Orlando-based Rosen Hotels have shown how straightforward it is to slay the healthcare cost beast. They spend 50% less on health benefits than a typical employer while providing outstanding benefits
Florida Business Coalition Set to Revolutionize Health Benefits Purchasing
Dave Chase , CONTRIBUTOR
After many years of de minimis impact on slowing healthcare’s hyperinflation, business coalitions are doing a strategy reset . Historically, the business coalitions I’m familiar with have been “captured” by industry (pharma, health plans, etc.) who have a vested interest in ensuring healthcare spending continues unfettered.
“How many businesses do you know that want to cut their revenue in half? That’s why the healthcare system won’t change the healthcare system.” Rick Scott – Governor of Florida
One byproduct of the industry “capture” is that various industry sponsors who foot the bill of many coalitions drive meeting agendas. They share new “solutions” ostensibly to tame the cost beast. The unchecked hyperinflation over the last couple decades makes it self-evident that the “solutions” have been wholly ineffective at taming the healthcare cost beast.
Another byproduct is the resulting health benefits packages look like a Mr. Potatohead gone awry — an ear on a foot, a foot on top of a head, etc. It shouldn’t come as a surprise that the single biggest chunk of the workforce would rather clean a toilet than understand their health benefits. Like many in the industry, I get asked by friends about what choices they should make for their benefits. Otherwise brilliant people are completely baffled by benefits packages. This is no coincidence. Those trying to protect status quo (aka “Preservatives”) benefit from confusion.
Wise business coalition leaders are advising their membership to borrow an approach from budgeting — zero-based budgeting . That is, doing zero-based benefits planning where they build their benefits plan like they were a new company each year. After all, the vast majority of companies are pouring more than enough money into benefits to fund an excellent health benefits package and a comfortable retirement . Unfortunately, they are getting neither. The result is what I believe is the greatest threat to the American Dream.
Florida’s business coalition sets blueprint for business coalitions
Although Florida has 40% of the most expensive hospitals in the country, employers such as Orlando-based Rosen Hotels have shown how straightforward it is to slay the healthcare cost beast. They spend 50% less on health benefits than a typical employer while providing outstanding benefits(e.g., great health benefits, pay for employees’ college education, etc.).
The 50 top price gouging hospitals. Source: Health Affairs reported in the Washington Post https://www.washingtonpost.com/graphics/health/hospital-price-gouging/
It is no coincidence that the Florida Health Care Coalition’s (FLHCC) annual conference is being held at the Rosen Shingle Creek facility since Rosen’s track record is one of the best in the country. Rosen Hotels and Resorts serves on the FLHCC Board of Directors. Companies such as Rosen are the inspiration behind the Health Rosetta — the blueprint for how to purchase health benefits wisely.
[Disclosure: As I’ve disclosed many times, I catalyzed the Health Rosetta which is a non-commercial open-source project that provides a reference model for how purchasers of healthcare should procure health services. In my role as Managing Partner of Healthfundr, a seed stage venture fund, we invest in companies adhering to precepts of the Health Rosetta. I am keynoting the event referenced in this post.]
The agenda will include insights, results and lessons learned in the following areas:
- How Transparent Medical Networks have solved healthcare’s most vexing problem
- Understanding how Value-based Primary Care is foundational to any well-functioning health team and how it’s creating a primary care renaissance
- An overview of how Concierge Style Employee Customer Service is a cost-effective way of helping employees/members navigate the complex healthcare system
- A leading ERISA attorney who has helped employers revolutionize how they handle health benefits and ensure they meet their fiduciary responsibilities
- Lessons learned from how employers overcame the predictable “fear, uncertainty & doubt” (FUD) that incumbent benefit providers will use to thwart forward progress — the folks I call the “Preservatives” hellbent on protecting the under-performing status quo
Senior executives are increasingly realizing that despite spending vast sums of money on health benefits, the reality is their benefits packages severely under-deliver as compared to the Health Rosetta. Consequently, FLHCC’s CEO (Karen van Caulil) wisely decided to organize FLHCC’s annual conference with the Health Rosetta as the framework of Zero-based Benefits Planning. The conference agenda will be devoted to a comprehensive look at the various facets of the Health Rosetta. It will wrap up with a leading expert on ERISA plansconveying how the Health Rosetta can be codified.
The waste in the U.S. Healthcare system is more than the entire GDP of The Netherlands Source: The Future Health Ecosystem Today from Cascadia Capital
A central requirement of ERISA regulations is the role of the company as fiduciary. There’s a growing recognition that companies are failing in theirfiduciary responsibility given the vast waste that is being purchased in a typical health benefits package. With corporate Risk Management groups taking notice, companies realize that they need to exercise the same oversight on health benefits as they do on retirement benefits . Further, as company shareholders recognize that health benefits are the second biggest cost for most companies and that some companies are spending 50% less than others, it’s clear there is an earnings impact to under-performing health benefits.
Interestingly, despite large companies theoretically having the buying clout to secure a better deal for their employees, few have effectively exercised their clout. Rather, organizations such as small manufacturers and unions haven’t had the luxury of being able to absorb healthcare’s hyperinflation without doing something different. After implementing two of the components of the Health Rosetta, this small manufacturer was able to spend 30% less per capita while providing great benefits. Rather than needlessly squandering money on healthcare’s pricing failure, they invest that money in R&D (they invest more than twice what their industry peers spend).
Naturally, there is resistance and confusion around change. The company and union leaders I spoke with said that the key to their success was proactive education with their employees. They had what they called “adult conversations” about the mechanics of how money moves around healthcare. While they made the new approach very attractive, they allowed employees to continue to maintain their status quo benefits while making the new options much more attractive.
The Orwellian-esque named “consumer driven health plans” (I have yet to find that elusive consumer who “drove” for a high deductible plan) simply don’t pencil out for most American households . If a family income is less than $50,000 and they are barely making ends meet, a medical event of nominal significance can easily fully fulfill the high deductible of $2500 (or more). As many know, healthcare bills are the top driver of bankruptcies. What fewer know is the vast majority of those bankruptcies are to families with health insurance.
High Deductible Health Plans and Self Insurance trends. Source: The Future Health Ecosystem Today from Cascadia Capital
Fortunately, the leaders in Florida are showing there’s a much better path. Their approach to their annual conference will be a template for business coalitions/groups around the country. It can’t happen soon enough.
Subscribe to The Future Health Ecosystem Today from Dave Chase
Contact via Healthfundr for expertise requests or speaking engagements.