Category Archives: HR and Benefits Technology

The Health Care Solution Can Be Found in the Dunkin Donuts Drive-thru


Almost every morning on the way to work I go through the Dunkin Donuts drive-thru and get a large coffee. On an average day there are two or three cars in line. If it is a school day and my timing is off there may be 4-5 cars in line. But every now and then there are 10-15 cars in line. The first time I saw the big line I thought they were short-handed. However, when I pulled up to the drive thru speaker and ordered my large coffee I was asked what kind of free donut I wanted with that. Yes, it was buy a large coffee and get a free donut day. My first thought was that I needed to lose fifteen pounds and don’t need the donut. My second though was that I could not believe how many people changed their morning routine to get a free high calorie food item that costs $1.20 because they purchased a coffee. As a psychology major I came to the simple realization that this is real human behavior in action.

This gets me to what I have always believed about the U.S. health insurance and health care market. I believe that the major obstacle to achieving significantly lower costs are laws and rules that prohibit normal and instinctive human behavior. If we simply unleashed the power of an individual to act in their own self-interest as they do to get a free donut, the entire market would react to meet the demand that this behavior created. Costs would drop like a rock as insurance companies, doctors, hospitals, and drug companies restructured their businesses to accommodate this new buyer. These lower costs would also free-up needed capital to cover those that need a safety net.

Most can’t imagine this new world because their minds are stuck in the current model. The new models would be very different. Maybe insurance products would not be as complex. I often reference how Steve Jobs was a uability fanatic. He cared about the fonts on the cell phone. If the iPhone wasn’t easy nobody would use it. Apply the same logic to health insurance. Would some company design an easy to understand product? I always make fun of a prescription drug plan that I saw that had 12 different ways to get reimbursed for a prescription. Does anyone really understand what a non-formulary non-network drug is?

A few years ago, I read that 87% of employees had one health insurance option through their employer. That may be a little higher today but still a low number. With almost every other product I purchase I have dozens of options. Dunkin Donuts has 20+ donut options. The local ice cream place has 30 flavors and that is just one place. How many different cars can I buy? A buddy of mine owns a vodka business. How many types of vodka or beers are there? Yet with health insurance I have one option and the price is going up 15% every year. Maybe there is a relationship between these two stats.

I read all these articles by brokers and others about working with employers to try and control health care costs. In my opinion, while it is necessary in today’s world, it is all garbage. It is a temporary fix. I know this may be blasphemous to say such things in the world that I travel but I really don’t think employers want to be going to work and worrying about how to control the claims of their employees. I often say that the best way to control costs is to not hire old fat people. The current market does promote that type of discrimination.

The two areas in then U.S. where there is easy access to capital are in health care and college education. These are also the two areas where costs are exceeding inflation by a mile and are the biggest burdens on our society. In health care employers pay a large part of the premium taking the obligation away from the individual. In education the student loan programs give loans in the hundreds of thousands of dollars to young people who have no job, no credit, and have no idea what $150,000 in debt really feels like. The solution to both is to change the incentives to drive down costs. It seems so simple that I really can’t understand what is preventing this from happening. If a free donut can change human behavior in this way then why not try it in health care and education. I bet it would work.

Redefining Employee Benefits


When it comes to the benefits brokering business you get people or companies labeling themselves in many different ways. When I started in the business the common title was a Group Insurance Broker. Some added the label “Consultant”. Over time the term changed to Employee Benefits Advisor or Employee Benefits Consultant. I guess in the end you can call yourself whatever you want but the market really doesn’t care. What an employee values as a “Benefit” to working at some employer is something that is personal to that individual. The consumer or customer, or in this case an employee, will determine for themselves what is a benefit and what is not. Even the employer may be offering “benefits” that their employees don’t value much as a benefit to working there.

I think we are in the middle of a redefinition of what Employee Benefits is. A 23-year-old entering the workforce with a ton of college debt more than likely does not view a health insurance plan with a $3000 deductible as much of a benefit. Most don’t see themselves incurring claims over $3000, and if they did, they don’t have the $3000 in the bank to pay the deductible. My son is that 23-year-old and that is what he and his friends told me when I asked them. Granted, this is not a large sample size.

