Tag Archives: advisers

Benefit Advisers Must Actually Advise

Sales is the name of the game, no matter the industry, but some professions should focus more on providing sound advice and less on promoting new and trendy products. Many benefit brokers fall into that latter category, and I say this as someone who has been in the insurance industry for 25 years.

It used to be that group insurance brokers were more transactional. Get a good product at a fair price, provide some service, and your client is generally happy. Today, that same broker must create compliance initiatives, administer COBRA, FMLA, enrollment services, ERISA advice and some human resource functions. This new responsibility requires expertise beyond what’s needed to get an insurance brokers license, yet, like most entrepreneurs, we adapt. We must, however, get back to basics.

As group benefits brokers, we must turn our attention to the core mission of our profession today. That mission is strategic consultation and education for our clients, addressing the cost of providing healthcare in this country. It is, by far, the biggest driver of the increase in the cost of, and inability to afford, group health insurance.

Certainly, maintaining an awareness of professional trends has its benefits, and often a new offering can make a big difference for clients, but advisers need to dial down the reseller role and concentrate on imparting guidance to address core issues.

Next to payroll, the largest expense for most businesses is the cost of group health insurance. Yet many benefits advisers continue to go down the same old path by providing information on the same, tired, cost-shifting plans – this despite the fact that these plans’s premiums are rising faster than the cost of living.

See also: Benefits Advisers: It’s About to Get Real  

Benefit brokers need to begin educating clients on what is really driving premiums. One significant lesson that should be learned upfront is that joining a large insurance purchasing group is rarely the solution for small to medium-sized businesses, because savings are short-term for most. The dominant problem facing health insurance prices is the cost of providing care. It won’t cost less for a small firm with a staff of 10 for an MRI or maternity stay simply because it is in a pool of 5,000 employees. Although these multi-employer plans may show short-term savings, unless there is a marked improvement in the risk pool, as with every other group collective purchasing arrangement for healthcare, it fails. And, oftentimes these plans are dangerous self-insured arrangements where the employer, and sometimes even the broker, has little knowledge of the potential risk.

The need, from my standpoint, is for businesses to embrace measures that can result in less prohibitive healthcare costs, beginning with the use of telemedicine programs not owned by insurance companies. An eye-opening statistic from the American Medical Association indicates that over 70% of all emergency room, urgent care and primary care visits could be handled via telemedicine. This is a cost-effective alternative that will reduce the employers claims cost by a weighted average of $240 to $300 per visit. Offering telemedicine as a benefit not only decreases claims and keeps overall costs down, but the employees are less likely to miss work due to a medical appointment.

An independent second opinion program is another avenue to trim costs, yet a mere 19% of health care consumers get second opinions. This is head-shaking as a study conducted in 2014 by the Houston Veteran Medical Center and the Baylor College of Medicine estimated that 12 million people in this country are misdiagnosed annually. The study went on to show a change in diagnosis by nearly 15%, as a result of a second opinion and as high as 26%. The course of treatment is changed an astonishing 70% of the time. An independent medical second opinion program can provide simplified access to high-profile medical centers/teaching hospitals, specialists, etc. in collaboration with a patient’s attending physician team, often for little to no cost. Result: Employees are less likely to miss work due to a misdiagnosis or follow-up appointments. Consider, also, that the third leading cause of death in the U.S. is medical errors.

Offering employees a choice as to how they purchase prescription medications is another cost-efficient employer healthcare program. It fosters consumerism by deploying a comparative prescription drug environment and can lower cost for the consumer and the employer, sometimes substantially. Numerous online prescription drug programs can help members identify discounts, coupons and subsidies available for their high-tier prescriptions. Current and emerging technologies aggregate these programs so immediate access to potentially less expensive prescriptions drugs are identified and easily obtained by the patient. Also, some of these programs will have deductible and copayment assistance programs designed to keep people compliant with their medication regiments. Another easy way to reduce costs.

Employers need to weigh the worth of group health insurance against self-funding; if choosing the latter, always offer a reference-based pricing option. This plan recognizes that insurance company payments to hospitals can be as much as 300% to 600% more than what Medicare would pay. Reference-based pricing plans might pay the hospital just 50% over Medicare. If an employer or local market isn’t ready for this aggressive approach, there is a solid opportunity to educate about reference-based pricing.

