Are you on the board of directors of a company? Or are you a shareholder of a publicly traded company? Or are you a CEO or a CFO or in-house counsel who reports to a board of directors or these shareholders? Well, this show is for you.
And it’s about how the healthcare industry has become financialized at the same time that providing health benefits has become the second-biggest line item after payroll for most companies. We talked about that in a recent encore with Mark Cuban (EP418) also, as well as the show with Cora Opsahl (EP452) and Claire Brockbank (EP453) from 32BJ.
In this encore episode of 'Relentless Health Value,' Stacey Richter interviews Andreas Mang from Blackstone about the financialization of health benefits for boards of directors and C-suites of self-insured employers.
They discuss the unseen financial layers in healthcare benefits and how companies can save significantly while improving employee satisfaction and health.
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04:55 Why Andreas starts every conversation with the question, “How’s your healthcare company?”
07:38 Why is it important, as a self-insured employer, to treat your business as a small healthcare company?
09:16 Why is it unnatural for companies to be providing health insurance?
10:47 What can be achieved when there is alignment between employers and insurers?
12:41 What things can a company do to reduce spend by 10%?
14:14 Why is it better to have CFO engagement in the benefits plan throughout the year?
16:25 Why does self-insurance save 5% to 9% for companies automatically?
18:14 “The funding isn’t a healthcare thing; it’s a CFO thing.”
18:27 Why is it vital to have a reliable, trustworthy broker?
25:12 When is the last time your company has RFP’d their health plan?
27:39 Why does changing a health plan feel scary but is necessary?
28:31 What is a dependent eligibility audit?
31:20 Why are employers better together?
34:34 How do employers truly get a flat-fee model with brokers?
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Stacey Richter (00:00):
Encore episode, "The Financialization of Health
Benefits for Boards of Directors andC-suites of Self-insured Employers".
Today, I am speaking with Andreas Mang.
American Healthcare Entrepreneurs andExecutives You Want to Know, Talking.
(00:25):
Relentlessly Seeking Value.
Are you on the board ofdirectors of a company?
Or are you a shareholder ofa publicly traded company?
Or are you a CEO or a CFO or in-housecounsel who reports to a board of
directors or these shareholders?
Well, this show is for you, and it'sabout how the healthcare industry has
(00:46):
become financialized at the same timethat providing health benefits has
become the second biggest line itemafter payroll for most companies.
We talked about that in our recentencore with Mark Cuban also, as
well as the show with Cora Opsahland Claire Brockbank from 32BJ.
So this encore with AndreasMang is really timely.
(01:10):
And even if you've listened to the showwhen it originally aired a year ago, you
may want to take another listen becausein the context of these recent shows,
this one really slots right in there.
And also, by the way, the one with JulieSelesnick from last year talking about
the legal jeopardy currently in play.
So this show isn't reallyabout health benefits.
It's about the business that these healthbenefits have become and how, if the CEO
(01:34):
or CFO of an employer is not intimatelyinvolved in the financial layer wrapping
around health benefits, then the companyis getting really taken advantage of
by those entities who are intimatelyfamiliar with the financial layer
surrounding those health care benefits.
And the employees of that company alsoare getting equally taken advantage of.
This is not a case where payingmore or less results in better or
(01:57):
worse employee health or healthcare.
It is a case where not mindingthe shop in the c-suite means that
financial actors, just take more ofthe pie and nobody wins but them.
Employer loses, employee loses.
Andreas Mang, my guest today, kicksoff this interview talking about
the conversation that will go downbetween himself and any CEO whose
(02:21):
company gets bought by Blackstone.
So if you're a CEO and you're aspiringfor this to happen, yeah, heads up.
But he says it's kind of an unnaturalact to dig into anything that smells
like health benefits or health insurance.
Some may not even realize that this wholefinancial layer has developed that sits
above the healthcare benefits themselves,and they also may not think that there's
(02:43):
anything that's possible that can be done.
As far as both of these points areconcerned Andreas Mang gives a list of,
as he calls them, easy things a c-suitecan do to save 10 percent while improving
employee satisfaction and health.
Saving 10 percent or more?
This can be a really big number.
A lot of this is just enforcing purchasingdiscipline that is being used elsewhere.
(03:05):
Here's Andreas's list, recapped.
There's some sub lists in here, whichI put in the show notes, but I'm
not going to necessarily go through.
Six easy things.
Number one, have CFOengagement throughout the year.
That's number one.
We talked about that lastweek with Mark Cuban also.
Number two, be self-insured onceyou have reached a certain size
and Andreas gets into this in moredetail during the show itself.
(03:28):
Number three, be very, verycareful who you hire as your
broker or benefits consultant.
There's four things that need to be true.
We go through these in the show.
They're also listed in the show notes.
Number four, do Carrier/ASO/TPA, RFPsonce every three years or thereabouts.
Number five, do dependenteligibility audits.
(03:49):
Cora Opsahl talked a lot about thisalso in an episode last summer.
Number six, relatively easy thing to doas per Andreas Mang, leverage pharmacy
coalitions and stop loss collectives.
In the show itself, Andreas offerssome warnings because some of
these coalitions and collectivesare great, and some are not.
But bottom line, just keep inmind, as Mark Cuban said two weeks
(04:09):
ago, those that are taking yourmoney, your company's money, are
advantaged when you are confused.
Where there's mystery, there's margin.
If you can't convince them,confuse them and all that.
This is a business strategy.
Healthcare should not be thiscomplicated but yet it has become
so, and anyone who doesn't realizethat is letting themselves and their
employees really get taken advantage of.
Unknown unknowns are not benign.
(04:31):
As I have said several times already,Andreas Mang is my guest today.
He is a partner at Blackstone, the privateequity and alternative asset manager.
His job is helping portfoliocompanies manage their U.S.
healthcare benefits for their employees.
My name is Stacey Richter.
This podcast is sponsoredby Aventria Health Group.
Andreas Mang, welcome toRelentless Health Value.
Andreas Mang (04:52):
Thanks Stacey.
Appreciate you inviting me to join.
Stacey Richter (04:55):
One thing that I've heard that you say, you walk in and
you say to the CEO and CFO, how'syour healthcare business doing?
Andreas Mang (05:00):
This idea came to me probably seven years ago now where I sat
down with the CEO of one of our companies.
They had about 5,000 employees.
They were spending north of 50, maybe$60 million a year on healthcare spend.
Their rates of inflation werefar higher than benchmarks.
And we sat down and I saidto him, so great to meet you.
(05:23):
It's a great business you have here.
Excited about the investment.
I'm here to talk about yourhealth insurance business.
And this was a financial services firm.
The CEO kind of looked at mewith that over the glasses look.
He gave me that look that said,your colleagues at Blackstone
all seem really smart.
You seem to be the outlier.
(05:43):
I don't have a health insurancebusiness here, a healthcare company.
We're a financial services firm.
And I'll tell you, that was apretty uncomfortable moment.
I sort of shifted in my seat, but I alsoknew I had him right where I wanted him.
And I said, I understand that,but you have over, again, 5,000
employees, you're spending north of $50million a year, you're self-insured.
(06:03):
And I said, at your current rateof growth, if we don't do something
about this, you're not going tobe a financial services firm.
You're going to be a healthcarecompany in a few years.
That moment the lightbulb wentoff, you sat back down with a look
that said, okay, keep talking.
I'm interested in what you have to say.
Interestingly, he held weeklymeetings with the entire company.
And after we met, he started toincorporate that into his weekly
(06:26):
conversations with all 5,000 plusemployees where he said, look, folks,
we need to do something about thisor we're going to be a healthcare
company in the not so distant future.
So, yeah, that was a funny experience,but at the end of the day, it's the truth.
If you are self-insured, you haveassumed health insurance risk
and you're running a small healthinsurance company inside your business.
(06:48):
And that's a strange thing.
That's an unnatural act for acompany to have that put on them.
It's pretty unique to the U.S., but itcertainly creates a number of challenges.
When you think about, you know,what, 60 percent plus of the U.S.
workforce is under self-insured plans,and so you're hoping that all of those
companies that are employing all thoseindividuals have the skill set to
(07:11):
run a small health insurance companyinside their business, and most don't,
and quite honestly, it's probablynot fair to think that they should.
Stacey Richter (07:18):
The reaction that you got from that CEO, Looking across
the glasses as you described, likeif you had been anybody, if you had
been coming in from the benefitsdepartment, like you, you would have
gotten kicked out of the office.
This whole endeavor might reallyneed to start at the board of
directors, or with someone that theleadership team holds in great esteem.
(07:39):
Why is it so important for an executiveteam such as you have at Blackstone and
or a board of directors almost anywhere,why is it so important to actually
recognize if you're a self-insuredemployer, you're running a small
insurance company and treat it as such?
