Before COVID-19, companies across the U.S. had grown at a rate of 2.1%. However, issues loom on the horizon that threaten to slow that progress. A pandemic, and falling oil prices and lack of demand are all impacting business. Knowing all of these issues, you must take every step possible to improve cash flow and grow your business. Stopping inefficiencies in your employee benefits plan will allow you to predictably and consistently free up money by focusing on the 80 percent of your health plan’s expenses that are manageable — yet regularly ignored by most insurance brokers.
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FACTORS HURTING GROWTH
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A SHIFT IN MINDSET
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YOU HAVE THE ANSWERS!
Factors Hurting Growth
Attention Companies: Is your insurance broker’s compensation aligned with your success?
Your insurance broker’s compensation may influence the type and amount of service they provide when designing the “best” benefits package for your company, relative to cost. How your broker is paid (i.e. commissions, fee-for-service, fee-for-performance) often factor significantly in the plan recommendation.
Learn the various compensation models you can use to align your insurance broker’s compensation with your organizational goals and take back control of a top three expense that is hindering your company’s ability to grow.
How The Wrong Employee Benefit Strategy Could Cost Your Company 10x in a Merger or Acquisition
Most insurance brokers who work with companies’ during mergers and acquisitions space don’t take a sophisticated look at employee benefit strategy during a potential transaction. They focus on the acquisition cost of the coverage and consider a reduction in that cost a strategic win when it’s nothing more than gaining a one time leverage of increased employee count.
Understanding the lost revenue buried in the 80% of health insurance expenses that are variable can give you the ultimate advantage whether you are selling your business or acquiring another. Many companies in our area are valued at 10X their past year’s EBITDA. This means if you reduce $100k in insurance expenses, you’ve raised your company’s value by $1,000,000.
The Rise of Healthcare Costs in Business. It’s Not Whether You’re Losing Money, It’s How Much You’re Losing
The uncontrollable and unsustainable rise of healthcare costs is a major factor hurting companies. If insurance was the source of this problem, we could fix it with insurance. We’re telling you that insurance is neither the problem and nor the solution.
Here’s the ugly truth for most companies: You’re not managing the supply chain when it comes to your employees’ benefits, which means you’re losing money. Learn how to take control of 80% of your healthcare costs by managing variable expenses.
A Shift in Mindset
The Smartest Companies Are Changing Their Healthcare Purchasing Strategy
Typically, the way companies purchase healthcare involves choosing the least bad option from a variety of carriers who are all presenting premium increases year over year.
Improving your company’s health plan is not about what you buy, but rather how you buy it. Understanding how your benefit plan directs cost within the healthcare supply chain is the key to taking control of your benefits expense.
Learn How an Insurance Professional Can Help Your Business Grow
Most business owners do not realize that the right insurance professional can help their business grow and produce free cash flow in the process. The reason for this is that insurance professionals have not been able to manage or reduce costs. Understanding that 80% of healthcare costs can be managed allows you to find an insurance professional who can free up substantial dollars currently wasted by your benefit plan. This money directly improves your company’s cash flow and profits.
The Best Companies View Benefit Plan Performance as Growth Driver
The same way that companies expect a certain number of units per hour from a given machine, the best companies understand their benefits are an investment. With this knowledge, they expect a return on the investment through little to no premium increases and higher employee satisfaction.
In the same way you invest in technology to increase efficiency, you should find new ways to manage the 80 percent of benefits expenses that are within your control to improve benefit plan performance.
You Have the Answers!
Manage the Healthcare Supply Chain the Same Way You Manage Other Areas of Your Business
The performance of the benefits plan is a critical role, rightly led by HR experts. But, the strategy behind financing the healthcare supply chain needs to be set by someone at your company with P&L responsibility and expertise.
The goal is not to dismiss HR but rather connect them with your person, or perhaps it’s an entire department, assigned with sourcing your company’s raw materials. Allowing HR to tap into an existing resource that specializes in sourcing can change the way you purchase benefits for the better.
With Benefits Expense as a Top 3 Line Item, Companies Need to Manage the Healthcare Supply Chain Just Like Every Other Aspect of Their Business!
You likely have a procurement strategy for your company’s materials that is overseen by a sourcing or supply chain manager who ensures efficient and effective use of that material, with the goal of increasing or at a minimum maintaining your profit margins.
Deferring management of your benefits expense to a non-P&L manager is a glaring oversight since statistics show 80% of health insurance expenses are variable.