See also: Reinventing Sales: Shifting Channels 

Those of us in the insurance and benefits industry have the responsibility to shed light on strategies that address the real drivers of cost rather than simply regurgitating what we are told are current industry trends.

Advising With AI: A New Approach

If actuaries are the elite of the insurance industry, members of a licensed class whose workaday language is intelligible to few but influential to many, then business advisers are the interpreters of a separate yet equally important language: data. More to the point, business advisers are an independent class—hence their advisory role—in which they do much more than translate data into reports. They use artificial intelligence (AI) to find intelligence worth analyzing. They use intelligence to advance wisdom, because it takes skill to convert ones and zeros into a message that is as concise as it is compelling; it takes a different class of advisers to actualize a future that is close but hard to see; it takes verbal facility and visual acuity to present the future—to make the future present—for the insurance industry.

AI is a tool to accelerate the future. That future depends on business advisers who can explain why what seems possible is not only probable but inevitable: that AI answers the needs of insurers. Making the answers accessible—proving the answers are right—is an issue of talent, not technology.

According to Nick Chini, managing partner of Bainbridge, AI augments the models actuaries develop and business advisers deliver. Which is to say actuaries theorize scenarios—they quantify what may happen—while business advisers qualify how things will likely happen; how a business adviser infers what will happen; how the inferences a business adviser draws are the result of his fluency in data; how his education is more extensive, his expertise more expansive, his experience more exhaustive than that of a typical adviser. He is atypical, in a good way, because he represents the future of business advisory services. He may have a doctorate in linguistics or degrees in finance and computer science. He may be a former professor or a career academic.

To paraphrase Chini, what matters most is a business adviser’s ability to advise: to add value by abandoning generalities—to stop generalizing, period—and offer specifics about the future direction of the insurance industry and the course insurers should follow. In this situation, AI acts like a compass. It points the way, telling a person where to go without revealing how or when that person should start his journey.

See also: What to Look for in an AI Partner

For an insurer to begin that journey, he must know the advice he receives is right. To advise, then, is to communicate—to communicate with clarity and conviction—so an insurer has no reason not to do the right thing, so an insurer believes in the rightness of his decision, so an insurer knows he is right.

If business advisers can further what is right, to get insurers to more easily and expeditiously do the right thing before challenges arise, the insurance industry will benefit as a whole. If AI can substantiate what a business adviser recommends, if that recommendation is brief yet bold, if that business adviser can prove his recommendation is right, an insurer can succeed.

Let us welcome the chance to read—and endorse—these recommendations.

Insurance Has a ‘Triple-Legacy’ Problem

I talk to a LOT of executives on a weekly basis from all parts of the insurance industry:

  • Senior executives at the reinsurer level
  • C-level executives at the insurer level
  • C-level executives at the intermediary level
  • Regulators
  • Reporters/writers/bloggers
  • Wholesalers
  • Advisers
  • Administrators
  • Other insurtechs
  • Literally anyone who will talk about the sexy subject of Insurance!

These conversations give me an extremely interesting perspective about not only the current state of the insurance industry, but also about where we are heading.

A few themes consistently emerge during these conversations: Machine learning, AI, the role of advisers in the future and the most prevalent topic “disruption.”

Let me start by offering a perspective:

“No one needs to be disrupted unless they choose to be.”

Innovation and technology at large are about inclusion and raising the bar of a particular industry. Innovation DOES NOT mean people have to LOSE for other people to WIN. There is a WIN-WIN-WIN; we just have to be motivated to find it.

See also: Is Insurance Really Ripe for Disruption?  

We, in this part of the world, are lucky enough to truly have equal opportunity. Technology democratizes our ability to compete. WE determine what is possible, who we choose to work with, which problems we solve, etc. To turn around as an industry and say “we are being disrupted” is a completely inaccurate way of looking at the future and exceptionally unfair to those individuals/companies who are looking to create meaningful change.