Andreas Mang (07:57):
You have to start with, for most companies, healthcare is their second
largest expense behind only salaries.
And for most companies, that expenseis largely growing unchecked.
It's certainly, at least in normaltimes, outpacing inflation, and it can
be an incredible drag on the business.
(08:18):
However, many people view itas something that they don't
have a lot of control over.
They say, well, there's going to becancer, there's going to be train
wrecks, there's going to be bad thingsthat happen and I can't control that
expense, so they shrug their shoulders.
And I think therein lies the problembecause there's a lot of waste in the U.S.
healthcare system that can beworked out by employers and
(08:39):
actually addressed by employers.
But let me rewind with, soit's your second biggest
expense behind only salaries.
Let's say you were an aluminum company.
You made cans, aluminum cans.
I'll bet you anything that CFOof that company knows everything
about this, the price of aluminum,their suppliers, the supply chain.
They've probably hedged against inflation.
(09:01):
They have futures contracts locked in.
I'll bet you they can tell youeverything about the price of aluminum.
And I wonder why companies don'tuniversally attack healthcare in the
same because you don't see it often.
But I go back to why.
Well, because it is an unnaturalact for companies to be providing
(09:21):
health insurance benefits.
And that's thing one,that it's complicated.
It's strange.
It's, I don't condemn companies for notbeing 100 percent sure what to do with it.
In addition, I think it's misplaced.
We lobbed this expense andcontrol of it onto HR teams.
I was in front of a huge group ofHR leaders when I got on stage,
(09:43):
and I said, Hey, I'd love to know,put your hands up, how many of you
got into HR, got into benefits?
It was a mixture of CHROs and benefitleaders, and I said, got into this
business so that you could run a smallinsurance company, and not a hand went
up, and they all kind of laughed at me.
But, but it's where it's put.
You have a group of people whoare being asked to manage this,
(10:03):
but being told, create no noise.
There's a conflict there.
Manage this second biggest expense in thecompany that's growing out of control,
but create no noise because we don't wantemployees to be feeling any friction.
So that's a conflict right there.
HR leaders who say, well, this,there wasn't a class when I was
getting my degree or learningabout HR, that was a class on
(10:25):
running a small insurance company.
So I'm going to look to my advisors andthese are brokers and there's a broad
range of brokers out there and theirexperience and they may have little
experience managing insurance risk.
They may have misaligned incentives.
And so you have this combinationof all these things where these
programs become structurally unsound.
Right?
So you have all of thoseforces working together.
Stacey Richter (10:47):
Let's talk about what happens if you have alignment
between the investor group, seniorleadership, the board of directors,
and the HR team, if you have thatalignment, what is possible to achieve?
Like what's the why here?
Because everything that you havesaid and others have said, we did
a whole show on employer inertia.
(11:08):
We called it the InertiaShow with Lauren Vela.
This is tough stuff, so like, why bother?
Andreas Mang (11:14):
Here's the thing, I think some of it can be pretty
technical, some of it can be tough,but some of it can actually just
be enforcing purchasing disciplineacross the, across your company.
Let, let, let me talkabout what's possible.
So let me start with, at Blackstone,currently my team is managing a portfolio.
We're, we're, we have about a littleover 70 companies, 250,000 lives, we're
(11:37):
managing about 2 billion in spend.
Our 13 year track record formedical and pharmacy inflation
trend has been hovering around 2%.
We have delivered solutions to ourcompanies that are improving the
experience for their employees,that are providing a high level of
clinical support, that is delivering adifferent concierge service experience.
(11:59):
That, by the way, as rated by theemployees and their dependents who
are using our solutions, have providedan NPS of around 80, which is some of
the highest scores in the industry.
And so, a lot can be done by the employer.
Think about that.
A growth rate, a trend hoveringaround 2 percent for 13 years.
And that has not been done by strippingthings down, by taking things away.
(12:25):
To the contrary, what I just said waswhat we have provided are solutions
that give a lot and sort of fillthe holes in the healthcare system.
But let's say you don't have the sizeor, or knowledge that, that you can
build a platform that is enhancingclinical support and all that.
There's at least four or five, sixthings that I think any company can
(12:45):
do that can deliver an easy 10%.
Right off the top in terms of savings.
And if you think about 10 percent onwhat a company is spending on healthcare,
that can be a really big number.
Stacey Richter (12:55):
I definitely want to get into those things to reduce spend 10%.
I think it would beimportant to point out.
You know, if you've got multiplemiddle people, companies, and then you
go on the stock market and you lookat what their profit margins are, if
those companies are working unhamperedfor your company, then that profit
(13:18):
margin, speaking in total broad strokeshere, your company is paying for.
But like, this is what you'retalking about cutting off
the top that's easy enough.
It's not like you're digging into the.
actual nuts and bolts of the plan per se.
You're basically cutting things thatyou are currently paying for that are
not actually providing or accruingany health to your member population.
(13:42):
It's basically just excess financialspend that doesn't amount to anything.
Andreas Mang (13:48):
Yeah, I think that's fair.
A lot of companies are leaving dollarson the table that is unnecessary.
That is not delivering a lot of value.
Now, look, I'm not going tosay every company is set up
this way, but I have seen many.
And the usual standard engagement modelis CFOs get involved with healthcare
once a year during the renewal, they'llwork with the HR team, they'll see
what the numbers are coming in at, andhowever that conversation goes, it's
(14:10):
accepted, there's pushback, it's or not,and they sort of go on with their day.
Better is to have CFO engagementthroughout the year, and what I said
before, is providing air cover tothe HR team so that they have the
support and sort of the cover to dothe things that I think many know need
to be done, but again, they may havesome conflicting imperatives coming
(14:32):
down around how to manage this spend.
And so I think c-suite, broad c-suiteengagement, but at a minimum CFO
engagement, especially if you'reself-insured, is imperative.
Create that teamwork, create thatbuy in on both sides so they're
working together to manage this.
You just don't see that a lot.
It seems kind of basic, but to me, that'ssort of first and foremost because then
(14:53):
that opens up the doors to a lot ofother things that, that we'll talk about.
Stacey Richter (14:57):
Tracking this back and connecting some dots here.
The point is there is a lot of wastethat unchecked vendors will basically
take advantage of an employer.
So you have a bunch of excess spendtranspiring, which is going to continue
and the CFO, as you said, and the c-suiteare best equipped to be able to sort
(15:19):
of ferret that out, probably doing whatthey do all day in their normal day
jobs, buying aluminum or whatever itis that their core business deals with.
So main point you're making is if youwant to trim back the dollars, which the
company is spending, maybe fritteringaway imprudently, the CFO, the CEO
(15:41):
must be involved and then just kind ofconnecting it back to the larger point.
This is another reason why boards ofdirectors, et cetera, probably should
be paying attention here and helpingthe CEO, CFO, almost providing air cover
for them or the imperative at a minimum.
So that then they can help thebenefits team do what they do as well.
(16:02):
And then you have the entire organizationin alignment as opposed to no air
cover, don't create any noise, but atthe same time control the spend, which
is never going to work in any world.
Did I nail that?
Andreas Mang (16:12):
Nailed it.
Exactly.
I want that.
I'd like every CFO to be asknowledgeable about what's happening
with their health care spend asthey are about the spot price of
aluminum if they're a canning company.
Stacey Richter (16:22):
Let's talk about number two on your list.
Andreas Mang (16:23):
Number two, funding.
Self insurance.
Self insurance will save a companyin the range, depending on the
state, depending on a few factors.
But it's going to save a company 5to 9 percent automatically because
of a number of fees and taxes andmandated benefits and things that go
away when you become self-insured.
(16:44):
Any company from our perspective,the threshold, I know it's gotten
small and small companies havedecided to go self-insured.
We get comfortable with companiesgoing self-insured at around
400 employees on their plan.
So if you have at least400 employees on your U.S.
medical plan, you should be taking avery hard look at going self-insured
(17:06):
because you're automatically goingto eliminate 5 to 9 percent of costs
without doing anything that affectsyour employees at all, you are simply
changing the funding mechanism.
Stacey Richter (17:17):
Before we get into the third point, which is going to be about
brokers and employee benefit consultants.
I can see how two on your listhere, which is to be self-insured
folds into number three becausecompanies rely very heavily on their
brokers slash benefit consultants.
And if that broker slash employee benefitconsultant has book a business, goals
(17:41):
and bonuses, etc, then you could stillbe winding up in a situation where the
broker is steering based, I'm goingto say a little bit more on their own
self interest and may not be guidingthe company toward a solution that
is necessarily best for the company.
Which is just another reason why theCEO, CFO, and board of directors needs
(18:03):
to get involved here because these arebig decisions that really need to be
made and at the level of a senior exec.
