Taking Control of Benefits

 OP CIVIL 01By Eric Krieg

Benefits plans – and specifically health benefits – have long been used as a cost effective and tax advantageous way to support wages in a holistic view of total compensation. In the construction industry, where labor and related benefits costs often have the greatest impact on the bottom line, it’s important to continually manage and review plans to make sure you’re optimizing performance and eliminating waste.

However, benefits managers are consumed with the ongoing struggle to control healthcare costs and manage the structure of the employee health program. This is done with the additional challenge of managing employee noise and dissatisfaction regarding the health plan. This is a big chore, indeed. Unfortunately, what has been happening with such a close watch on health plan management is that many have forgotten about the big picture of total compensation. Without a close eye on compensation in conjunction with health plan decision making, your employees’ disposable income is experiencing dramatic erosion. This is due greatly because of the increase in payroll contributions and skyrocketing plan deductibles and cost sharing.

 

What’s a Leader to Do?

First, stop following your counterparts who work within the rules of the system that actually caused the current mess. Next, act as if everything starts with a fresh approach to plan management and decision-making.

If you keep playing the game under today’s rules, both your employees and company will continue to lose. The cards are stacked against you. The healthcare providers, insurance companies and brokers are currently in charge and you are simply a pawn in their game.

The Path To Success

Here are five ways your company can dive deep into your employee benefits plans.

1. Really understand your employees’ healthcare cost issues by conducting a deep analysis of your workforce and understanding your employees’ disposable income dilemma. You can begin by reviewing historical trends of employee benefits costs as well as by assessing employee salary adjustment trends.

2. Look at the current management techniques being deployed to control your plans. How much of your strategy is cost shifting versus cost savings? Are there opportunities to reduce cost and share those savings with employees? Begin by evaluating vendor relationships and associated arrangements versus results. Are you really getting what you pay for? As a fiduciary of your medical plan, your responsibility is to evaluate all service provider contracts and determine where there may be opportunities to save money and increase value. Assign your best managers to the benefits team and question everything. Analyze all existing programs, vendor relationships and contracts. Ask for detailed reporting in order to understand pricing, fee structure and utilization.

3. Recognize the barriers your team has created regarding possible available options and modifications. When you hear “we couldn’t possibly do that,” be sure to take the “yes, if” instead of the “no, because” approach to plan management. Promote and allow your benefits team to take risks. Don’t expect perfection, but demand progress.

4. Stop depending on organizations and vendors that are profiting from a broken system and process.

5. Instead of working in a silo, bring management of benefits into the mainstream of business priorities. What else do you spend this kind of money on? Reveal the mystery of employee health benefits and manage these costs with the type of scrutiny used in other key areas of your business.

What Now?

Embrace change, get involved and shake things up. You can make a difference. It all starts with the key internal changes described above. The crucial point is to appreciate the true impact that healthcare costs are having on your employees and organization. A new paradigm is necessary to embrace solutions that are, in fact, quite different from today’s traditional approaches.

Your next step is to focus on the acquisition of healthcare and health plan services in the same manner used for traditional economic products and services. Begin with critically exploring non-traditional market solutions with a focus on high-quality, low-cost service providers. This subject is a key topic for your success and involves a lot more information than what can be contained in this column.

If you take these steps, you can expect that:

* You will gain control of a system in chaos.

* Your employees will have a better opportunity to experience and appreciate the increased wage you provide.

* Your business will have more resources to devote to your core purpose as an enterprise.

* Your plan can achieve a meaningful decrease in cost.

The solution is to improve cost and quality of services delivered with aggressive management. There are many levers that can be adjusted in order to produce a positive effect and while it may seem daunting, it truly is possible to drive change. There are resources available to help you navigate this landscape, including organizations not entrenched and highly conflicted by the massive profits generated from today’s system.

Eric Krieg is the president of Risk International Benefits Advisors, which specializes in helping companies optimize their employee benefits plans to reduce overall costs for the company and their employees. 

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