When data transparency needs a carrot-and-stick approach
How does an employee benefit adviser convince their clients’ employees to be smart shoppers for their medical procedures? EBN spoke with Mark Johnson, founder and CEO of Creative Benefit Solutions of Birmingham, Ala., about data transparency, the need for incentives and how to offer Google-level benefits while keeping an eye on the bottom line. What follows is an edited transcript of the conversation.
EBN: Tell us about Creative Benefits Solutions.
Mark Johnson: I started this firm in 2003. We are based in Birmingham, Ala., and we work with small to mid-sized employers in a 10-state radius in the Southeast region. We are a consultancy and our scope of work is for employers looking to work on their retention and attraction strategy. We work with more than 30 different insurance carriers, whether it's health insurance, dental, vision, life insurance and short-term disability. We do everything with the exception of retirement planning.
EBN: What tools do you offer?
Johnson: We also use data analytics. We provide data analytics for benchmarking, actuarial tools and resources to help customers with their risk decision support. We do broker products as well, but our primarily approach is a strategic planning process: helping companies put together a two- to three-year plan, versus working on the renewal one year after another.
EBN: How do your data tools work?
Johnson: We have a high-touch service model where we're helping with transparency and data. We're helping customers understand how to manage their costs and we are sort of an extension of the HR team to help that HR team manage their benefit program. We deal with the compliance issues around new state or federal legislation, help a firm build a budget, and we also help when it comes to managing their population’s health and looking at strategies around wellness initiatives to help that employer achieve success.
EBN: You can build the best medical pricing data tool in the world, but if employees don’t use it, it’s pointless. How do you convince an employee to shop for an affordable medical test or procedure?
Johnson: We try to promote what we call reference-based pricing, or transparency with the data. We say to the employer and their employees here's a lower-cost alternative to the same service. We make sure when they have anything that's considered “shoppable” — that's sort of our term — we give them the tools and resources to help them understand not only pricing, but also the quality of the medical service.
We have seen that when there are incentives around the savings that are generated when that decision is made, typically you're going to have more success with an employee making the right choice. We're seeing this model work.
Like anything else, it takes time, and engagement needs a good messaging platform to really get that employee base to understand how to utilize that service. You're also seeing some of the larger carriers like Blue Cross Blue Shield, UnitedHealthcare and Aetna starting to embrace that strategy, as well and helping to provide transparency.
EBN: But what happens when an employee has to make a decision between convenience and saving money? If I had a small child screaming with an ear infection or I needed an MRI, I would go to the nearest care provider.
Johnson: That’s a difficult one. There has to be a carrot-and-stick approach to incentives sometimes. Typically, the balance that works best is one [that takes into account] the location, the employer and their culture, and what works well with the type of employee. Even within the same population, different strategies around incentives work better than others.
Sometimes if you can't move the needle with your passive approaches, you have to revert to a more aggressive strategy to incentivize through limiting the network's access or having higher out-of-pocket costs to drive that incentive for people to make that better choice.
EBN: What are your clients asking for these days that they weren't asking for two years ago? Are we in the midst of a benefits arms race to attract and retain new talent?
Johnson: Yes, and it's really focused on cost savings, making it affordable, making the overall benefit package attractive is what we're being asked to do. That's the No. 1 issue.
Health insurance is the driver of that conversation because it's the No. 2 or No. 3 most-costly benefit, other than cash compensation. It's always on the radar for the employer, whether it's the C-suite or the HR or the financial arm of the C-suite. Everyone's looking at that number and trying to tackle, manage and contain that cost over time. But they are also keeping those benefits attractive so they can compete for employees.
EBN: Do you see a lot of envy for Silicon Valley-type perks and benefits?
Johnson: I have a construction design and project management client that works in multiple states and they're one of the top companies in the Birmingham market. One of their HR professionals told me, “We want to be the Google of construction.” So, what does that mean? They said, “We want to be a fun place to work, we want an environment where we can attract that top talent.” And what they were looking for are non-traditional benefits.
As a consultant, I had to put my thinking cap on. Even though it's a construction company, their office looks a lot like a tech company. There has been a migration to a Silicon Valley philosophy and that philosophy is moving over into other sectors where employers are getting creative because you compete for that the top talent when you can.