Andreas Mang (18:12):
I agree with that.
I agree with that 100%.
Again, the funding isn'ta healthcare thing.
It's a CFO thing.
It's sort of a risk thing.
It's a funding mechanism, but we'renot getting, we haven't, look, I just
talked five to 9 percent savings.
Boom.
We haven't gotten intoanything healthcare yet.
Stacey Richter (18:27):
Let's talk about number three on your list, which is ensuring that
you have a broker slash employee benefitconsultant that is very trustworthy, you
can rely on to work in your best interest.
Andreas Mang (18:41):
And has the experience to do so.
Look, in, in my experience, and I wantto be careful, this isn't universal.
But in, in my experience, theretends to be a dividing line,
brokers, benefit consultants.
There are those who spend a lot of timeon the fully insured sides, and then
there's a group that spends most oftheir time on the self-insured side.
(19:04):
And I would argue that the skillsets, the experience required to
do the self-insured is different.
The math is going to be different.
You do require a team who can projectmedical claims risk, who can help a
company write appropriate budgets,be able to box in the risk that
does come with going self-insured.
And so ensuring you have a brokerwho has experience with self
(19:27):
insurance is really important.
Something we do a lot with ourcompanies is we do broker RFPs.
Look, it's just like any business, youknow, there's good, there's less good.
Our job is to bring the bestwe can to our companies.
We've helped north of 100companies now run broker RFPs.
There's five things I look for.
(19:48):
First is experience.
Do they have a broad setof self-insured clients?
You want a broker who has spentmany years and who has a broad book
of almost exclusively self-insuredclients, and they've been in the
trenches doing this for a while.
Doing provider networks,finance, like my actuary did
pricing, ran stop loss programs.
My chief clinical officer is apharmacist, but also ran clinical
(20:12):
programs at a large Blues plan.
Great if you can find peoplewho have that experience.
Hard to find, but at least a broadset of self-insured clients, with
appropriate resources to support that.
So you're not going to build up a teamof actuaries and clinical folks and
compliance experts, but the broker thatyou employ has to have those to look
(20:33):
for actuaries, not just finance guys
Stacey Richter (20:37):
So number one on your list of things to look
for in a broker, when you areself-insured is absolutely number one.
Does this broker and their organizationhave the talent that is required to
actually help you manage the plan?
You said you had five thingsthat would be number one.
Give me number two.
Andreas Mang (20:57):
Compensation, flat fee model.
A broker who is willing todisconnect their compensation from
commissions, etc., really important.
So when we do a brokerRFP, we do a flat fee.
It is disconnected from all commissions.
And that flat fee must encompassa robust scope of services.
One thing that companies needto beware of, beware of being
(21:19):
statement of work to death.
Bunch of statements of workfor every little thing.
No, you want a broad scope ofservices that the broker is willing
to accept a fair fee on and says,I will execute on all aspects of
running your plan for this fee.
And it's a broad, welldetailed scope of services.
You can find those online pretty easily.
(21:41):
Third, product pushing.
It seems that in today's world, manyof the consulting houses have put
together suites of products, solutionsthat are pre baked for employers.
Well, we don't like those.
That's a red flag for us.
Better are those who arenot pushing solutions.
Have access to them, have awarenessof them, suggest deploying them if the
(22:04):
data supports the need for a solution.
For instance, one of ourcompanies in investment just
had, they had a lot of babies.
And so for them, solutionsaround fertility and healthy
babies, those things made sense.
If you have a workforce that may bedifferent, right, is older, probably
don't need to push that solution.
(22:24):
It might be something else that they need.
So beware of brokers who come with afull set of solutions that are pre baked.
You want, you want the brokers whocome with insights, who look at
your data and say based on this,here's the best solution and we have
experience deploying it and it works.
Number four, fees at risk.
We think it's really important that asignificant portion of fees at risk,
(22:45):
call it 30 percent or more for a verysimple net promoter score question.
. If the company cannot answer with a score of nine or greater, I would recommend
this broker to a colleague or a friend,if they're not willing to put 30 percent
or more fees at risk for that simplequestion, I think that's a red flag.
Those that are willing to dothat, I think it says something
(23:07):
about their service model.
Stacey Richter (23:09):
So fees at risk to assume an NPS Net Promoter Score of 90%?
Is that what you said?
Andreas Mang (23:16):
Yeah, it's a 9 or above, which says I'm delivering on the promise
that I sold you when you chose me.
Saying fees at risk forservice is a really big one.
And finally, simpletermination provisions.
There should be easy out clauseswithout penalties if a company has
chosen to go in a different direction.
Too often, we have seen punitive contractprovisions, termination provisions.
(23:39):
We're involved with one right nowwhere a consulting firm is demanding
millions of dollars from a company whowants to go in a different direction.
I think those are things that you canhead off in, in the beginning during
the, called the procurement process.
Again, if you're in the service businessand the person paying you has decided
that you're not meeting their needs, itshould be that company should be able
(24:04):
to move on and make a different choice.
I think when you have things like that,simple out provisions and fees at risk,
it sort of makes everyone aligned.
Stacey Richter (24:11):
And I probably could underline everything that you're
saying because I have heard horrorstories about every single one.
So I appreciate you puttingthe what's in your Brooker RFP
into such a concise list here.
Going back to the very top of ourconversation, we started out talking
about what are really important musthaves for any company who's looking to
(24:36):
not get taken advantage of by vendors.
You had listed number one, the c-suiteabsolutely must be doing and applying
the skills and authority that they have.
That's your number one.
Number two is making sure if theentity, if the company has 400 or
more employees in the United States,they are being self-insured and as
(24:56):
you said you're going to save around 5to 9 percent right off the top there.
Just by doing that.
And number three, we've just spenta bunch of time talking about brokers
and employee benefit consultants andthe importance they are well aligned.
Is there anything elseon your main list here?
Andreas Mang (25:12):
Really big.
When is the last time the companyhas actually done a carrier RFP?
When is the last time theyRFP'd their health plan?
On average, hospital contractsturn over every three years.
So every three years, there's apretty big shift out there in terms
of what carriers are paying providersystems in terms of unit price.
(25:34):
Ninety, let's call it 95 percent ofwhat you're spending is on claims.
Claims is being driven by price and use.
And so three years ago, five yearsago, you may have decided health plan
A was the right one for you, but hey,have you done an RFP and checked?
Because if the discount has shifted 3 to5 percent with another health plan, 3 to
(25:55):
5 percent on your second biggest expense.
That's a big number.
People can get comfortable,kind of feel scary.
I don't want to change my health plan.
I don't want to disrupt employees.
Well, if you do a proper RFP, you'regoing to check provider networks.
You're going to make sure your employeesaren't going to be disruptive, but you
can save three to five or more percenton your total costs just by doing that.
(26:16):
We find that a lot of companieshaven't done that as frequently as
we might want to see them do it.
Stacey Richter (26:22):
Again, going back to boards of directors or others who have
an interest in ensuring that a companyis not getting taken advantage of.
Every time I hear of a company that hasbeen with the same carrier for 17 plus
years or whatever, insert a timeframeway longer than three years here.
Sometimes the reason why there is notan RFP for a really long time could be
(26:45):
a sign of certain conflicts of interestgoing on amongst the c-suite or maybe
amongst benefit leads and the vendor.
And I'm certainly not stating anyof this as any sort of broad stroke
here, but there's definitely examplesof where the CEO or a CFO even has
an, what I'm going to say, not inthe best interest of the company at
(27:05):
large, relationship with some vendor.
And so that actually could be a warningsign, also, if there's too long of
a time that's being spent with onecarrier, there might be reasons why,
especially if there hasn't been an RFP.
And I certainly, again, don't wantto state that as any sort of broad
stroke, but it has come up enoughthat it would be a red flag of sorts.
Andreas Mang (27:28):
Yeah, it could be.
It's just, it's a good practice becauseagain, I'm sure in other parts of a
company's business, they're probablychecking suppliers more often.
I think it goes back to that issue ofif you're in HR and the mandate is,
hey, manage this expense, create nonoise, well, let me tell you something,
changing a health plan feels pretty scary.
Talk about source number one whereI could potentially create a whole
(27:50):
bunch of noise if doctors arechanging, hospitals aren't in network.
I don't want to do that.
So that structural issue of what I'veseen too often, where HR leaders are
out there on their own doing this, whenyou bring that alignment, guess what?
When they feel supported, when they feellike they're getting the air cover they
need, they're probably more willing to dothings like at least look at the health
(28:11):
plan, and if a change is warranted,because it makes sense, because the
networks line up, but there's savings.
It's going to be more apt to do that.
I think it kind of all goesback to that alignment.
Stacey Richter (28:20):
All right.
So let's turn to number five on your list.
What do you have for us?
