Here's how brokers can beat Goliath
Advisers Beth Johnson and Deke Lape of Mitchell Insurance last year battled a Top 5 national broker for a 500-employee life manufacturing account — and won.
Mitchell Insurance is not an isolated example. Across the country, small- to mid-sized independent benefits firms are winning lucrative mid-market business from bigger competitors.
Adviser Randy Hansen of PSG Washington in Everett, Washington, out-raced a Top 15 national broker to win a 200-employee life auto dealership. In Indianapolis, adviser Jeff Fox of HJ Spier took a 1,500-life regional hospital from a large local brokerage. Bob Gearhart Sr. and Bob Gearhart Jr. of DCW Group in Youngstown, Ohio, pried a 125-life steel company away from a Top 10 brokerage. Perhaps even more impressive, adviser Kim Eckelbarger of Tropical Benefits in Trinity, Florida, ripped a 250-life transportation company out of the hands of the incumbent broker, a former NFL quarterback.
These independent Davids are prevailing over these status quo Goliaths using next-generation strategies and techniques that they call “NextGen benefits.” These tactics improve benefits while reducing a company’s year-over-year benefits spend, usually by 20% to 40% in the first year alone. Let’s look at the main elements of NextGen benefits.
Ascend to the C-Suite
The foundation of NextGen benefits is ascension to the C-Suite, moving the benefits strategy discussion from the HR department to the executive offices. While an important part in the benefits process, HR is operational while the CEO and CFO are highly strategic.
NextGen advisers have a benefits strategy conversation with the CEO and/or CFO, avoiding topics like plan design, open enrollment and renewal strategies — operational details that executives have delegated to their HR team. The conversation focuses instead on how these executives can reclaim control of their benefits spend using alternative benefits financing strategies and managing the healthcare supply chain.
Alternative financing of the benefits program, i.e., some form of self-funding — level-funded plans, partial self-funding, captives or fully self insured plans — is essential for NextGen benefits, allowing employers to reclaim control of their benefits spend. Fully-insured plans give total control of the plan to the carrier, preventing the employer from retaining unused claims dollars and selecting strategic vendors such as the PBM and medical management firm to manage the employer’s healthcare supply chain.
Healthcare supply chain
When it’s time to purchase new computers, no company hands each employee a corporate credit card with instructions to go buy a computer for their work. Yet employers use this strategy when it comes to workers’ healthcare purchases. They give each employee who wants one an insurance card and sends them off to purchase healthcare whenever they please from any (in-network) provider regardless of the quality and cost, which varies widely from provider to provider.
Companies carefully manage all their sourcing through what is known as supply chain management — except for the healthcare their employees buy.
NextGen benefits are changing that, using various strategies and techniques to manage the healthcare supply chain — the quality and cost of healthcare — including medical management, fiduciary PBMs, specialty med cost-mitigation programs, bundled-price surgery centers, surgical bidding, direct contracting, and reference-based pricing/reimbursement. With these strategies, NextGen advisers are correcting the misaligned incentives in healthcare that drive up the cost of medical treatment.
By working with the C-Suite to take control of the benefits spend and managing the healthcare supply chain, independent NextGen benefits advisers are delivering measurable bottom-line results that give them a clear competitive advantage over larger status quo brokers.