Private exchanges: 'Not a fad or flash in pan'

The adage within the industry is that if you have seen one health insurance exchange, you have seen just one exchange. A longtime provider of technology products, bswift launched its private exchange in February 2014 and has seen considerable growth ever since. The company's director of exchange solutions, Don Garlitz, shares three attributes that make an exchange function and how bswift is working in an incremental fashion to get clients familiar with the platform.

What is the structure of your exchange? What makes it different?

What distinguishes us from many exchanges is that we allow an employer to adopt an exchange experience in an incremental fashion. Such incremental attributes include [first,] greater choice — more consumerism with more options available to the consumer. No. 2 is a consumer having access to decision support tools so they can have a retail-like shopping experience. Third is the use of more standardized product offerings.  An employer on our system can do any one of those three things or all three of those things. However they want to come into an exchange, they can.

Furthermore, we think part of what the incrementalization around the adoption of an exchange provides is who is going to have access to the exchange? Some employers are using private exchanges only for post-65 retirees or they may use it only for some populations, like part-timers or COBRA-eligible people who don’t have access to the same things that the actives might have.  

How do you recruit clients?

We have a direct sales force which sells direct to large employers. For bswift, a large employer is typically 1,000 lives and up. We have a sales force that is out talking to those employers and, frankly, most of that business is driven through broker or consultant relationships. We are not trying to displace a broker or consultant, but are working cooperatively with them.

For smaller companies, we have a whole set of channel partners out across the country that adopt our technology and typically private-label it and bring their clients onto the bswift platform. … They may have a special brand for their private exchange and they will bring their clients in. That marketplace usually serves the under 1,000 market.

What is your relationship with brokers?

I think we’ve got a well-deserved reputation in the marketplace as we’ve built our business over the last 15 years of being very broker-friendly. The evidence for that is even though with large employers we do directly contract with the employer, we’re not interfering with or displacing the relationship between the broker or consultant and that employer client. We sell that technology direct to the employer, there’s no middle person there. It’s a cooperative relationship and always has been.

But in the under 1,000 market that we don’t serve on a direct basis at bswift, that whole block of business — which is substantial for us — is a very important piece of our business. It is driven almost exclusively by brokers and consultants. Those folks typically will license our technology, private label it and bring it downstream to their clients with their own label on it. That is a market channel for us where we’ve worked very well brokers over the years.

How does 2015 open enrollment compare to 2014?

Not just exchange business but for general business, we’ve grown at a very healthy clip for the last several years, and this year was no different. I don’t have the exact numbers yet, but … I will say that our growth as a company has been very strong and comparable to the growth we’ve had over the last several years.

We’re bringing on a lot of business, so the question becomes: How much of that is private exchange business versus not? Well, how do you define a private exchange? If you define it the way I did with the three components of what distinguishes a private exchange from a traditional benefits program, then I would say we have pretty good segment of employers that are adopting one or three of these attributes.

How do you see private HIXs fitting into the future of health care?

I think there they are going to continue to grow. They may never fully replace the traditional benefits market, but we expect — like most others in the market expect — that private exchanges are not necessarily a fad or a flash in the pan. When you define private exchanges a little bit more liberally as I have, these are things that people will value. They value choice, they value decision support. Employers will value some standardization of product.  Those things are in my view are definitely here to stay.

Editor’s note: This story is the first in a series of one-on-one interviews with private exchange leaders and top decision-makers across the U.S. Know of an exchange expert who should be profiled? Email Brian.Kalish@sourcemedia.com.