Andreas Mang (28:24):
Number five in the, you don't need to be a healthcare expert to
do this, dependent eligibility audit.
So what is that in a nutshell?
A dependent eligibility audit simply says,look, we're going to audit our, out plan
membership, because if there's peoplewho are illegally sort of on our plan or
who shouldn't be, are not eligible forthe plan, guess what's going to happen?
(28:46):
If one of those people, let's say it's,let's say it's an aged out child who's
now beyond the age limit of being onyour plan, they should be on their own.
Let's say something catastrophic happened.
Your stop loss plan kicks in becauseit was some million dollar claim.
Here's what I can tell you will happen.
I can guarantee you the stop losscarrier will make sure that the
individual is eligible, they'renot going to cover that service.
(29:08):
You are going to cover it.
There are examples out there ofcompanies who think this million
dollar claim is going to be coveredby their stop loss carrier, and it's
not because it was an ineligiblemember receiving these services.
This one goes back to almostwhat we've been talking about
alignment, especially with the CFO.
This is a risk management action.
So doing a dependent eligibilityaudit can feel like, well, I
(29:29):
don't want to create noise.
My employees are not going to likebeing questioned whether the people
that they've signed up on this planare eligible and should be on the plan.
However, if you put it in the contextof, well, first and foremost, we as an
employer probably lay out pretty clearlywho should be on the plan and shouldn't.
And if everyone's doing theright thing, no problem.
Also, there's companies out there thatdo this in a very employee friendly way.
(29:54):
But when you look at it from theperspective of the potential risk that
is associated with having ineligiblemembers on your plan, Again, when
you're self-insured, you are runninga small health insurance company.
You've got to take some of the actionsthat a health insurance company
would take to ensure that you'remanaging your risk appropriately.
So dependent eligibility audit,and look, we've seen savings
(30:16):
of at least 2 percent or more.
On total medical expense from doing adependent eligibility audit, cleaning
up your rosters and who's eligible.
Stacey Richter (30:24):
That is something interestingly Cora Opsol also talked
about the risk exposure because if youhave a big claim and it's not covered
by stop loss, like that's a BFD.
So that's number five on yourlist, ensuring that everybody
who is not eligible for theinsurance is not still on the plan.
(30:46):
If we're going to talk aboutnumber six, what do you got for us?
Andreas Mang (30:49):
Let me lump six and seven together.
I'm going to start with the premisethat in healthcare, when you look
at what's happening in the industry,provider systems are coming together
and getting larger and more powerful.
Health plans are vertically integrating,they're buying provider systems,
they're buying PBMs, so health plansare getting bigger and more powerful.
(31:09):
Who's left alone in the story?
The employer, when you look at it thatway and you say this is becoming a little
bit of an unfair fight, the employeris bringing a knife to a gunfight.
I'm gonna, I'm going tooffer the next two quickies.
on the premise that you're bettertogether, you're better with larger
groups than out there on your own.
And so I understand there's a bit ofnoise around these next two, but let
(31:32):
me just start with leveraging pharmacycoalitions and leveraging stop loss
coalitions or collectives are a good idea.
However, I would just saythere are good ones out there.
There are ones that are doing the rightthing, and there are ones that can deliver
real value around pharmacy and stop loss.
(31:53):
That's basically an entire othershow to dive into those two areas.
However, I'd say thatit's worth looking into.
And if you're involved in a coalition,it's worth just sort of having an
extra set of eyes, take a look at yourcontracts, look at the results, look at
your data, because you should be gettingit, and see how they're performing.
Because again, there aresome good ones out there.
(32:13):
There are some that have gottensome press for doing things
that maybe aren't so great.
But again, I think employers areoutgunned in this whole game.
It's an unfair match.
And so if there are opportunitieswhere we can bring companies
together, you're better together.
So that's my list.
Stacey Richter (32:28):
I love how you put that.
Employers are better together,but also keeping in mind
the caution you tossed out.
The opaqueness of healthcare hashuge allure for opportunists to
be making money on the back ofan unwise or a naive employer.
Andreas Mang (32:48):
100 percent agree.
And I would say that it's, it goes backto this unfairness and the strangeness
of employers providing this benefit.
Stacey Richter (32:57):
So let me kind of circle back on a couple of things.
Something that I think a lot of peoplefear when they hear a self-insured
employer, an employer is going to get morein the mix here, cost containment becomes
the name of the game and everybody's goingto throw their backs into saving money.
Saving money becomes asynonym for cutting benefits.
Andreas Mang (33:15):
I would argue employers, especially in this very tight labor
market, have a natural incentivenot to do the kind of cost cutting
things that result in sort of paringback benefits or making unattractive
benefits to their employees.
The incentive to not do that isso strong just by the labor market
today that I think, I think you havethat as a counterbalance to just
(33:36):
doing things just to save money.
And what's interesting is if you thinkabout the list I just went through,
most of those things on that list havevery little impact on employees at all.
Stacey Richter (33:46):
You can save 10 percent plus just cutting waste, which
actually is a benefit to employeesbecause if there's any cost sharing
involved and everybody is overpayingor if there are, you know, assessments
that the CFO is doing to determine howmuch money is available for raises.
Instead of giving the 10%, which can behuge dollars to your point, to some third
(34:08):
party entity, by saving those dollars,as has been said any number of times
by any number of people, now all of asudden we do not have stagnant wages,
which has been a result of every year.
The benefits spend going up becausethen there's less money for pretty much
anything else the company wants to do.
Andreas Mang (34:27):
A hundred percent.
Stacey Richter (34:28):
So, let me also dig into another thing that you said relative
to brokers in your list of five thingsthat you include in your broker RFP.
One of the things you said was making surethat the brokers have a flat fee model.
And I think that bears a littleclarification here because there are many
brokers who will come to the table sayingthat they have a flat fee model because
(34:50):
they are not disclosing indirect payments.
Andreas Mang (34:53):
Let me, let me say maybe a couple of things.
One is getting your scope ofservices right is the first step.
Being careful about how you write youragreement and spelling out what is
and is not included in that flat fee.
We have found there's a handful ofbroker teams out there we are very
aligned with and supportive of becausethey're really good at disclosing.
(35:16):
They say, look, here's all the,here's all the different ways
that we're going to make money.
Here's how we're goingto pay for your fee.
Here's how we're going to box this in.
And hey, sometimes we evenget fees from over here.
Some of these we have control over.
Some of these we don't.
Biggest thing is, is it disclosed?
Are they being robust in their disclosure?
So, that's a big first step.
And then second, again, is layingout, hey, when I say a flat fee,
(35:40):
any and all forms of compensation,whether it's core medical, pharmacy,
uh, ancillary services, employeepurchased insurance products, it's up
to you to spend the time to educateyourself and to box in those things.
And again, it doesn't take a ton of workto write language in a way that says,
look, any and all ways of potentialdirect and indirect compensation,
(36:03):
need to be included in this fee.
Stacey Richter (36:05):
If an employer discovers there are fees that are
transpiring, that are getting withdrawnfrom their bank account, like it's
kind of too late at that point.
The fix would be do an RFP and startagain, because unless the language
is in the original RFP, it's verydifficult to adjust on the back
(36:25):
end is what I'm understanding.
Andreas Mang (36:26):
But again, what I would say is the teams that you want
to align yourselves with are goingto have absolutely no problem being
extremely transparent with you.
We'll offer that.
We'll offer that transparency,and you'll know it.
You'll know it when you sitdown and have the conversation.
You gotta be clear that not everybenefits consultant and benefits
broker out there is doing bad things.
(36:47):
Some do.
We've found, certainly,plenty of bad things.
Look, sometimes it's unintentional.
We've worked with brokers who actuallyare trying to do the right thing.
They're just, they haven't,they don't have enough
experience with self insurance.
They haven't done enough.
They haven't had enough at bats.
They think they're doing the right thing.
They're not.
Sometimes you have that.
But I'd say brokers who come toyou and are very willing to be
(37:08):
completely transparent and they're outthere, that should be a green flag.
What you can do is apply the same rigor,the same purchasing discipline that you
apply to other aspects of your business.
Do it to your healthcare plan.
Do it to your medicalplan for your employees.
Do the same things.
And you're going to deliver somemeaningful results in a way that's
not going to disrupt your employees,which is sort of a wonderful thing.
Stacey Richter (37:29):
This can be done incrementally.
It's not like you've got to go fromzero to the deep ends of the pool.
There's a number of things that yousaid that you could try something,
layer on a little bit more, a littlebit more, a little bit more in a way
that makes everyone feel comfortable.
Andreas Mang (37:43):
I think it's a great point.
100%.
You can take this list andlay out a plan and say, look,
we're going to do these things.
we're going to do theeligibility audit next year,
check funding, check the broker.
We're going to do that immediately.