Mark Bertolini, CEO of Aetna, who has implemented some of the most progressive employee benefits programs for their employees says, their goal is to help employees be “happy, healthy, and economically viable”. Not a bad objective, and I would assume this would help their employees be more productive. I think most people strive to be happy, or at least happier, so helping people be a little happier is a worthy goal.

When a 25-year-old single mother with no money in the bank has her refrigerator break down that is a bad day. When a 40-year-old has their spouse ask for a divorce unexpectedly that is a bad day too. And when your 87-year-old father has dementia and needs to be put in a nursing facility that is a bad day for you and your 89-year-old mother who is slowly losing her partner. These bad days suck the happiness out of most people and this almost always leads to lost productivity at work, at home, or almost at any endeavor. It is hard to stay focused when something else consumes you.

This emerging market demand to help people through their workplace has resulted in a significant amount of capital being invested in new companies providing products and services to fill the need. These solutions include wellness, nutrition and smoking cessation programs, financial fitness, college loan payment support, employee loan programs, help with bad credit, and more. At Aetna, they promote yoga and pay employees to sleep more in additional to many other programs. Aetna claims that these programs have saved them millions of dollars through improved employee productivity and a reduction in sick days. This is certainly a different employee benefits world.

For employers, the idea of providing a benefit to employees should be a good thing. Who doesn’t want healthy, happy, financially viable, and productive employees? For many though, the number one employee benefit, health insurance, has become a necessary evil that still leaves employees with a financial burden. And what employer wants to come to work and worry about managing the health claims of their employees to keep down costs and maintain profitability? You would think they already have enough to do running whatever business they are in. In addition, they are essentially delivering “bad news” once per year when they raise employee contributions. This change has made health insurance much less of a benefit. And many people believe that it is rising health care costs that is holding back salary increases. So, indirectly, employees are really paying for the health insurance through lower incomes.

As these “new benefits” enter the market there are challenges. Employers aren’t sitting there with the budgets to provide all these solutions. HR departments, that are already strapped for time, don’t have the capacity to evaluate, purchase, communicate, and administer such programs. And many programs only address a subset of a population. A 48-year-old overweight diabetic has different needs than a 23-year-old triathlete with no money who just crashed his car. Meeting the needs of a broad employee population is not easy. While today these may be new ideas, there may be a day in the near future when this will be an expectation of employers.

Helping employers meet the needs of this changing market is an opportunity that can also be exciting. The idea of helping someone have a “better day” because you provide an outlet for an individual that has some immediate need, can be rewarding. But, as stated above, this is not easy. As the definition of employee benefits is redefined, it may also redefine what people call themselves who serve this market. It may start separating the traditional Group Insurance Broker/Consultant from those providing redefined Employee Benefits Consulting. Those lines are blurry today. They may not be in the near future.

The Zenefits/OneDigital Partnership – It’s Magic


You may have seen the news about the Zenefits/OneDigital deal and the how Zenefits will now start working with brokers. This news reminds me of a magician performing a magic trick. They get you to focus on one hand while the other is where most of the action is happening. With this new partnership, most brokers are probably focusing on this competitor named Zenefits. The real story however is about the competitor named OneDigital.

The details of this relationship and how Zenefits may partner with other brokers has yet to come out. Let me speculate here. First, I would assume the OneDigital deal with Zenefits is similar to what OneDigital has done with other brokers in their small group outsourcing business. OneDigital gets 50% – 60% of the commissions to manage the business and the other broker gets 40% – 50%, or something like that. Without some significant share of the commission being retained by Zenefits this deal would not have happened. If Zenefits was giving away free software then they certainly can’t give away all the revenue and still employ all their people.

I would assume that any broker that wants to have a relationship with Zenefits will have to provide what OneDigital is doing. Handle all the service for 60% of the revenue. Or if they want to sell Zenefits technology, I would imagine the fees would need to be closer to what the market is.

