Seven Key Questions to Transform your Health Care Plan, Boost your Bottom Line and Improve Employees’ Experience

In business, driving robust results requires asking the right questions. It’s a habit I honed in transforming the self-insured health care plan of a Fortune 500 public company.  As Chief Human Resource Officer (CHRO), my team worked with with Finance, IT, Purchasing, Legal, Communications and other key staffs to dive deep, reimagine and reconstruct a health care plan that significantly reduced cost and delivered more value for our employees. As a leader in your company, you can do it too.

Back to the Baseline   

In my last article, I reviewed how we built a business case for change.  As with most companies, our health care plan was more than 3 percent of total cost out of our annual budget. And while it was our employees’ most valued benefit, they found it lacking. So we collaborated across the enterprise to transform our health care plan. The result?  We  generated huge savings, a material increase to the bottom line, and provided a better quality of care. Every. Single. Year.

Start with Your Supply Chain  

Most business leaders are not health care experts. Including me. So when I started studying self-insured company healthcare, I began with the basics – the supply chain.  There were lots of components. Payers, providers, medicare, third party administrators (TPAs), networks, primary care, specialists, pharmacy benefit managers (PBMs), case management. You can drown in the detail.

But you don’t have to.

Simplify the Complex   

I knew we could boil things down to the basics. Companies pay for most of self-insured medical plans. And the recipients of that care – the ultimate “customers” – are their employees and their family members.  The rest of the supply chain falls between the employer and those covered by their plans.  They generally include multiple elements, outlined in this simple graphic:

As the graphic depicts, health care insurance companies or carriers generally manage all the components between employers and their employees.

Carriers have taken on this expansive role because employers have delegated their responsibilities in this space to them. Yet there are alternative ways to manage this model.

Disintermediation and Disaggregation  

More and more companies are diving into the detail of their health care plan supply chains. Instead of letting carriers and / or consultants determine their strategy, they are pulling the supply chain apart, analyzing and refining key functions, and putting it back together again. This disintermediation or disaggregation helps determine your pain points, your proof points, and your opportunities for progress.

Believe me – it’s worth it. At my company, this process allowed us to reduce our per member per month health care spend over five years – while our competitors’ same costs increased between 40 and 50 percent. And at the same time, our employees received better health care.

So how did we do this? By actively engaging. And asking questions.

 The Starter Seven   

If you want to improve your bottom line and your employees’ health care, I recommend you start with these seven key questions:

1. Do you view your health care plans as a variable cost or a fixed cost?   
   This is a great place to start. Fixed costs are, well, fixed. Variable costs are manageable.  And good news: self-insured health care is a variable cost. You can manage it! This realization, as with other costs you can control, is the impetus to ask more questions. Like, where waste can be eliminated. Where to leverage technology. How to make your spend more efficient and effective.
2. Is your health care plan helping  employees and their families get more healthy? 
   Many leaders think health care is reactive. But what if it isn’t? By asking questions about repeat and high cost claims, you can explore preventive practices and care. What if a health care plan could deploy predictive analytics?  What if it could share data on the best doctors and clinics?  Or deploy bolt-on strategies to help employees prevent or manage diabetes, cancer, musculoskeletal issues, and other sadly common health concerns?  Many companies are reinventing their health care approach to drive better outcomes for employees and their families.
3. What type of year-over-year cost increases are you seeing in your medical plans?   
   Remember: this is 3% of your total cost.  What does the trend look like?  How does it compare to market?  What is causing variability?  What assumptions are your carrier and consultants using to look at previous performance and forecast future performance?  This level of detail often discloses double-digit opportunities to decrease cost.
4. What’s the NPS of your health care service platform? 
   Let’s face it – for the average person, health care customer service stinks. Changing every health care interaction is beyond our capabilities. But as business leaders, we CAN change our employees’ experience with our health care plans. Picture walking into the lobby of a luxury hotel. There’s a smiling concierge to help with any question. Now, picture an employee with that same concierge-level service in the “lobby” of health care. Not only a concierge, but an advocate. We designed this service into our plan as part of my company’s health care transformation. And it worked.  In a town hall about one year after we changed our plan, I asked employees what was going well at work. One team member raised his hand to say he appreciated the recent benefits changes – particularly the health care concierge advocate system. He loved it.
5. Have you used an RFP process to really understand what’s in your carrier and PBM contracts?
   There’s nothing like bidding out a service to understand what you’re really getting. What are your medical contract minimums and maximums?  What is in bounds? Out of bounds? What are the implications of the carriers’ in-network and out-of-network decisions? By asking these questions, many company leaders learn that this level of detail and nuance in their medical and pharma contracts contributes to inflated cost increases. Shining a bright light on your contracts and reminding your health care partners that there is competition will drive down cost, encourage innovation and improve service.
6. What is your experience with pharma benefits?
   For most self-insured employers, prescriptions represent 25 to 30 percent of total health care costs. That translates to 1 percent of a firm’s overall expense.  In drug dispensation!  It’s something that should be understood and managed. How are you dealing with GLP-1s?  How much of your spend is in specialty drugs?  What are your rebate levels from the PBMs?  Do you understand how those rebates are calculated?  Lots of cost here. And lots of opportunity.
7. Do you have access to your employees’ aggregate medical data to understand performance, issues and opportunities? Do you analyze and apply that data?
   I recently saw a t-shirt that read, “It’s just an opinion until you have the data.” That’s especially true in this space. Many of the above questions delineate data’s importance in health care decision-making. And your company’s health care plan has plenty of it.  Do you have complete access to all of that data?  How do you get the analytics completed?  Internally, or through a consultant?  And if you leverage a consultant, are you confident they are objective? Health care is not only big, it’s often emotional for your employees and their families. Data and analytics drive better decisions. And can help deflect those emotions.

Where to Go from Here  

In article 1, I started with the business case. In this one, I laid out key questions to help prioritize where and how to transform your health care plans. The process is a team sport, engaging nearly every function in your company. In my next and final article, I will share a few strategies to reshape your health care plan. I strongly recommend you engage in this opportunity. For the betterment of your employees, and your bottom line.

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Written by Thomas Plath.