And we're going to do some ofthese other things down the road.
I think it's a great point.
You don't have to swallow thewhole thing in one, one bite.
Stacey Richter (38:00):
Is there anything I neglected to ask you, which
you would like to mention here?
Andreas Mang (38:04):
What we talked about today are like blocking and tackling.
You get those nailed and then youcan get into the next level of things
Stacey Richter (38:11):
Andreas Mang, thank you so much for being on
Relentless Health Value today.
Andreas Mang (38:15):
It has been a terrific conversation.
I've enjoyed being here with you, Stacey.
Thanks for having me.
Tom Nash (38:20):
Hi, this is Tom Nash, one of the RHV team members.
You might recognize my voicefrom the podcast intro.
If you love this show and you want toshow us your support, please follow us
on your favorite podcast app, sign upfor the newsletter, or maybe consider
making a small donation in the tip jar.
Thanks so much for listening.
Encore episode, "The Financialization of Health
Benefits for Boards of Directors andC-suites of Self-insured Employers".
Today, I am speaking with Andreas Mang.
American Healthcare Entrepreneurs andExecutives You Want to Know, Talking.
(00:25):
Relentlessly Seeking Value.
Are you on the board ofdirectors of a company?
Or are you a shareholder ofa publicly traded company?
Or are you a CEO or a CFO or in-housecounsel who reports to a board of
directors or these shareholders?
Well, this show is for you, and it'sabout how the healthcare industry has
(00:46):
become financialized at the same timethat providing health benefits has
become the second biggest line itemafter payroll for most companies.
We talked about that in our recentencore with Mark Cuban also, as
well as the show with Cora Opsahland Claire Brockbank from 32BJ.
So this encore with AndreasMang is really timely.
(01:10):
And even if you've listened to the showwhen it originally aired a year ago, you
may want to take another listen becausein the context of these recent shows,
this one really slots right in there.
And also, by the way, the one with JulieSelesnick from last year talking about
the legal jeopardy currently in play.
So this show isn't reallyabout health benefits.
It's about the business that these healthbenefits have become and how, if the CEO
(01:34):
or CFO of an employer is not intimatelyinvolved in the financial layer wrapping
around health benefits, then the companyis getting really taken advantage of
by those entities who are intimatelyfamiliar with the financial layer
surrounding those health care benefits.
And the employees of that company alsoare getting equally taken advantage of.
This is not a case where payingmore or less results in better or
(01:57):
worse employee health or healthcare.
It is a case where not mindingthe shop in the c-suite means that
financial actors, just take more ofthe pie and nobody wins but them.
Employer loses, employee loses.
Andreas Mang, my guest today, kicksoff this interview talking about
the conversation that will go downbetween himself and any CEO whose
(02:21):
company gets bought by Blackstone.
So if you're a CEO and you're aspiringfor this to happen, yeah, heads up.
But he says it's kind of an unnaturalact to dig into anything that smells
like health benefits or health insurance.
Some may not even realize that this wholefinancial layer has developed that sits
above the healthcare benefits themselves,and they also may not think that there's
(02:43):
anything that's possible that can be done.
As far as both of these points areconcerned Andreas Mang gives a list of,
as he calls them, easy things a c-suitecan do to save 10 percent while improving
employee satisfaction and health.
Saving 10 percent or more?
This can be a really big number.
A lot of this is just enforcing purchasingdiscipline that is being used elsewhere.
(03:05):
Here's Andreas's list, recapped.
There's some sub lists in here, whichI put in the show notes, but I'm
not going to necessarily go through.
Six easy things.
Number one, have CFOengagement throughout the year.
That's number one.
We talked about that lastweek with Mark Cuban also.
Number two, be self-insured onceyou have reached a certain size
and Andreas gets into this in moredetail during the show itself.
(03:28):
Number three, be very, verycareful who you hire as your
broker or benefits consultant.
There's four things that need to be true.
We go through these in the show.
They're also listed in the show notes.
Number four, do Carrier/ASO/TPA, RFPsonce every three years or thereabouts.
Number five, do dependenteligibility audits.
(03:49):
Cora Opsahl talked a lot about thisalso in an episode last summer.
Number six, relatively easy thing to doas per Andreas Mang, leverage pharmacy
coalitions and stop loss collectives.
In the show itself, Andreas offerssome warnings because some of
these coalitions and collectivesare great, and some are not.
But bottom line, just keep inmind, as Mark Cuban said two weeks
(04:09):
ago, those that are taking yourmoney, your company's money, are
advantaged when you are confused.
Where there's mystery, there's margin.
If you can't convince them,confuse them and all that.
This is a business strategy.
Healthcare should not be thiscomplicated but yet it has become
so, and anyone who doesn't realizethat is letting themselves and their
employees really get taken advantage of.
Unknown unknowns are not benign.
(04:31):
As I have said several times already,Andreas Mang is my guest today.
He is a partner at Blackstone, the privateequity and alternative asset manager.
His job is helping portfoliocompanies manage their U.S.
healthcare benefits for their employees.
My name is Stacey Richter.
This podcast is sponsoredby Aventria Health Group.
Andreas Mang, welcome toRelentless Health Value.
Andreas Mang (04:52):
Thanks Stacey.
Appreciate you inviting me to join.
Stacey Richter (04:55):
One thing that I've heard that you say, you walk in and
you say to the CEO and CFO, how'syour healthcare business doing?
Andreas Mang (05:00):
This idea came to me probably seven years ago now where I sat
down with the CEO of one of our companies.
They had about 5,000 employees.
They were spending north of 50, maybe$60 million a year on healthcare spend.
Their rates of inflation werefar higher than benchmarks.
And we sat down and I saidto him, so great to meet you.
(05:23):
It's a great business you have here.
Excited about the investment.
I'm here to talk about yourhealth insurance business.
And this was a financial services firm.
The CEO kind of looked at mewith that over the glasses look.
He gave me that look that said,your colleagues at Blackstone
all seem really smart.
You seem to be the outlier.
(05:43):
I don't have a health insurancebusiness here, a healthcare company.
We're a financial services firm.
And I'll tell you, that was apretty uncomfortable moment.
I sort of shifted in my seat, but I alsoknew I had him right where I wanted him.
And I said, I understand that,but you have over, again, 5,000
employees, you're spending north of $50million a year, you're self-insured.
(06:03):
And I said, at your current rateof growth, if we don't do something
about this, you're not going tobe a financial services firm.
You're going to be a healthcarecompany in a few years.
That moment the lightbulb wentoff, you sat back down with a look
that said, okay, keep talking.
I'm interested in what you have to say.
Interestingly, he held weeklymeetings with the entire company.
And after we met, he started toincorporate that into his weekly
(06:26):
conversations with all 5,000 plusemployees where he said, look, folks,
we need to do something about thisor we're going to be a healthcare
company in the not so distant future.
So, yeah, that was a funny experience,but at the end of the day, it's the truth.
If you are self-insured, you haveassumed health insurance risk
and you're running a small healthinsurance company inside your business.
(06:48):
And that's a strange thing.
That's an unnatural act for acompany to have that put on them.
It's pretty unique to the U.S., but itcertainly creates a number of challenges.
When you think about, you know,what, 60 percent plus of the U.S.
workforce is under self-insured plans,and so you're hoping that all of those
companies that are employing all thoseindividuals have the skill set to
(07:11):
run a small health insurance companyinside their business, and most don't,
and quite honestly, it's probablynot fair to think that they should.
Stacey Richter (07:18):
The reaction that you got from that CEO, Looking across
the glasses as you described, likeif you had been anybody, if you had
been coming in from the benefitsdepartment, like you, you would have
gotten kicked out of the office.
This whole endeavor might reallyneed to start at the board of
directors, or with someone that theleadership team holds in great esteem.
(07:39):
Why is it so important for an executiveteam such as you have at Blackstone and
or a board of directors almost anywhere,why is it so important to actually
recognize if you're a self-insuredemployer, you're running a small
insurance company and treat it as such?
Andreas Mang (07:57):
You have to start with, for most companies, healthcare is their second
largest expense behind only salaries.
And for most companies, that expenseis largely growing unchecked.
It's certainly, at least in normaltimes, outpacing inflation, and it can
be an incredible drag on the business.
(08:18):
However, many people view itas something that they don't
have a lot of control over.
They say, well, there's going to becancer, there's going to be train
wrecks, there's going to be bad thingsthat happen and I can't control that
expense, so they shrug their shoulders.
And I think therein lies the problembecause there's a lot of waste in the U.S.
healthcare system that can beworked out by employers and
(08:39):
actually addressed by employers.
But let me rewind with, soit's your second biggest
expense behind only salaries.
Let's say you were an aluminum company.
You made cans, aluminum cans.
