There is one job that plays a central role to fixing the healthcare mess: the benefits consultant. No one has a bigger influence over health purchasing than benefits advisors.
This Job Could Save America
Published on Published onFebruary 8, 2018
When one looks at the collateral damage from how we handle healthcare, it’s hard to not come to the conclusion that the legacy healthcare system is the biggest immediate threat to the American Dream and way of life. At the bottom of this article, I’ve listed the direct byproducts of an under-performing healthcare system (e.g., devastated retirement accounts, flat household incomes). Those items can be addressed by fixing how employers purchase healthcare.
There is one job that plays a central role to fixing the healthcare mess: the benefits consultant. No one has a bigger influence over health purchasing than benefits advisors. We’ve been fortunate to work with the most forward-looking benefits advisors in the country. What’s more, the greatest percentage of healthcare purchasing is done by the private sector.
In this article, I refer to my book, The CEO’s Guide to Restoring the American Dream. You can get it on Amazon or download it for free here.
Benefits consultants only need to look at real-life examples like Enovation Controls (see case study in the book) who found solutions that resulted in huge savings to the company and employees. While most employers and employees have seen their costs massively spike, Enovation Controls employees have had their benefits costs stay flat over the last 10 years. The company absorbed some cost increases but those were managed as well. Enovation Controls spends 30% less per capita on healthcare than comparable companies.
Having spoken to hundreds of employers in the last year, it’s clear to me that they defer most of the benefits decisions to their consultants. Unfortunately, not all benefits consultants have been as forward-looking as others. The byproduct is the benefits consultants have created a situation where their client CEOs and CFOs are failing in their fiduciary responsibility to their shareholder in contrast to those who use health benefits as a source of competitive advantage. Why? Health benefits are typically the second biggest expense (after wages) for most employers. With such a large-cost item, companies are squandering massive shareholder resources while also impairing their employees’ future. The good news is that the vast majority of employers are pouring more than enough money into health benefits and retirement plans to have outstanding healthcare and a comfortable retirement. The bad news is the status quo is getting us neither.
The most forward-looking benefits consultants realize there is not only an opportunity to transform the future of their client companies, they can also lead their communities via Economic Development 3.0 – Playing the Health Card. New technology has facilitated the amazing power of deflationary economics and created economic growth for many sectors. Unlike most industries, new technology in healthcare has been a vehicle for hundreds of billions spent on harmful overtreatment.
One of the first lessons I learned as a freshly minted grad going through Accenture consultant training was that one must first fix an underlying process before applying technology. If you don’t, you simply make a broken process move faster and usually cost more. Organizations such as Enovation Controls, Rosen Hotels, Serigraph and many others recognize that it’s important to apply components of the Health Rosetta (the reference model for ideal health benefits purchasing) before applying technology. Only then does it make sense to apply technology.
As a technology entrepreneur and investor, this is the core reason I’ve become focused on accelerating the push to a dramatically smarter way of purchasing healthcare. As any healthtech entrepreneur who has tried to sell into legacy healthcare providers will tell you, it’s virtually impossible. They have convoluted purchasing processes that are leading to billions of dollars squandered. In contrast, the Quadruple Aim overachievers doing the best job tackling the most challenging patient populations have rational decision processes and naturally buy modern technology when there is a need.
Once armed with information from the Health Rosetta, benefits consultants have an opportunity to change the trajectory of not only their client company but also the country. One thing I’ve seen happen time and again in healthcare is there is resistance to change and then seemingly out of nowhere a sea change happens. The best benefits consultants see the once-in-a-lifetime opportunity in leading their clients to a far better place than the status quo.
Collateral damage from the American healthcare system
Listed below are 10 examples of the collateral damage mentioned in the first paragraph of this article. The first few are a direct result of how employers are addressing healthcare needs. The next few transcend both private and public payer programs. The rest of the list are a function of how healthcare is handled at the state and federal level. While that is out of the direct control of employers and benefits consultants, in many sectors, private sector innovation gets copied in the public sector.
- Nest eggs have been crushed due to healthcare costs. 68% of working age people aren’t participating in an employer retirement plan. As a consequence, the majority of Americans have next to no retirement savings. Even with Medicare, it’s estimated that there are $300,000 of costs not covered by Medicare not to mention other living needs. Retirement accounts at JP Morgan Chase, Fidelity, MassMutual and TIAA-CREF would be far bigger if healthcare wasn’t stealing from retirement savings.
- Household income has been directly impaired by healthcare costs. Despite significant employee cost increases over the last 20 years for organizations, almost all of it has gone to fund healthcare’s hyperinflation rather into worker’s pockets. Washington Post, NY Times, WSJ, Time and others have reported, healthcare cost increases have been borne by both the employers and employees, not to mention shareholders.
- Consumers rate health insurance lower than every other industry on the Net Promoter Score (see NPS scores here). Contrast CIGNA’s NPS at -1% (the lowest health plan is -24% and highest health plan is +28%) versus next generation players such as Iora Health who have NPS scores in the 80s.
- There are unprecedented levels of dissatisfaction and burnout by doctors. A major reason is we’re layering more and more on top of a design failure.
- A new wave of exciting, health-improving healthtech is held back due to outmoded health purchasing practices (see Tech Industry, Heal Thyself for more).
- As US News & World Report found, due to healthcare costs, cities are unable to perform basic services such as maintaining roads. More dramatically, there are 100’s of millions of unfunded pension commitments due to healthcare costs.
- At the state and federal level, trains are going off the tracks and bridges are falling into rivers as healthcare costs have starved budgets of infrastructure investment. Both the NY Times and the non-partisan Center on Budget and Policy Priorities have reported on the tragic consequences of the spending on healthcare waste and over-treatment while roads, airports, bridges and rails fall apart.
- As Bill Gates pointed out in a TED Talk, out-of-control healthcare costs are directly devastating education budgets that are critical to our long-term future.
- As Atul Gawande pointed out in his book and in the recent PBS Frontline special, we are doing a horrendous job dealing with end-of-life issues leading to a tortuous experience for those at the end of their life and it needlessly squanders money in the process. Knowing the limits of medicine and what impacts quality of life, the fact is doctors die differently from the rest of us using much less intervention (not to mention cost).
- As a former Chair of the Council of Economic Advisors once said, “We don’t have a debt problem. We have a healthcare problem.“
Fortunately, the antidotes for the items listed above have all been created and proven as I outlined in the CEO’s Guide to Restoring the American Dream.
This article was also published on Forbes.
Dave Chase is the co-founder of the Health Rosetta Institute (a LEED-like organization for healthcare), Managing Director of the Quad Aim Fund, Executive Producer of The Big Heist, and author of the book, “CEO’s Guide to Restoring the American Dream – How to deliver world class healthcare to your employees at half the cost.” Follow the link to the book below for a free download of the book. Chase’s TEDx talk was entitled “Healthcare stole the American Dream — here’s how we take it back.” See the Health Rosetta Institute website for how to get involved, resources and how to join others to support its mission.
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