Here are a few thoughts:

1) Advisers will be around in the next generation of financial advice (and the one after that). Their role will remain the same (helping people feel better about the financial decisions they make), but how they do their job will fundamentally shift. As we streamline parts of the industry that are siloed, cumbersome and antiquated, we will allow for advisers to re-invest their time into what matters: the customers they serve and their own development. Technology will allow people to UNLOCK their human potential and do what they love.

2) Technologies such as machine learning will AUGMENT, not replace, the role of amazing advisers. Many believe that as technology and automation come into the insurance space, fewer advisers will be needed. The contrarian view is that if people are able to focus on WHY they love the industry (helping people!) and we automate the functions they dislike (administration, compliance, etc.), more people will be drawn to our industry. Insurance (and all financial services) is about people, not paperwork. This may actually INCREASE the number of advisers. That is my hope.

3) You simply cannot solve a systemic problem with technology alone and expect everything else to take care of itself. Technological innovations will make today’s systems better, but they will inevitably become legacy in the future. This is the nature of technology. It is a moment in time, until the next moment.

What will be everlasting is the MINDSET that executives take to navigate the future. There is NO SILVER BULLET. This is about systemic change. We must THINK DIFFERENT and forget some of the preconceived notions that stifle our ability to effect change.

Currently, our industry is being hampered by a “triple-legacy” problem: Legacy technology, built for legacy processes, operated by a legacy mindset. Addressing each part of the “triple-legacy” challenge is required to ensure the future success of our industry.

See also: Insurtech vs. Legacy Insurance Carriers  

At Finaeo, we are dedicated to solving many of the problems that are holding back our industry and are starting our journey by helping the hundreds of thousands of advisers around the world get their time back by streamlining processes and providing them with elegant, intelligent and thoughtful technology to manage their day. We are actively seeking partnerships with insurers, reinsurers and intermediaries who also believe that advisers and their customers (the policy holders) DESERVE a better experience.

Want to know more about why you should join Finaeo? Check us out here.

This article first appeared here.

Health Insurance: Near-Record Panic?

I’ve been caught a little off guard recently. I am seeing a level of panic in the industry that I don’t think I’ve seen since Parker Conrad was threatening to drink the industry’s milkshake.

Chances are, you have been reading about the exciting trend taking root in the industry. Advisers are reengineering how they build medical plans for their clients. Direct primary care (DPC), bundled services and transparent pharmacy are just a few of the ideas strategies being put into place.

The result? Advisers now have a way to improve the level of benefits their clients receive while actually, and significantly, reducing the overall cost. That’s freakin’ awesome!!

Putting on a brave face

As awesome as I think most of us can agree this trend is for the industry and employers/employees, I can’t tell you how many times I’ve had verge-of-breakdown conversations with very sophisticated advisers. Many of you are convinced you are the last in the industry to be learning these approaches.

You are reading about the success stories of other advisers online and hearing about their implementation victories from the stages of conferences. Many of you have drawn the conclusion that the rest of the industry is putting every one of these solutions in place for every client they have.

Friends, the reality could not be further from the truth!!!

First, it’s only a very small part of the industry that is even aware of these new solutions. Trust me, we talk to agencies big and small that are sometimes not even aware of these trends, let alone putting them in place.

Second, a significant percentage of the ones talking about the solutions are talking a big game but have yet to take the first step of any meaningful walk.

Third, even the most advanced advisers are only putting these strategies together for a relatively small portion of their book. (I’m sure there are exceptions. If that’s you, congratulations; you are a pink unicorn.)

Now, don’t get me wrong, I am not saying you shouldn’t make learning these strategies a priority. Maintain a sense of urgency, but take a deep breath, relax a bit and lay out an overall strategy as to how you will position yourself to use these ideas most effectively.

But make a conscious decision to move forward with a realistic sense of the effort actually required. Way too many talking a big game have yet to figure this out for themselves.

See also: How Likely Is Zenefits to Change? 

The unintended consequence?

Too many advisers see the new trend as a silver bullet that will separate them from their competitors and drive growth. Those who try to hunt with a silver bullet are destined to shoot themselves in the foot.

As much as advisers need to be arming themselves with this new strategy, there are a few things you need to remember.