The thing about OneDigital is they built a business based on leveraging technology in the most optimum way to drive down costs and provide better service. Brokers tell me all the time they can’t make money on small group for 100% of the commission yet OneDigital does it with only 60% of the revenue. How can that be?

The idea of combining HR/Benefits/Payroll technology with services is something we have been touting for years now. In fact, a shift in our business was made because of the need to provide the united services around the technology. Even Namely recently announced they are moving from a software as a service model to software with services model. These services include benefits brokering along with benefits administration and of course, HR and payroll.

The one-stop-shop for everything HR is an attractive value proposition for employers. Mike Sullivan, One Digital’s Chief Growth Officer stated in today’s Employee Benefit Advisors article that, “In a very client-centric way, the alignment of these two platforms makes sense for small businesses.” Indeed, it does.

This is not OneDigital’s first play in this space. It was less than two years ago when they announced their investment in GoCo. The title of the press release said, “GoCo Takes Zenefits Head on with Digital Insurance Partnership and Investment”. You can see that press release here. Even today Mike Sullivan is still listed on the GoCo website as a Board Member. I don’t know where this leaves that relationship.

What will come out in the coming days or weeks is how Zenefits plans to partner with other brokers. I wonder if and how the insurance commission is going to be leveraged to deliver this joint offering. Somehow, I don’t think this strategy of benefits commissions subsidizing HR technology game is over. Firms like Gusto and Namely are still combining benefits brokering with HR/Payroll technology and services. And we all know that other brokers are subsidizing systems across the country to get new business. As I have stated in the past, the idea of giving away free technology to get a broker of record started at least a dozen years before Zenefits was even founded.

Personally, I don’t think Zenefits has anything special, but OneDigital does. So, while most brokers are paying attention to what they perceive as the fall of Zenefits, I think the competitor to look out for is OneDigital. They will be knocking on your client’s door.

Note: This article is wildly speculative, but it is my blog. As more information comes out I will write again.

What is the Speed of Your Benefits Business


I often wonder why the benefits world is so slow to advance new ideas and new technology. I have been in the business for over 30 years yet have seen very little evolution relative to other industries. In my personal life, almost everything has evolved. The way I do my banking, communicate with friends and businesses associates, book an airline ticket, turn lights on and off in my home, pay at Starbucks, or get around a city, have all changed. Things are easier. Yet, for the most part, the benefits business is almost still the same as it was when I got in the business in 1986. Up to this point lack of change has not significantly impacted those in the business. I think that is about to change.

I started my career in finance at General Electric where the CEO, Jack Welch, was good at putting things in perspective. One quote has stuck with me and that is as follows:

“If the rate of change on the outside exceeds the rate of change on the inside, then the end is near.”                                  Jack Welch

Since I have been running a business I have heeded that advice. We try hard to change with the times and it isn’t always easy. I would say it is never easy. But we haven’t sat still.

With all the attention to health care and health insurance in the U.S. I have spent a great deal of time researching the market so that I can make an educated guess as to where the market is headed. What I have seen is that the outside world, (outside of the current benefits market including carriers, brokers, TPA’s etc..) is moving much faster than the inside world. If you only looked on the inside; at broker and carrier conferences; read benefits magazines or blogs; or listen to one’s buddy in the business; you would miss what is going on outside. The outsiders don’t care about the insiders. Unlike the past 30 years, new technologies, new business models, significant capital, a populace looking for better solutions, and government debt that is unsustainable, are the catalysts for change that exist today and not at any time in the past. Things are different.

A changing health care market is right under everyone’s nose yet many don’t see it. The Apple Watch, an Amazon Echo, Bitcoin and Blockchain technology, Artificial Intelligence and machine learning (highlighted on 60 minutes) all can be the foundation for huge changes. Never mind simple things like video conferencing, online chat and text messaging, and bots.

