Independent Consultants Declare Old Model Fails Customers

This summer — and at Independence Hall in Philadelphia, no less — a group of 30 benefits consultants signed their own “declaration” outlining a novel strategy based on collaboration over competition.

By Randy Barrett

Published September 08 2017, 4:03pm EDT

When in the course of human events it becomes necessary to blow up old employee benefit models, a group called the Agency Growth Mastermind Partnership has declared a new way of doing business.

This summer — and at Independence Hall in Philadelphia, no less — a group of 30 benefits consultants signed their own “declaration” outlining a novel strategy based on collaboration over competition.

“We know the industry is changing in profound ways,” says Nelson Griswold, president of Bottom Line Solutions in Nashville, Tenn. “The status-quo role of a broker doesn’t work.”

Griswold, who organized the declaration signing, had grown frustrated with the old model of selling health insurance and charging a standard 5-7% increase each year. “It’s compounded, just like interest,” he says. And then the agent reappears 12 months later only to lather, rinse, repeat.

He and the rest of the signatories are convinced that model is no longer sustainable for insurance buyers. More importantly, they say, it is specifically designed to never save a client a penny.

“I’m super proud to have signed this,” says Mick Rodgers managing partner Axial Benefits Group in Boston and EBA’s Adviser of the Year. “I think it signifies that there’s a new generation of employee benefit advisers that aren’t going to put up with it anymore.”

The genesis of the declaration started in 2013 when the Mastermind Partnership, founded by Griswold and Scott Cantrell, began sharing ideas and strategies about how to directly address the problem of costs. What they found as they talked shop was that by attacking each cost driver they could actually save clients significant healthcare dollars. That didn’t just equate to lower premiums, in many cases they could drive down annual expenses, says Griswold.

The old model has agents selling a set package of insurance delineated by a large carrier. The Mastermind group dug into the machinery and saw ways to rework the equation. Specifically, that meant becoming an expert at controlling pharmacy costs, medical management and claims management.

Also see: “EBA selects 2017 Advisers of the Year.”

If that sounds more like a healthcare consultant than an insurance broker, you’re right. “It’s a lot more work in comparison to selling a product,” says Griswold.

But it’s working, say signatories, whose small independent shops are poaching more and more business from big players. Rodgers’ firm will soon break its third year of $1 million in new revenues.

“I started in this collaboration with my arms crossed saying I don’t want to share,” says Rodgers. But he soon became converted. His specialty is aggregating companies of 50 to 100 employees into a group “so they act like a 10,000-life company.”

That gives Rodgers leverage in dealing with insurers and hospitals. But he can’t do it all alone. He often taps fellow Mastermind member Gary Becker of the Becker Benefit Group in Baltimore, who is an expert at internationally sourcing medications, and others.

‘What we have is real’
Signatory Kimberly Eckelbarger, a principal at Tropical Risk Management in Trinity, Fla., follows the money in an effort to improve a client company’s EBITDA.

“I don’t want a United Healthcare that owns pharmacy and doctor,” she says. “We layer in medication management and pre-authorization. We look to source meds domestically or internationally.”

Eckelbarger builds the team as seamlessly as possible. Her hospital repricing guy picks up the phone before an employee has surgery and makes a deal — often Medicare plus 140% — all behind the scenes.

The approach is taking Eckelbarger and other consultants in the group into the C-Suite to talk strategy with the chief financial officer rather than with HR directors who often aren’t empowered to be creative. What’s getting CFO attention is their business proposition: If you don’t save money, we don’t get paid.

“I think what we have is real,” says Rodgers. “I put my compensation at risk to prove that.”

Signatory Bob Gearhart, a partner at DCW Group in Youngstown Ohio, is new to the approach but has already brought on nine new clients with it. “I find the transactional nature of traditional insurance incredibly boring and incredibly misaligned with client needs,” he says.

His shop no longer provides insurance quotes to non-customers. Gearhart would rather have a conversation with a prospective client about cost savings.

Also driving the group is a keen awareness that independent brokers must compete more effectively with big players — or face getting bought out.

“We truly want to remain independent,” says Eckelbarger. “It’s kind of sad. They acquire people running a good agency but then cut pay, and within two years your top talent is walking out the door.”