  1. Not every client or market is ready for these strategies.
  2. No one solution satisfies all the HR/benefit needs of a client.
  3. You (still) have to ensure that the foundation of your agency is strong.

Are clients really ready?

Many of these new strategies are dependent on moving clients to a partially self-insured program. Of course, this idea isn’t new at all, and you likely already know it can take a long time to get a prospect/client comfortable with this idea. And, that’s okay, educating them to the point of comfort/confidence with this idea is a critical part of your job.

But, if this is a prospect you’re talking to and you are depending on this as your single strategy to earn their business, it’s going to take a while to uncheck the Prospect box and check the New Client box.

Of course, these ideas aren’t just about moving to self-insured; there is additional education to take place as to how direct primary care, bundled services and transparent pharmacy can be managed effectively and successfully. The thing is, even once they understand, some employers just don’t want to be that involved in the management of their benefits program.

Right or wrong, some will only want a plug-and-play program regardless of how tilted that game is against them. That’s just the reality, regardless of how much you may want to help them make the change. And then it’s up to you to decide if you’re going to help them in their fully insured program or walk away. But, if you choose to walk away at this point, you’re missing out on a lot of opportunities – opportunities to still help and opportunities to grow your business.

Finally, some markets just aren’t ready to allow these solutions to be implemented. If you believe, as I do, that a strong network of direct primary care (DPC) physicians is a key to this new direction, you also understand that the framework/infrastructure of those DPC practices doesn’t yet exist and will take a while to build.

Live by a single solution, die by a single solution

I have watched many times as this industry gets giddy with excitement over a solution being introduced to the market; this isn’t the first silver bullet for the industry. It’s happened with technology solutions, compliance solutions, HR resources. The list is long.

If you put all of your chips on any single solution, no matter how important it might be, you’ll eventually lose.

As an adviser, you will never be differentiated by the solutions you offer. Your greatest chance for sustainable and meaningful differentiation is in how you use those solutions. Even if you are the first to market with a solution, the advantage will be short-lived. Every viable competitor will soon be promoting the same solution.

Besides, your clients need WAY more than any single solution. It is more difficult to run a business today than ever before, and your clients need guidance in ways they never have before.

I wouldn’t criticize anyone for a moment leading with new strategies and solutions, but I strongly advise that you better be plugging any solution you offer into a value proposition that addresses the broader needs of your prospects and clients. Face the obvious: Just because you have a powerful strategy to control healthcare doesn’t diminish your clients’ needs for help with compliance, technology and HR, to name a few.

And, with more complex solutions being put in place, the need for compliance and an effective employee communication strategy has never been greater.

If you’re going to try to live on a single idea, just know it will only work until one of the following inevitably happens:

  • You run into prospects/clients/market that just aren’t ready;
  • Every competitor arms itself with the same idea;
  • Competitors show up with the same idea and have built it into a broader platform of solutions (again, compliance, technology, etc.).

See also: Zenefits’ Troubles Don’t Let Brokers Off

Are YOU really ready?

When your value proposition and solutions become more complex, it is more important than ever to ensure that the foundation of the agency is strong enough to support it. Here are a few areas you need to evaluate to determine if you can really support these new solutions/strategies:

Sales Process — One of the things that concerns me about these new solutions/strategies is that advisers will simply see them as another insurance solution and feel the right time to talk about them is at renewal. Now more than ever, it is critical to be meeting with buyers off renewal to prepare them for the ideas and strategies you can bring at renewal. And, with off-renewal conversations, having a structured sales process in place is an absolute requirement.

And, no, going out to get quotes is not an effective process. You have to have a process that allows you to help the buyer effectively evaluate the insurance and non-insurance parts of the business to determine what is working and what isn’t working and create an overall plan of improvement.

Marketing — But, for that sales process to be effective, you have to have an effective marketing strategy in place. These ideas need to be featured on your website. You need to be writing about them regularly in your blog. You need to be out on social media sharing these ideas and participating in conversations. You have to integrate these ideas into your automated marketing campaigns.

Team education/training — You must have a plan for how are you going to educate your team to sell and service these more complex solutions. You must develop more effective team structures/processes to ensure your sales and service teams work together effectively enough to sell/service these programs.

