Warren Buffett said it all: “GM is a health and benefits company with an auto company attached.” In fact, it spends more on health care than steel, just as Starbucks spends more on health care than coffee beans.
CFO Magazine published the single most mindset shifting chapter I have ever written.
What’s different about employers who are winning the battle to slay the #healthcare cost beast?
Warren Buffett said it all: “GM is a health and benefits company with an auto company attached.” In fact, it spends more on health care than steel, just as Starbucks spends more on health care than coffee beans.
For most companies, healthcare is the second largest expense after payroll. This puts you in the healthcare business.
“So, how’s your health-care business doing?”
That’s the first question the [chief operating officer] of a large private equity fund’s health-care benefits purchasing group asks when he sits down with the CEO of a newly acquired company, say, a manufacturer. Naturally, the CEO will look puzzled. The COO will then show that the company has, for example, 400 members enrolled in its health plan and spends the typical $10,000 per year per member for health care. He then asks “How’s your $4 million health-care business?”
That’s when the light bulb goes on, said the COO.
One CFO implementing a #healthrosetta style plan shared how they would have had to increase top line sales revenue 25-30% to have the same EBITA (profit) impact as what improving their #healthplan accomplished. Paradoxically, the best way to slay the healthcare cost beast is to *improve* benefits (e.g., removing harmful high deductibles, adding advanced primary care, etc.).
You Run a Health-Care Business Whether You Like It or Not – CFO
