A Texas school district is out to bid for a new health insurance consultant. The usual suspects will apply and the outcome is predictable. A brand name, national brokerage/consultancy will win the account and life will go on with little changed.
But what if late one afternoon a lonely, generally unknown casually dressed and unkempt elderly insurance consultant no one has ever heard of shows up shortly before the bid deadline and submits a two page proposal including fees to be charged.
“My name is Thomas Edison and I have invented a better way to control health care costs. Enclosed is my proposal to do the same for you.“
The bids are opened and read aloud. When Tom’s bid is opened laughter erupts throughout the room. “Whaaaaat! Two page proposal! Who is the knucklehead who submitted this! Throw his proposal out! It doesn’t meet specs.”
“Wait!” says a board member in attendance. “It says here he won’t get paid unless he saves us money without reducing benefits. I think we should give Tom a try. After all, our current consultant hasn’t saved us a dime all these years with costs going up every year while we pay him $100,000 for the privilege of paying more and more, year after year.”
So lets imagine Tom is hired and given free reign to apply his inventive risk management strategies towards saving money while improving benefits and lowering costs at the same time. Fast forward 16 months…………….
All financial barriers to health care have been removed. Gone are deductibles, copays and coinsurance features common to traditional health plans. Whereas before not all employees enrolled in the plan due to costs, now 100% of all employees are enrolled. Mature claim costs have reduced 32% over the previous year.
Tom gets his value based bonus of $500,000. And the school district, plan members and community health care givers lived happily ever after.
Shortly thereafter Tom sends the district his resignation letter. “I want to thank you for the opportunity to serve you this past year and a half. Now that you know how to manage your plan better I am confident you can continue on without me with continued success. As always, please know if you need my assistance from time to time please feel free to reach out to me and I will be happy to assist.“
“This is a (mostly) untrue story” By Pinnochio