Compensation — Because these new strategies are outside the traditional insurance products with attached commissions, you have to be comfortable with charging fees, discussing how much you need to get paid and articulating what you do in return for that compensation. I know this is pretty scary for many of you.

Take a deep breath

The world of employee benefits is going through one of those transformational eras that redefines an industry.

  • Yes, it’s a bit scary
  • No, not all of the answers are clear
  • Yes, it’s a lot of freakin’ hard work
  • No, doing more of what you’ve always done isn’t the answer
  • Yes, you are going to have to reengineer your agency
  • No, not everyone is going to survive

Don’t curse these facts, celebrate them. Celebrate because very few of your competitors have the courage, curiosity, work ethic, creativity, grit or resilience it will take.

Those of you who emerge on the other side will find there has NEVER been a more exciting or rewarding time to be in this industry. The destination is exciting, but let’s not forget to enjoy the journey.

Finally, don’t make your journey any more difficult than it needs to be. There are many groups out there working together to help one another learn these ideas and put them into practice. My advice is to find a group that fits with your style and get started sooner rather than later. Your success, and that of your clients, may very well depend on it.

This article originally appeared on Q4intel.com.

How Advisers Can Save Healthcare

Of course, insurance advisers can’t save healthcare alone, but they will play a pivotal role.

We must first recognize the key players:

  • Employers (purchasers of healthcare via health insurance)
  • Employees/dependents (consumers of healthcare)
  • Physicians/hospitals/clinics (providers of healthcare)
  • Insurance carriers (financiers of healthcare)
  • Insurance brokers/advises (role varies dramatically)

To truly save healthcare will require collective change from at least four of these five groups. I’ll let you decide who may be the odd-player-out.

By now, you are, or should be, aware of a new trend in the design of benefit programs: moving away from traditional carriers/networks and toward direct-pay programs where purchasers/consumers are contracting directly with the providers of care. While this approach has been producing real results for several years in isolated situations, the trend is still in its infancy.

As you might expect, with some of the players’ self-interests at play, its eventual maturity is anything but certain, and certainly not imminent.

It is a path to maturity for which brokers/advisers need to be paving the way.

In a comment he left on one of my LinkedIn updates, where I partially reflected on the emerging trend of these direct-pay programs, Robert Nelson, MD (spokesperson for the Georgia chapter of the Free Market Medical Association) made the following request:

I would love to hear the perspective from the supply side that actually performs the care and interfaces with brokers & TPAs on price-transparent direct contracts, from a position of owner (provider of service).”

In response to Dr. Nelson, Dr. Keith Smith (medical director at Surgery Center of Oklahoma) observed:

The rate at which a physician (or facility like mine) transitions to a 100%-pure, non-insurance model will, and should, vary depending on the degree to which the local practice environment functions like a cartel. In areas of the country where large hospital systems and abusive carriers exist predominantly and work together, the speed with which a disruptor can achieve independence will be slower than in areas that are not so cartelized.

“I am aware, however, of DPC (direct primary care) practices that have successfully launched in highly cartelized environments with tremendous success, partly because the physician(s) had decided that if their venture was unsuccessful they were going to quit practicing anyway.  At the Surgery Center of Oklahoma, we worked with insurance for years but do not at this time. 

“Once a mutually beneficial arrangement with a self-funded employer (or a cash-paying individual) makes its entrance in a practice or facility, the abuses and coercion of the carriers cannot as easily be ignored or tolerated. One ‘win-win’ arrangement creates a desire for nothing but ‘win-win’ arrangements, and the journey to a pure model has begun.”

See also: High-Performance Healthcare Solutions  

Sean Kelley (president at Texas Free Market Surgery & MedSimple) then added the following observation:

“I agree with Dr. Smith about the impact of market conditions on adoption of new, non-insurance, direct pay models. The cartels have erected competitive barriers over time with just this type of disruption in mind; the opacity at every level and supported by the entire cast of characters in the healthcare value chain are testaments to this fact.

“(1) Most doctors want to see a new model emerge and will support it, some more energetically than others who fear a backlash or are at the end of their careers. DPCs have the most risk while independent specialists are able to straddle in our model and Dr. Smith’s. 