I'll bet you anything that CFOof that company knows everything
about this, the price of aluminum,their suppliers, the supply chain.
They've probably hedged against inflation.
(09:01):
They have futures contracts locked in.
I'll bet you they can tell youeverything about the price of aluminum.
And I wonder why companies don'tuniversally attack healthcare in the
same because you don't see it often.
But I go back to why.
Well, because it is an unnaturalact for companies to be providing
(09:21):
health insurance benefits.
And that's thing one,that it's complicated.
It's strange.
It's, I don't condemn companies for notbeing 100 percent sure what to do with it.
In addition, I think it's misplaced.
We lobbed this expense andcontrol of it onto HR teams.
I was in front of a huge group ofHR leaders when I got on stage,
(09:43):
and I said, Hey, I'd love to know,put your hands up, how many of you
got into HR, got into benefits?
It was a mixture of CHROs and benefitleaders, and I said, got into this
business so that you could run a smallinsurance company, and not a hand went
up, and they all kind of laughed at me.
But, but it's where it's put.
You have a group of people whoare being asked to manage this,
(10:03):
but being told, create no noise.
There's a conflict there.
Manage this second biggest expense in thecompany that's growing out of control,
but create no noise because we don't wantemployees to be feeling any friction.
So that's a conflict right there.
HR leaders who say, well, this,there wasn't a class when I was
getting my degree or learningabout HR, that was a class on
(10:25):
running a small insurance company.
So I'm going to look to my advisors andthese are brokers and there's a broad
range of brokers out there and theirexperience and they may have little
experience managing insurance risk.
They may have misaligned incentives.
And so you have this combinationof all these things where these
programs become structurally unsound.
Right?
So you have all of thoseforces working together.
Stacey Richter (10:47):
Let's talk about what happens if you have alignment
between the investor group, seniorleadership, the board of directors,
and the HR team, if you have thatalignment, what is possible to achieve?
Like what's the why here?
Because everything that you havesaid and others have said, we did
a whole show on employer inertia.
(11:08):
We called it the InertiaShow with Lauren Vela.
This is tough stuff, so like, why bother?
Andreas Mang (11:14):
Here's the thing, I think some of it can be pretty
technical, some of it can be tough,but some of it can actually just
be enforcing purchasing disciplineacross the, across your company.
Let, let, let me talkabout what's possible.
So let me start with, at Blackstone,currently my team is managing a portfolio.
We're, we're, we have about a littleover 70 companies, 250,000 lives, we're
(11:37):
managing about 2 billion in spend.
Our 13 year track record formedical and pharmacy inflation
trend has been hovering around 2%.
We have delivered solutions to ourcompanies that are improving the
experience for their employees,that are providing a high level of
clinical support, that is delivering adifferent concierge service experience.
(11:59):
That, by the way, as rated by theemployees and their dependents who
are using our solutions, have providedan NPS of around 80, which is some of
the highest scores in the industry.
And so, a lot can be done by the employer.
Think about that.
A growth rate, a trend hoveringaround 2 percent for 13 years.
And that has not been done by strippingthings down, by taking things away.
(12:25):
To the contrary, what I just said waswhat we have provided are solutions
that give a lot and sort of fillthe holes in the healthcare system.
But let's say you don't have the sizeor, or knowledge that, that you can
build a platform that is enhancingclinical support and all that.
There's at least four or five, sixthings that I think any company can
(12:45):
do that can deliver an easy 10%.
Right off the top in terms of savings.
And if you think about 10 percent onwhat a company is spending on healthcare,
that can be a really big number.
Stacey Richter (12:55):
I definitely want to get into those things to reduce spend 10%.
I think it would beimportant to point out.
You know, if you've got multiplemiddle people, companies, and then you
go on the stock market and you lookat what their profit margins are, if
those companies are working unhamperedfor your company, then that profit
(13:18):
margin, speaking in total broad strokeshere, your company is paying for.
But like, this is what you'retalking about cutting off
the top that's easy enough.
It's not like you're digging into the.
actual nuts and bolts of the plan per se.
You're basically cutting things thatyou are currently paying for that are
not actually providing or accruingany health to your member population.
(13:42):
It's basically just excess financialspend that doesn't amount to anything.
Andreas Mang (13:48):
Yeah, I think that's fair.
A lot of companies are leaving dollarson the table that is unnecessary.
That is not delivering a lot of value.
Now, look, I'm not going tosay every company is set up
this way, but I have seen many.
And the usual standard engagement modelis CFOs get involved with healthcare
once a year during the renewal, they'llwork with the HR team, they'll see
what the numbers are coming in at, andhowever that conversation goes, it's
(14:10):
accepted, there's pushback, it's or not,and they sort of go on with their day.
Better is to have CFO engagementthroughout the year, and what I said
before, is providing air cover tothe HR team so that they have the
support and sort of the cover to dothe things that I think many know need
to be done, but again, they may havesome conflicting imperatives coming
(14:32):
down around how to manage this spend.
And so I think c-suite, broad c-suiteengagement, but at a minimum CFO
engagement, especially if you'reself-insured, is imperative.
Create that teamwork, create thatbuy in on both sides so they're
working together to manage this.
You just don't see that a lot.
It seems kind of basic, but to me, that'ssort of first and foremost because then
(14:53):
that opens up the doors to a lot ofother things that, that we'll talk about.
Stacey Richter (14:57):
Tracking this back and connecting some dots here.
The point is there is a lot of wastethat unchecked vendors will basically
take advantage of an employer.
So you have a bunch of excess spendtranspiring, which is going to continue
and the CFO, as you said, and the c-suiteare best equipped to be able to sort
(15:19):
of ferret that out, probably doing whatthey do all day in their normal day
jobs, buying aluminum or whatever itis that their core business deals with.
So main point you're making is if youwant to trim back the dollars, which the
company is spending, maybe fritteringaway imprudently, the CFO, the CEO
(15:41):
must be involved and then just kind ofconnecting it back to the larger point.
This is another reason why boards ofdirectors, et cetera, probably should
be paying attention here and helpingthe CEO, CFO, almost providing air cover
for them or the imperative at a minimum.
So that then they can help thebenefits team do what they do as well.
(16:02):
And then you have the entire organizationin alignment as opposed to no air
cover, don't create any noise, but atthe same time control the spend, which
is never going to work in any world.
Did I nail that?
Andreas Mang (16:12):
Nailed it.
Exactly.
I want that.
I'd like every CFO to be asknowledgeable about what's happening
with their health care spend asthey are about the spot price of
aluminum if they're a canning company.
Stacey Richter (16:22):
Let's talk about number two on your list.
Andreas Mang (16:23):
Number two, funding.
Self insurance.
Self insurance will save a companyin the range, depending on the
state, depending on a few factors.
But it's going to save a company 5to 9 percent automatically because
of a number of fees and taxes andmandated benefits and things that go
away when you become self-insured.
(16:44):
Any company from our perspective,the threshold, I know it's gotten
small and small companies havedecided to go self-insured.
We get comfortable with companiesgoing self-insured at around
400 employees on their plan.
So if you have at least400 employees on your U.S.
medical plan, you should be taking avery hard look at going self-insured
(17:06):
because you're automatically goingto eliminate 5 to 9 percent of costs
without doing anything that affectsyour employees at all, you are simply
changing the funding mechanism.
Stacey Richter (17:17):
Before we get into the third point, which is going to be about
brokers and employee benefit consultants.
I can see how two on your listhere, which is to be self-insured
folds into number three becausecompanies rely very heavily on their
brokers slash benefit consultants.
And if that broker slash employee benefitconsultant has book a business, goals
(17:41):
and bonuses, etc, then you could stillbe winding up in a situation where the
broker is steering based, I'm goingto say a little bit more on their own
self interest and may not be guidingthe company toward a solution that
is necessarily best for the company.
Which is just another reason why theCEO, CFO, and board of directors needs
(18:03):
to get involved here because these arebig decisions that really need to be
made and at the level of a senior exec.
Andreas Mang (18:12):
I agree with that.
I agree with that 100%.
Again, the funding isn'ta healthcare thing.
It's a CFO thing.
It's sort of a risk thing.
It's a funding mechanism, but we'renot getting, we haven't, look, I just
talked five to 9 percent savings.
Boom.
We haven't gotten intoanything healthcare yet.
Stacey Richter (18:27):
Let's talk about number three on your list, which is ensuring that
you have a broker slash employee benefitconsultant that is very trustworthy, you
can rely on to work in your best interest.
Andreas Mang (18:41):
And has the experience to do so.
Look, in, in my experience, and I wantto be careful, this isn't universal.
But in, in my experience, theretends to be a dividing line,
brokers, benefit consultants.
There are those who spend a lot of timeon the fully insured sides, and then
there's a group that spends most oftheir time on the self-insured side.
