Monthly Archives: September 2016

Is Your Benefits Firm Built to Handle a Benefits Bear Market?

I often reference a quote from Mark Cuban that says, “Everyone’s a genius in a bull market.” When you think about the benefits business it has really been a bull market since I have been in the business, which is 30 years now. Everything seems to be going up, up, up, regardless of the quality of the product or service. Benefits brokers have benefited significantly, getting medical inflation raises for years. Admittedly they have also been adding more services, often at no cost. But this is behavior you see in a bull market. It is easy when the math is in your favor. However, do we even know what a benefits firm would look like in a bear market?

I know what a benefits bull market looks like. Companies good and bad are thriving. Money is spent fairly recklessly. Wages are often above the averages for similar jobs in other industries. There are trips and more trips. Everything is great. Those are the good parts.

Bull markets can also have some negative effects. Weaknesses in one’s business or value proposition aren’t easily recognized. Inefficiency is hidden. Complacency can creep into the organization. There can be a failure to recognize competitive threats. Common business practices aren’t practiced. And a belief that one’s world will never change can blind one’s vision of the future or reality.

But what does a bear market in benefits look like? What can cause a bear market? Commission compression? A move to fee for service? Government intervention including changes in tax laws? Obamacare collapsing? The budget deficit getting higher with rising health care costs being a big contributor? The MLR? Hospitals getting squeezed? Higher deductibles and employee contributions? All these factors appear to be present right now, favoring a need for change. Could it signal a coming bear market?

Warren Buffet loves bear markets because he thinks there are deals to be made. And it is bear markets that allow the cream to rise to the top. Bear markets eliminate a lot of competition. But do we really know who the superstars are? Can we tell the real genius from the bull market only genius? And what does a bear market benefits firm look like? Without really having been in a bear market I am not sure what one really looks like.

If a benefits bear market hits there will be opportunities. Opportunities for those who have anticipated changes; for those who built a model to sustain over the long haul; for firms whose infrastructure can adapt quickly to change; for those who have worked hard to expand their non-medical revenue reducing some business risk; for those who have differentiated their value proposition not by giving things away but by delivering products or services of value that an employer would pay for. Think about that one for a second. Of all those “value added services” a firm provides, what would an employer pay for and what would they pay? Would they pay anything at all?

Much like my financial advisor I don’t have that crystal ball. And it is hard to run a business when things you don’t have any control over can cause you chaos overnight. But hoping the benefits world doesn’t change isn’t a strategy. You also can’t put your head in the sand either. Recognizing business threats is a critical component of any business. Even Apple assesses business threats. So don’t let the first benefits bear market get you down. Some good planning can reap great rewards, even when the world changes. Or maybe we will have a bull market forever. Place your bets!

Webinar Invite – Growing Your Benefits Business by Leaps and Bounds

How does a broker go from 5 employees in their benefits firm in 2005 to 60 today without an acquisition? How does another go from 5 to 200 in just 8 years? Or another that generated $40 PEPM in addition to commission on a single account?

In this webinar we will get into the details of how some firms are skyrocketing while others struggle. We will show you the details of what these firms did to generate rapid growth, and show you how you can do the same.

This is a no-holds-barred webinar. If you want me to tell you what I think you are already thinking, then this is not for you. I am going to tell it like it is.

In this webinar we will answer the following:
• What are these brokers doing that is different?
• How they generate up to $20 PEPM above the regular commission?
• Why their model sustains any changes in healthcare reform?
• What is the difference between faking it and making it?
• The 3-year plan to a better future?

This webinar is a culmination of all others we have done. It puts things in a nice neat package and explains things in a different way. If you want to learn this formula, please click here to register.

Register HERE

The dates are September 9,13,and 16th at 12 noon eastern time.

This is for benefits brokers only.

Consumerism in Healthcare is Not Practical

I read a lot of articles about consumerism and how employees need to be better consumers. And as one who implements technology I am very familiar with most of the decision support tools in the market and all the online symptom checkers. So let me make a bold statement. It is all garbage. I have always thought that individuals will never have enough knowledge to make educated health care decisions. Health care is too complex and always changing so how am I ever going to have the time to keep my knowledge current. I don’t want to, trust me. And the last time I needed health care I was driving very quickly to the emergency room. Not a lot of time the think there.

I recently listened to a presentation that Aetna CEO Mark Bertolini gave a few years ago at Stanford. (you can see it here) The final question asked of him was as follows: “How do you create a more educated consumer in a marketplace where they are being directing their own health care decisions?” What surprised me was his answer.

“Trying to educate to everybody on how the health care system works and the level of detail isn’t going to work. Sorry to say. And the reason is that unless the amount of information I can gather is immediately available and that when I act on it has an immediate response I am not going to pay attention to it.”

With all the articles out there about consumerism and directing one’s own health care I thought I was the only one that had such view.

Every time I have my car fixed I am wondering whether I am getting ripped off. I don’t know enough about cars to “shop the market” for service. I remember watching 60 minutes or one of those shows where they show auto mechanics taking advantage of everyday consumers by doing things people didn’t need. That’s me. I wish I had a trusted auto consultant who would tell me whether I really need the services some mechanic is saying I need. You get my point. If I don’t know whether my car is getting the proper treatment how the heck am I expected to figure out whether my doctor is doing the right thing.

Just last night my wife and I had a debate about the value of multivitamins and we couldn’t even agree on whether they worked or were a waste of money. So I Googled the topic, read a bunch of articles, and still don’t know whether multivitamins work.

Let’s not confuse choosing health care versus choosing health insurance. When choosing health insurance is one supposed to be predicting what their needs are going to be in the next 12 months to essentially “game the deductible”? Insurance is supposed to protect one from an unanticipated event that may cause financial duress if one were not insured. Anything that doesn’t fit into this category is simply a reimbursement plan. Dental insurance is almost not insurance. It is a prepaid reimbursement plan for most. There should be two types of insurance plans. One that runs like dental and is simply discounted reimbursements, and another that is real insurance. It is for this reason health savings accounts should rule the day.

So what is the solution? I don’t like when people run around talking about the problems without giving viable solutions so I won’t do that myself. I always say that stating the problem is easy, it is the solutions that are tough. Let me start with what I would want as a consumer. I would want someone who would give me sound advice as to what is proper treatment. I want someone who has an incentive to do the right thing for me. I want someone who would spend my money as if it were their own.

I think the solution requires properly placing incentives. I want to live a healthy, happy, long, and financially viable life. I want someone advising me who understands my goals which I will safely say that these goals are more than likely shared by many. I am all about incentives. It is funny how when you have the right incentives you get better outcomes. That requires having someone who wants me to be healthy and not just fix me when I am broke. This sounds like the things I would want from my car consultant who would advise me on how to take care of my car. I want my car to last long, be healthy, and financially viable. I am not sure what a happy car would look like.

There are emerging models out there that will provide this type of service. And making consumer based decisions around the small stuff may become common. But as a means of controlling healthcare costs, no way. We all know that the majority of health care costs come from few people with chronic conditions. If I need to have my oil changed maybe I can shop the market. But if I need a new engine I would hope to have a very educated mechanic at my side to help me make the best decisions.