“(2) Many broker/consultants desire change, though only a select few are risking their existing accounts; they are more likely to use a new direct pay model as a wedge to gain an edge with new prospects.

“(3) Purchasers are unprepared for this type of disruption; the health plan data they get is highly summarized, making it impossible to compare what they currently pay for services to direct pay providers like Texas Free Market Surgery or Surgery Center of Oklahoma. Additionally, health plan purchase decision processes are mostly ad hoc, with multiple leaders holding tacit vetoes over direct pay contracting.

“(4) Given this landscape, it takes years to create a few ‘win-win’ arrangements with the true innovative purchasers before the rest of the market will even start to pay attention. Many of the status-quo incumbents believe that almost any new model will eventually asphyxiate and go away. I firmly believe adoption of the direct pay model is mostly constrained by the demand or purchasing side. Purchasers hold the key; if there are enough purchasers, open and willing to enter into direct pay contracts with transparent, high-quality healthcare providers, most will react to the change and flock to the new direct pay model.”

For me, this was an unbelievably insightful exchange.

Some of my key takeaways

From Dr. Smith:

In many markets, the providers of care and the insurance carriers operate in a cartel-like fashion to protect their own interest and to slow, if not outright halt, disruptive (direct-pay) innovations.

However, once a provider is able to break the stranglehold of the “cartel” and experience a win-win with the purchasers/consumers of healthcare, this new structure is addictive, and the traditional approach becomes unacceptable.

From Sean Kelley:

He agrees that this cartel-type behavior is real and all too common.

Both providers of care and brokers/advisers desire to see change take place but are afraid of its consequences on their respective practices. Many providers may only become drivers of the change as they approach the end of their careers, while many advisers will only become drivers when pursuing new business; they are not so willing to put existing client relationships at risk.

Purchasers need access to THEIR data, a key to becoming comfortable in changing the way they make their purchasing decisions.

The rate at which the direct pay trend reaches maturity is largely dictated by demand from the purchasers. With increasing demand, and the subsequent success stories sure to follow, there will soon be a tipping point at which the rest of the market will follow suit.

This is exciting stuff!

We are on the cusp (okay, that may be overly optimistic, but we can kinda, sorta see the cusp) of fixing one of the most challenging issues facing our country and our economy. But the solution requires change, sharing and collaboration at a level that I’m not sure many industries have ever experienced.

If Sean Kelley is correct, and I believe he is, the biggest key to driving this trend to maturity is demand from purchasers. And, the key to increasing that demand is education of those purchasers.

This is where brokers/advisers become the linchpin

Advisers, your job as educators for your clients about how to most effectively finance the purchase of healthcare has never been more critical. Of course, you can’t educate them until you have spent significant time studying the issues and solutions yourself.

The curriculum for your education is already being built. But, just know, as with any emerging trend, the curriculum continues to evolve. There are conversations taking place every day on LinkedIn that should be required reading for you.

There are many generously sharing their ideas and experiences online. In addition to the people already mentioned above, here are a few others to follow to help get you connected to the larger community working to drive these changes in the healthcare system:

And members of our Q4iNetwork who are deeply involved:

In addition to the daily, online conversations, you NEED to read Dave Chase’s book, “CEO’s Guide to Restoring the American Dream.”

Before we are truly prepared to educate the purchasers, there is a lot of collaboration that needs to take place within and between the groups of interested parties.

See also: Healthcare: Need for Transparency  

Providers of care need to collaborate and communicate with one another to ensure the right access to care and infrastructure are in place. Benefit advisers need to collaborate and communicate with one another to ensure there is the necessary critical mass taking this approach to their respective clients. And, the providers and advisers must collaborate and communicate with one another to help make this transformation of healthcare as smooth as possible for the purchasers.

Change is never easy, but this change comes with particularly complex challenges. Not the least of which is changing a purchasing pattern that drives one-sixth of our economy. This change can’t happen in a vacuum (one employer at a time) if it is to be sustainable and rapid. We have to ensure it scales, and scales quickly.

As my friend Josh Butler recently observed, change is only scalable through collaboration. All interested parties must come together as part of the solution or find themselves on the outside, victims of the solution.

This article originally appeared on Q4intel.com.