A few years ago, some benefits organizations started pushing Private Exchanges as some new idea. I wasn’t buying it. I sold similar plans in 1987. Many think they are offering some game changing idea, but most are simply different packaging of the same thing.

In the benefits business, small brokers may not have the capital to make the changes needed to keep up with the outside world. Many larger firms appear to be building moats around their businesses hoping the outside world won’t touch them. And as the old saying goes, it takes a long time for a big ship to change its course. The outsiders will just go around or over the moat anyway.
One doesn’t need to invent everything to have a sustainable business in a changing market. You may be able leverage the tools or resources invented by others to compete effectively. But all this change is not easy. Yet we all know that “Hope” is not a strategy.

So, look around and not just at your competitors or at some broker conference. When your Apple watch gives you your pulse. When you talk to your Amazon Echo. When you video chat with your son or daughter. When you turn on the air conditioning in your house from work. Wonder why this isn’t happening regularly in the benefits business. Is the outside moving faster than your inside? If so, well hoping Jack Welch is wrong is probably not a good strategy.

Webinar Invite – Taking HR to New Heights


2017_webinar_hr_without_limits_linkedin_mast33

For those employers interested, we are conducting a Webinar about HR and HR Technology that can change the way you think about HR. We guarantee you will hear a perspective on the market that will get you thinking. We have done this live and employers have said, “You made 4 or 5 points that I have never heard before.”

The market is changing and the opportunity to “Take HR to New Heights” exists. The problem is most employers don’t get there because of all the obstacles in the way. We analyzed the market and identified 54 obstacles to success. This webinar will expose those obstacles and provide an action plan to take HR to New Heights.

If you would like to attend please click on this link. REGISTER NOW . This is reserved for employers or partners of ProHCM only.

The Southwest Approach to HR and Benefits Technology


Recently I flew from Boston to Ft. Lauderdale on a Boeing 737 with engines made by General Electric. I had a window seat, Wi-Fi, and I got a Diet Coke on the plane. I reached my destination comfortably and on-time. A few weeks prior to that I flew on a Boeing 737 with GE Engines from Boston to Chicago. I had a window seat, Wi-Fi, and a Diet Coke. I was much less comfortable and my flight was 45 minutes late. Boeing was terrible on my Chicago trip.

What is wrong with my last statement? The experience I had on my first flight was from Southwest Airlines and the second was Delta. The technology these airlines used was, for the most part, exactly the same. The experience however, was much different. Boeing was not responsible for my expected outcome. Southwest and Delta were.

Southwest entered a business with non-proprietary technology and managed to shake-up the industry and become one of the most profitable airlines year-in and year out. They looked at every part of the airline business process and changed things that got in the way of achieving their main objective. This lowered costs, made flying more affordable, and improved outcomes while enabling them to be profitable. They didn’t really invent anything. They simply applied new processes to a business that was ripe for a change.

The same opportunities exist in many industries where the technology is simply the tool. Company A creates a product and other companies either use it for their business as Southwest does or they resell, implement, and service some technology. The differentiator in the end isn’t the technology, but the services around the technology.

In the HR and Benefits business many service providers including benefits brokers seem to be missing this concept. They think they have to bring employers the best “aircraft” versus understanding the service model needed to provide better outcomes. The result of focusing on the technology is a lack of understanding of the services.

Another misperception when it comes to technology is the cost. In many industries, the cost of the technology is small compared to the cost of making it run the right way and supporting it. When I fly from Boston to Chicago the majority of the costs are for things other than the aircraft. I saw a statistic that said the cost of the aircraft itself on a per person basis was around $30 per flight.

When it comes to HR and Benefits technology these same rules apply. The cost of the technology often pales in comparison to the cost of implementing, supporting, and operating the system. Yet many are still focused on the cost of the technology. I regularly replace low-cost benefits enrollment systems that actually drive costs up because of all the necessary workarounds because the technology lacked functionality. If I need to fly from Boston to Chicago a single engine plane would not be the optimum technology.

