How One Benefits Broker is Breaking Through Status Quo
“Healthcare is the only industry where you can deliver bad news every year and
people just accept it. You consistently pay more money for less value.”
These are words from John Sbrocco, a leading risk manager and benefits consultant that has built his reputation on transparency and results. In fact, he’s so confident that he can achieve huge savings to the companies he works with, that he bets his compensation on it. If he doesn’t deliver the savings he promises, you don’t have to pay him.
Sbrocco is the Principal at Questige Consulting, founder of Achieve Health Alliance, and co-author of Breaking Through the Status Quo: How Innovative Companies Are Changing the Benefits Game to Help Their Employees AND Boost Their Bottom Line - now available for pre-order.
We were thrilled to sit down with John to discuss his new book and learn how he is leading the charge to disrupt the status quo within the healthcare industry.
[Editor’s note: RFP365 was not in any way incentivized nor rewarded for this publication. All views are the contributor’s alone.]
What is the status quo?
Q1. [RFP365] What was your inspiration behind writing Breaking Through the Status Quo? Also, what is the “status quo”?
[John Sbrocco] I belong to the Agency Growth Mastermind Partnership with about 30 other consultants in the industry. We meet on a quarterly basis to discuss next practices for reducing costs and breaking through the status quo mindset of employers. Status quo is accepting year-over-year rate increases from insurance companies. It’s when an employer accepts a 6%-7% rate increase that their broker negotiated down from 12%. The employer celebrates the rate increase because they beat the industry average, which leads them to believe that they are managing their healthcare costs better than everyone else. It’s a psychological game that is played every year. And all that employers hope for is a less-bad rate increase.
My colleagues and I wrote Breaking Through the Status Quo to let employers know that there are real solutions out there that are changing the way companies purchase health care, manage costs and access care.
What kind of solutions and tools do you use?
Q2. [RFP365] What kind of disruptive solutions are you proposing to your clients to prevent year-over-year rate increases?
[JS] Self-funding is one. There is a misunderstanding among consultants that self-funding is dangerous for small employers because of the risk associated with it. Partial self-funding is a great option for small employers, especially now that the stop loss carriers have come down-market to offer small-mid-size companies self-funding and alternative funding solutions. The only way to control the healthcare supply chain is being self funded.
We are also utilizing regional networks for care instead of the BUCA networks. This provides us greater control of managing the healthcare supply chain. This causes some member disruption in the beginning, but can result in significant savings.
We also use incentives to steer members to high-quality facilities.
The reason healthcare is so expensive is members do not use consumerism when they access care; they do not compare costs and quality for healthcare like they do when they shop on Amazon. We put tools in place to help members access the highest quality physician or facility in their area for a specific procedure.
For example, if a member needs to have their ACL repaired, and they contact their advocacy service to find the highest quality physician or facility to perform the surgery, they pay nothing. The employer picks up 100% of the cost. This results in better outcomes and lower costs for both the employer, and the employee.
Q3. [RFP365] What tools are you using to help members determine where to access care?
[JS]: HealthJoy has been my advocate for my clients. They are great at customizing things appropriately to provide members with quality and price transparency. Transparency is a challenge in the healthcare industry, because insurance companies and providers are not always transparent about how much services actually cost. Transparency is important, because it drives competition, which in turn drives quality and lowers costs.
Why aren't more brokers doing this?
Q4. [RFP365] Why aren’t more brokers proposing disruptive solutions to their clients?
[JS] There are a few reasons. First, there is a lack of education on the programs and products available. I have spent $50,000 this year alone traveling the country to find the next practices and strategies available to my clients. It’s a great expense, but I am able to provide better solutions to my clients.
Another is conflict of interest. There are two ways that a broker is compensated – they are paid fees by the client, or are paid commission on insurance premiums. Brokers paid commissions are eligible to receive bonuses from insurance companies if they sell and maintain a large block of business with them each year. This leads to brokers having greater allegiance to insurance companies than their clients. When I go to prospect meetings, I ask “have you ever suspected that your broker’s commission means that they represent the insurance company and not you?”
Our model is 100% fee-based, which means that we get paid by the client, not the insurance company. We compete in the marketplace by delivering better outcomes for our clients. In fact, we are so confident in what we do, we are willing to put our compensation at risk. I tell new prospective clients, “if your outcomes don’t exceed what you pay me, I work for free.” Of course, that is predicated on their willingness to adopt the solutions that I propose.
What kind of results do you provide?
Q5. [RFP365] Can you provide an example of a solution that you proposed that resulted in significant savings to your client?
[JS] Sure, I had a renewal for a group that had always gotten the typical story from their previous broker – a 10%-12% average increase that was negotiated down a few points each year.
When we took over as broker of record, we were able to provide the employer with a better health plan, and savings of $200,000 in the first year. This year, there was no increase to their spend.
We are really proud of this success story, because we were able to deliver outcomes. We compete on OUTCOMES, not activity.
Thank you again John Sbrocco! Get more benefit administration RFP tips here.