Independent TPA’s, especially with those with out-of-the-box solutions, are second class citizens scrabbling for business in the insurance brokerage community.……..
The broker community distribution channel has been an essential component of medical insurance, HMOs and managed care plans for forty years now with an increasing integration almost exclusively and ultimately benefiting the BUCAs over the last 15+ years.
Independent TPA opportunities to win consistently with the brokerage community at large has been, in my observation, over these years an exception to the rule.
When you survey the broker community, which I have had the opportunity to do in the many years I’ve been in the business, you will come away with the impression that roughly 75% of brokers do not touch self-funded plans and of the 25% that do probably 75% of them only work with BUCA administered plans.
Brokers see themselves as “independent” outlets facilitating access to the market in general for their clients and are not focused on solutions and specific profiles of clients. Consequently if you work in the broker community with an independent TPA-administered plan that carries a market-changing capability which we have, you will get access to only 25% of 25% of the customer market.
The BUCAs, in this dynamic, have built an insulating barrier against competition. Any success in this environment is exceptional and transitory and, in my opinion, short-lived. I firmly believe for success we will have to get completely outside of this. It is for these reasons independent TPAs, given the good solutions they bring, are not huge. This end of the market is unstable and that’s by design.
The key for independent TPA’s is to find a handful of representatives who are capable and willing to disrupt this dynamic market and to nurture a preferred and mutually respective, even protected, relationship.