So, when it comes to Benefits technology you must ask yourself, are you Boeing or are you Southwest? Or are you neither? Are companies like ADP, Paychex, bswift, or Namely, more like Southwest or are they Boeing? Or are they both? Maybe trying to be both is the problem.

The HR and Benefits technology business, and maybe the benefits business as a whole could use a little Southwest. While your competitors are looking for that better jet the opportunity to help the employer in their journey is much greater. You can even drive down costs more by understanding the process than beating up some technology vendor. The result can be lower costs and better outcomes. Who doesn’t want that?

“Alexa – What is my deductible?”


When it comes to adoption of technology simple is most often better than complex. Steve Jobs and Apple went to great lengths to make their products simple. Without user adoption products fail. Current technology trends continue the move towards simplicity with the advent of artificial intelligence and personal assistant tools like Amazon’s Echo and the Google Home. Before you know it, these tools will enter the benefits world. The question is, who is going to be first and best? And if I am a benefits broker how does this impact my business?

While many brokers are aware of the vendors that call on them or have tradeshow booths at industry conferences, I believe the benefits technology race is going to heat up with new competition entering the market. These new competitors see the market opportunity to automate large segments of our economy including health insurance and health care. You may have heard of some of these companies like Microsoft, Google, Salesforce.com, and Apple. This would be in addition to current leaders such as ADP and Paychex. The stakes of the game will change and the price of entry, from an investment standpoint, is in the hundreds of millions of dollars. Those with the capital will quickly outpace those with less capital.

Don’t be surprised when you start to see major mergers and acquisitions in the HR and Benefits space. Could Microsoft buy Ultimate Software? Why not? They already purchased LinkedIn and recently hinted at getting deeper into the HR space.

When I look at products like the Amazon Echo and Google Home I see products that have very quickly grabbed market share with high rates of adoption. My wife, who is not an early adopter of technology, quickly became a user of Google Home. Why? Because it is easy. Would she have a better understanding of her health insurance if she could simply ask Google? Absolutely!

Benefits technology, on the other hand, has not had broad adoption by employees. Yes, employers have bought systems or brokers have given them away, but when you look at utilization on the employee side it is abysmal. I believe the reason for this is because there is not enough value as a stand-alone solution to generate broad adoption. Keep in mind that the majority of people hardly use their health care in a given year so there is little need to access such a system. I don’t know about you but I can hardly remember the login to my computer never mind something I may not use for 6 months.

The next generation of technology in the HR and Benefits area is going to have broader and “everyday” value, while being much easier to use. Market leading vendors, especially those with a great deal of capital, will invest in the latest technologies to try and win the technology race and gain more customers. And before you know it you will be saying the following:

“Alexa, is Dr. John Smith from Boston in the Blue Cross network?”

“Ok Google, request Friday off from work?”

“Hey Siri, how much does the average office visit cost?”

“Alexa, what is the balance of my 401k?”

“Ok Google, transfer $500 from my savings to checking?”

The advancement of technology and artificial intelligence has enabled many to have more personalized user experiences. Your Amazon Echo will “get to know you”. Maybe in the near future your doctor will get to know you a little better too.

Many benefits brokers have chosen some technology vendor with a mission of putting as many clients on the system as possible. This is a risky position competitively as more advanced solutions from highly capitalized companies come along. I don’t know many sales people or business owners in any industry who like running around with the 8th best product. Even more so when it is not necessary. The market and your customers do not care if you have invested thousands of dollars on some technology that may quickly fall out of favor.

One should take the advice of Jack Welch, ex- CEO of General Electric who once said,

“If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”

For those that have purchased the Amazon Echo or Google Home you don’t have to look far to see that the outside world is changing faster than the inside. The health insurance and health care industries often feel like they are moving at a snail’s pace. Private Exchanges were lauded as change when they really are a reincarnation of cafeteria plans from the 80’s.

With the Trump administration, changes in health insurance legislation may create a shift that empowers the consumer. The industry may need an army of people on the front lines to help the industry move to a whole new paradigm. The vendors will need help and the employers and employees will need it too. The technology is there. Alexa is ready. Are you?