(19:04):
And I would argue that the skillsets, the experience required to
do the self-insured is different.
The math is going to be different.
You do require a team who can projectmedical claims risk, who can help a
company write appropriate budgets,be able to box in the risk that
does come with going self-insured.
And so ensuring you have a brokerwho has experience with self
(19:27):
insurance is really important.
Something we do a lot with ourcompanies is we do broker RFPs.
Look, it's just like any business, youknow, there's good, there's less good.
Our job is to bring the bestwe can to our companies.
We've helped north of 100companies now run broker RFPs.
There's five things I look for.
(19:48):
First is experience.
Do they have a broad setof self-insured clients?
You want a broker who has spentmany years and who has a broad book
of almost exclusively self-insuredclients, and they've been in the
trenches doing this for a while.
Doing provider networks,finance, like my actuary did
pricing, ran stop loss programs.
My chief clinical officer is apharmacist, but also ran clinical
(20:12):
programs at a large Blues plan.
Great if you can find peoplewho have that experience.
Hard to find, but at least a broadset of self-insured clients, with
appropriate resources to support that.
So you're not going to build up a teamof actuaries and clinical folks and
compliance experts, but the broker thatyou employ has to have those to look
(20:33):
for actuaries, not just finance guys
Stacey Richter (20:37):
So number one on your list of things to look
for in a broker, when you areself-insured is absolutely number one.
Does this broker and their organizationhave the talent that is required to
actually help you manage the plan?
You said you had five thingsthat would be number one.
Give me number two.
Andreas Mang (20:57):
Compensation, flat fee model.
A broker who is willing todisconnect their compensation from
commissions, etc., really important.
So when we do a brokerRFP, we do a flat fee.
It is disconnected from all commissions.
And that flat fee must encompassa robust scope of services.
One thing that companies needto beware of, beware of being
(21:19):
statement of work to death.
Bunch of statements of workfor every little thing.
No, you want a broad scope ofservices that the broker is willing
to accept a fair fee on and says,I will execute on all aspects of
running your plan for this fee.
And it's a broad, welldetailed scope of services.
You can find those online pretty easily.
(21:41):
Third, product pushing.
It seems that in today's world, manyof the consulting houses have put
together suites of products, solutionsthat are pre baked for employers.
Well, we don't like those.
That's a red flag for us.
Better are those who arenot pushing solutions.
Have access to them, have awarenessof them, suggest deploying them if the
(22:04):
data supports the need for a solution.
For instance, one of ourcompanies in investment just
had, they had a lot of babies.
And so for them, solutionsaround fertility and healthy
babies, those things made sense.
If you have a workforce that may bedifferent, right, is older, probably
don't need to push that solution.
(22:24):
It might be something else that they need.
So beware of brokers who come with afull set of solutions that are pre baked.
You want, you want the brokers whocome with insights, who look at
your data and say based on this,here's the best solution and we have
experience deploying it and it works.
Number four, fees at risk.
We think it's really important that asignificant portion of fees at risk,
(22:45):
call it 30 percent or more for a verysimple net promoter score question.
. If the company cannot answer with a score of nine or greater, I would recommend
this broker to a colleague or a friend,if they're not willing to put 30 percent
or more fees at risk for that simplequestion, I think that's a red flag.
Those that are willing to dothat, I think it says something
(23:07):
about their service model.
Stacey Richter (23:09):
So fees at risk to assume an NPS Net Promoter Score of 90%?
Is that what you said?
Andreas Mang (23:16):
Yeah, it's a 9 or above, which says I'm delivering on the promise
that I sold you when you chose me.
Saying fees at risk forservice is a really big one.
And finally, simpletermination provisions.
There should be easy out clauseswithout penalties if a company has
chosen to go in a different direction.
Too often, we have seen punitive contractprovisions, termination provisions.
(23:39):
We're involved with one right nowwhere a consulting firm is demanding
millions of dollars from a company whowants to go in a different direction.
I think those are things that you canhead off in, in the beginning during
the, called the procurement process.
Again, if you're in the service businessand the person paying you has decided
that you're not meeting their needs, itshould be that company should be able
(24:04):
to move on and make a different choice.
I think when you have things like that,simple out provisions and fees at risk,
it sort of makes everyone aligned.
Stacey Richter (24:11):
And I probably could underline everything that you're
saying because I have heard horrorstories about every single one.
So I appreciate you puttingthe what's in your Brooker RFP
into such a concise list here.
Going back to the very top of ourconversation, we started out talking
about what are really important musthaves for any company who's looking to
(24:36):
not get taken advantage of by vendors.
You had listed number one, the c-suiteabsolutely must be doing and applying
the skills and authority that they have.
That's your number one.
Number two is making sure if theentity, if the company has 400 or
more employees in the United States,they are being self-insured and as
(24:56):
you said you're going to save around 5to 9 percent right off the top there.
Just by doing that.
And number three, we've just spenta bunch of time talking about brokers
and employee benefit consultants andthe importance they are well aligned.
Is there anything elseon your main list here?
Andreas Mang (25:12):
Really big.
When is the last time the companyhas actually done a carrier RFP?
When is the last time theyRFP'd their health plan?
On average, hospital contractsturn over every three years.
So every three years, there's apretty big shift out there in terms
of what carriers are paying providersystems in terms of unit price.
(25:34):
Ninety, let's call it 95 percent ofwhat you're spending is on claims.
Claims is being driven by price and use.
And so three years ago, five yearsago, you may have decided health plan
A was the right one for you, but hey,have you done an RFP and checked?
Because if the discount has shifted 3 to5 percent with another health plan, 3 to
(25:55):
5 percent on your second biggest expense.
That's a big number.
People can get comfortable,kind of feel scary.
I don't want to change my health plan.
I don't want to disrupt employees.
Well, if you do a proper RFP, you'regoing to check provider networks.
You're going to make sure your employeesaren't going to be disruptive, but you
can save three to five or more percenton your total costs just by doing that.
(26:16):
We find that a lot of companieshaven't done that as frequently as
we might want to see them do it.
Stacey Richter (26:22):
Again, going back to boards of directors or others who have
an interest in ensuring that a companyis not getting taken advantage of.
Every time I hear of a company that hasbeen with the same carrier for 17 plus
years or whatever, insert a timeframeway longer than three years here.
Sometimes the reason why there is notan RFP for a really long time could be
(26:45):
a sign of certain conflicts of interestgoing on amongst the c-suite or maybe
amongst benefit leads and the vendor.
And I'm certainly not stating anyof this as any sort of broad stroke
here, but there's definitely examplesof where the CEO or a CFO even has
an, what I'm going to say, not inthe best interest of the company at
(27:05):
large, relationship with some vendor.
And so that actually could be a warningsign, also, if there's too long of
a time that's being spent with onecarrier, there might be reasons why,
especially if there hasn't been an RFP.
And I certainly, again, don't wantto state that as any sort of broad
stroke, but it has come up enoughthat it would be a red flag of sorts.
Andreas Mang (27:28):
Yeah, it could be.
It's just, it's a good practice becauseagain, I'm sure in other parts of a
company's business, they're probablychecking suppliers more often.
I think it goes back to that issue ofif you're in HR and the mandate is,
hey, manage this expense, create nonoise, well, let me tell you something,
changing a health plan feels pretty scary.
Talk about source number one whereI could potentially create a whole
(27:50):
bunch of noise if doctors arechanging, hospitals aren't in network.
I don't want to do that.
So that structural issue of what I'veseen too often, where HR leaders are
out there on their own doing this, whenyou bring that alignment, guess what?
When they feel supported, when they feellike they're getting the air cover they
need, they're probably more willing to dothings like at least look at the health
(28:11):
plan, and if a change is warranted,because it makes sense, because the
networks line up, but there's savings.
It's going to be more apt to do that.
I think it kind of all goesback to that alignment.
Stacey Richter (28:20):
All right.
So let's turn to number five on your list.
What do you have for us?
Andreas Mang (28:24):
Number five in the, you don't need to be a healthcare expert to
do this, dependent eligibility audit.
So what is that in a nutshell?
A dependent eligibility audit simply says,look, we're going to audit our, out plan
membership, because if there's peoplewho are illegally sort of on our plan or
who shouldn't be, are not eligible forthe plan, guess what's going to happen?
(28:46):
If one of those people, let's say it's,let's say it's an aged out child who's
now beyond the age limit of being onyour plan, they should be on their own.
Let's say something catastrophic happened.
Your stop loss plan kicks in becauseit was some million dollar claim.
Here's what I can tell you will happen.
I can guarantee you the stop losscarrier will make sure that the
individual is eligible, they'renot going to cover that service.
(29:08):
You are going to cover it.
There are examples out there ofcompanies who think this million
dollar claim is going to be coveredby their stop loss carrier, and it's
not because it was an ineligiblemember receiving these services.
