destined to become involved in healthcare, but not as envisioned. A trained dentist and OB/GYN’s son, his real passion was cars. So after deciding not to pursue a proud family tradition, he instead co-founded a car dealership.
But the small-business owner of Great Lakes Auto Network (GLAN) in Ashtabula, Ohio northeast of Cleveland — whose first car dealership was adjacent to his father’s medical practice — grew tired of providing costly and subpar health benefits. His goal was to improve that coverage in hopes of enhancing recruitment and retention. What transpired exceeded those expectations.
An accountant friend referred him to Bryce Heinbaugh, a benefits adviser with IEN Risk Management Consultants who had his own colorful healthcare backstory. At just 22 years old, he faced open-heart surgery as an uninsured college grad. The die was cast on a career choice that would turn out to be highly rewarding.
“The stars aligned,” Heinbaugh recalls. “I walked into my career and job division at the college I was attending, and there happened to be posted in the hallway on a pegboard that said, ‘Internship available at a health insurance agency, and come and learn the basics.’ I picked up the phone and took the job immediately.”
A year later he started his own firm. In applying the principles of Health Rosetta, Heinbaugh suggested a self-funded chassis for the car dealer, which was an early adopter of reference-based pricing in Ohio. In addition, he recommended a “fiduciary” or “transparent” approach to pharmacy benefit management to combat rising prescription drug costs. Under such an arrangement, the PBM charges only a modest administrative fee per script in lieu of opaque spread pricing, rebates and manufacturer coupons featuring discounts on inflated prices.
Transparency is critical not only in healthcare pricing, but also adviser compensation, according to Heinbaugh. “Every dollar is disclosed to Great Lakes Auto,” he says. “If consultants or brokers have the best interests of their employer clients first vs. how much money they’re going to make on overrides or a bonus check, it brings an entirely different perspective to the consultation engagement.”
The benefits plan redesign paid off in a big way, reducing costs by 38% and generating a surplus of $138,000 after the first policy year. GLAN, which sells about 8,700 new and used vehicles a year, decided to pass the savings onto its workforce by allowing employees to skip a month of health insurance premiums in year two.
Surpluses were recorded in other years, with just under $50,000 earmarked for a rainy day account and about $100,000 being used to fund a concierge nurse navigator patient advocacy program for employees.
Nearly seven years later, more than $1.8 million was saved in direct premium dollars, helping more than double the workforce to nearly 300 employees and number of dealerships to six. Reinvested savings also paid for a concierge nurse navigator program to improve employee engagement, as well as morale, recruitment and retention.
Coverage terms for GLAN’s two medical plans, along with copays and deductibles, have remained unchanged, while costs have barely risen. When the self-funded plan took effect in 2012, for example, family coverage plummeted to $800 a month from $1,400 and it’s just $980 seven years later. Employees also have an option to add dental, vision, short- and long-term disability, as well as voluntary life insurance, accident and catastrophic coverage.
Apart from saving on expenses and boosting net profit, Huang believes these moves have helped him recruit top talent at GLAN, which represents Buick, Chevrolet, Chrysler, Dodge, GMC, Honda, Hyundai, Jeep and Ram. “When a majority of your workforce is below the $50,000 per year line, spending $1,300 or $1,400 a month in healthcare for a family is completely out of hand,” he says. “As a small-business owner, I’m always looking for competitive edges.”