This one goes back to almostwhat we've been talking about
alignment, especially with the CFO.
This is a risk management action.
So doing a dependent eligibilityaudit can feel like, well, I
(29:29):
don't want to create noise.
My employees are not going to likebeing questioned whether the people
that they've signed up on this planare eligible and should be on the plan.
However, if you put it in the contextof, well, first and foremost, we as an
employer probably lay out pretty clearlywho should be on the plan and shouldn't.
And if everyone's doing theright thing, no problem.
Also, there's companies out there thatdo this in a very employee friendly way.
(29:54):
But when you look at it from theperspective of the potential risk that
is associated with having ineligiblemembers on your plan, Again, when
you're self-insured, you are runninga small health insurance company.
You've got to take some of the actionsthat a health insurance company
would take to ensure that you'remanaging your risk appropriately.
So dependent eligibility audit,and look, we've seen savings
(30:16):
of at least 2 percent or more.
On total medical expense from doing adependent eligibility audit, cleaning
up your rosters and who's eligible.
Stacey Richter (30:24):
That is something interestingly Cora Opsol also talked
about the risk exposure because if youhave a big claim and it's not covered
by stop loss, like that's a BFD.
So that's number five on yourlist, ensuring that everybody
who is not eligible for theinsurance is not still on the plan.
(30:46):
If we're going to talk aboutnumber six, what do you got for us?
Andreas Mang (30:49):
Let me lump six and seven together.
I'm going to start with the premisethat in healthcare, when you look
at what's happening in the industry,provider systems are coming together
and getting larger and more powerful.
Health plans are vertically integrating,they're buying provider systems,
they're buying PBMs, so health plansare getting bigger and more powerful.
(31:09):
Who's left alone in the story?
The employer, when you look at it thatway and you say this is becoming a little
bit of an unfair fight, the employeris bringing a knife to a gunfight.
I'm gonna, I'm going tooffer the next two quickies.
on the premise that you're bettertogether, you're better with larger
groups than out there on your own.
And so I understand there's a bit ofnoise around these next two, but let
(31:32):
me just start with leveraging pharmacycoalitions and leveraging stop loss
coalitions or collectives are a good idea.
However, I would just saythere are good ones out there.
There are ones that are doing the rightthing, and there are ones that can deliver
real value around pharmacy and stop loss.
(31:53):
That's basically an entire othershow to dive into those two areas.
However, I'd say thatit's worth looking into.
And if you're involved in a coalition,it's worth just sort of having an
extra set of eyes, take a look at yourcontracts, look at the results, look at
your data, because you should be gettingit, and see how they're performing.
Because again, there aresome good ones out there.
(32:13):
There are some that have gottensome press for doing things
that maybe aren't so great.
But again, I think employers areoutgunned in this whole game.
It's an unfair match.
And so if there are opportunitieswhere we can bring companies
together, you're better together.
So that's my list.
Stacey Richter (32:28):
I love how you put that.
Employers are better together,but also keeping in mind
the caution you tossed out.
The opaqueness of healthcare hashuge allure for opportunists to
be making money on the back ofan unwise or a naive employer.
Andreas Mang (32:48):
100 percent agree.
And I would say that it's, it goes backto this unfairness and the strangeness
of employers providing this benefit.
Stacey Richter (32:57):
So let me kind of circle back on a couple of things.
Something that I think a lot of peoplefear when they hear a self-insured
employer, an employer is going to get morein the mix here, cost containment becomes
the name of the game and everybody's goingto throw their backs into saving money.
Saving money becomes asynonym for cutting benefits.
Andreas Mang (33:15):
I would argue employers, especially in this very tight labor
market, have a natural incentivenot to do the kind of cost cutting
things that result in sort of paringback benefits or making unattractive
benefits to their employees.
The incentive to not do that isso strong just by the labor market
today that I think, I think you havethat as a counterbalance to just
(33:36):
doing things just to save money.
And what's interesting is if you thinkabout the list I just went through,
most of those things on that list havevery little impact on employees at all.
Stacey Richter (33:46):
You can save 10 percent plus just cutting waste, which
actually is a benefit to employeesbecause if there's any cost sharing
involved and everybody is overpayingor if there are, you know, assessments
that the CFO is doing to determine howmuch money is available for raises.
Instead of giving the 10%, which can behuge dollars to your point, to some third
(34:08):
party entity, by saving those dollars,as has been said any number of times
by any number of people, now all of asudden we do not have stagnant wages,
which has been a result of every year.
The benefits spend going up becausethen there's less money for pretty much
anything else the company wants to do.
Andreas Mang (34:27):
A hundred percent.
Stacey Richter (34:28):
So, let me also dig into another thing that you said relative
to brokers in your list of five thingsthat you include in your broker RFP.
One of the things you said was making surethat the brokers have a flat fee model.
And I think that bears a littleclarification here because there are many
brokers who will come to the table sayingthat they have a flat fee model because
(34:50):
they are not disclosing indirect payments.
Andreas Mang (34:53):
Let me, let me say maybe a couple of things.
One is getting your scope ofservices right is the first step.
Being careful about how you write youragreement and spelling out what is
and is not included in that flat fee.
We have found there's a handful ofbroker teams out there we are very
aligned with and supportive of becausethey're really good at disclosing.
(35:16):
They say, look, here's all the,here's all the different ways
that we're going to make money.
Here's how we're goingto pay for your fee.
Here's how we're going to box this in.
And hey, sometimes we evenget fees from over here.
Some of these we have control over.
Some of these we don't.
Biggest thing is, is it disclosed?
Are they being robust in their disclosure?
So, that's a big first step.
And then second, again, is layingout, hey, when I say a flat fee,
(35:40):
any and all forms of compensation,whether it's core medical, pharmacy,
uh, ancillary services, employeepurchased insurance products, it's up
to you to spend the time to educateyourself and to box in those things.
And again, it doesn't take a ton of workto write language in a way that says,
look, any and all ways of potentialdirect and indirect compensation,
(36:03):
need to be included in this fee.
Stacey Richter (36:05):
If an employer discovers there are fees that are
transpiring, that are getting withdrawnfrom their bank account, like it's
kind of too late at that point.
The fix would be do an RFP and startagain, because unless the language
is in the original RFP, it's verydifficult to adjust on the back
(36:25):
end is what I'm understanding.
Andreas Mang (36:26):
But again, what I would say is the teams that you want
to align yourselves with are goingto have absolutely no problem being
extremely transparent with you.
We'll offer that.
We'll offer that transparency,and you'll know it.
You'll know it when you sitdown and have the conversation.
You gotta be clear that not everybenefits consultant and benefits
broker out there is doing bad things.
(36:47):
Some do.
We've found, certainly,plenty of bad things.
Look, sometimes it's unintentional.
We've worked with brokers who actuallyare trying to do the right thing.
They're just, they haven't,they don't have enough
experience with self insurance.
They haven't done enough.
They haven't had enough at bats.
They think they're doing the right thing.
They're not.
Sometimes you have that.
But I'd say brokers who come toyou and are very willing to be
(37:08):
completely transparent and they're outthere, that should be a green flag.
What you can do is apply the same rigor,the same purchasing discipline that you
apply to other aspects of your business.
Do it to your healthcare plan.
Do it to your medicalplan for your employees.
Do the same things.
And you're going to deliver somemeaningful results in a way that's
not going to disrupt your employees,which is sort of a wonderful thing.
Stacey Richter (37:29):
This can be done incrementally.
It's not like you've got to go fromzero to the deep ends of the pool.
There's a number of things that yousaid that you could try something,
layer on a little bit more, a littlebit more, a little bit more in a way
that makes everyone feel comfortable.
Andreas Mang (37:43):
I think it's a great point.
100%.
You can take this list andlay out a plan and say, look,
we're going to do these things.
we're going to do theeligibility audit next year,
check funding, check the broker.
We're going to do that immediately.
And we're going to do some ofthese other things down the road.
I think it's a great point.
You don't have to swallow thewhole thing in one, one bite.
Stacey Richter (38:00):
Is there anything I neglected to ask you, which
you would like to mention here?
Andreas Mang (38:04):
What we talked about today are like blocking and tackling.
You get those nailed and then youcan get into the next level of things
Stacey Richter (38:11):
Andreas Mang, thank you so much for being on
Relentless Health Value today.
Andreas Mang (38:15):
It has been a terrific conversation.
I've enjoyed being here with you, Stacey.
Thanks for having me.
Tom Nash (38:20):
Hi, this is Tom Nash, one of the RHV team members.
You might recognize my voicefrom the podcast intro.
If you love this show and you want toshow us your support, please follow us
on your favorite podcast app, sign upfor the newsletter, or maybe consider
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