You can listen to the episode here.

Introduction and Overview

[00:00:02] Stacey Richter: Episode 419, The Financialization of Health Benefits for Boards of Directors and C-suites of Self-Insured Employers.

Today I speak with Andreas Mang  

American Healthcare Entrepreneurs and Executives You Want to Know, Talking. 

Relentlessly Seeking Value.  

The Role of CEOs and CFOs in Health Benefits

[00:00:29] Stacey Richter: 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 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 last week with Mark Cuban also.  

The Business of Health Benefits

[00:00:54] Stacey Richter: So this show isn't really about health benefits, it's about the business that these health benefits have become and how if the CEO or CFO of an employer is not intimately involved in the financial layer wrapping around health benefits, then the company is getting. 

Really taken advantage of by those entities who are intimately familiar with the financial layer surrounding those health care benefits, and the employees of that company also are getting equally taken advantage of. This is not a case where paying more or less results in better or worse employee health or healthcare. 

It is a case where not minding the shop in the C-suite. Means that financial actors just take more of the pie and nobody wins but them. Employer loses, employee loses.  

Interview With Andreas Mang

[00:01:38] Stacey Richter: Andreas Mang, my guest today, kicks off this interview talking about the conversation that will go down between himself and any CEO whose company gets bought by Blackstone. 

So if you're a CEO and you're aspiring for this to happen, yeah, heads up, but he says it's kind of an unnatural act to dig into anything that smells like health benefits or health insurance. Some may not even realize that this whole financial layer has developed that sits above the health care benefits themselves. 

And they also may not think that there's anything that's possible that can be done. As far as both of these points are concerned. Andreas Mang gives a list of, as he calls them, easy things a C-suite can 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 purchasing discipline that is being used elsewhere. Here's Andreas's list, recapped. There's some sub lists in here, which I put in the show notes, but I'm not going to necessarily go through. Six easy things.  

The Importance of CFO Engagement

[00:02:41] Stacey Richter: Number one, have CFO engagement throughout the year. 

That's number one. We talked about that last week with Mark Cuban also.  

The Benefits of Being Self-Insured

[00:02:48] Stacey Richter: Number two, be self-insured once you have reached a certain size. And Andreas gets into this in more detail during the show itself.  

Choosing the Right Broker or Benefits Consultant

[00:02:55] Stacey Richter: Number three, be very, very careful 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.  

The Importance of Regular Audits

[00:03:05] Stacey Richter: Number four, do carrier slash ASO slash TPA RFPs once every three years or thereabouts. Number five, do dependent eligibility audits. Cora Opsahl talked a lot about this also in an episode last summer.  

Leveraging Pharmacy Coalitions and Stop Loss Collectives

[00:03:20] Stacey Richter: Number six, relatively easy thing to do as per Andreas Mang, leverage pharmacy coalitions and stop loss collectives. 

In the show itself, Andreas offers some warnings because some of these coalitions and collectives are great and some are not. But bottom line, just keep in mind, as Mark Cuban said two weeks ago, those that are taking your money, 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.  

The Complexity of Healthcare

[00:03:47] Stacey Richter: Healthcare should not be this complicated. But yet it has become so, and anyone who doesn't realize that is letting themselves and their employees really get taken advantage of. Unknown unknowns are not benign. As I have said several times already, Andreas Mang is my guest today. 

Andreas Mang's Role at Blackstone

[00:04:02] Stacey Richter: He is a partner at Blackstone, the private equity and alternative asset manager. His job is helping portfolio companies manage their US healthcare benefits for their employees. My name is Stacey Richter. This podcast is sponsored by Aventria Health Group. Andreas Mang, welcome to Relentless Health Value. 

[00:04:19] Andreas Mang: Thanks Stacey. Appreciate you inviting me to join.  

The Importance of Viewing Healthcare as a Business

[00:04:22] Stacey Richter: One thing that I've heard that you say, you walk in and you say to the CEO and CFO, how's your healthcare business doing?  

[00:04:27] Andreas Mang: 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 were far higher than benchmarks. And we sat down and I said to him, so great to meet you. It's a great business you have here. Excited about the investment. I'm here to talk about your health insurance business. 

And this was a financial services firm. The CEO kind of looked at me with 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. I don't have a health insurance business here, a healthcare company, we're a financial services firm. 

And I'll tell you, that was a pretty uncomfortable moment. I sort of shifted in my seat, but I also knew 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 50 million a year, you're self-insured. And I said, at your current rate of growth, if we don't do something about this, you're not going to be a financial services firm. 

You're going to be a healthcare company in a few years. That moment the light bulb went off, you sat back down with a look that said, okay, keep talking. I'm interested in what you have to say. Interestingly, he held weekly meetings with the entire company. And after we met, he started to incorporate that into his weekly conversations with all 5,000 plus employees where he said, look, folks, we need to do something about this or 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.  

The Challenges of Self-Insured Plans

[00:06:08] Andreas Mang: If you are self-insured, you have assumed health insurance risk and you're running a small health insurance company inside your business. And that's a strange thing. That's an unnatural act for a company to have that put on them. 

It's pretty unique to the U.S., but it certainly creates a number of challenges. When you think about, you know, what, 60 percent plus of the US workforce is under self-insured plans. And so you're hoping that all of those companies that are employing all those individuals have the skill set to run a small health insurance company inside their business, and most don't, and quite honestly, it's probably not fair to think that they should. 

[00:06:45] Stacey Richter: The reaction that you got from that CEO... Looking across the glasses, as you described, like if you had been anybody, if you had been coming in from the benefits department, like you, you would have gotten kicked out of the office.  

The Role of the Board of Directors in Healthcare

[00:06:56] Stacey Richter: This whole endeavor might really need to start at the board of directors or with someone that the leadership team holds in great esteem. 

Why is it so important for an executive team 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-insured employer, you're running a small insurance company, and treat it as such?  

The Importance of Recognizing Healthcare as a Major Expense

[00:07:25] Andreas Mang: You have to start with, for most companies, healthcare is their second largest expense behind only salaries. 

And for most companies, that expense is largely growing unchecked. It's certainly, at least in normal times, outpacing inflation, and it can be an incredible drag on the business. However, many people view it as something that they don't have a lot of control over. They say, well, there's going to be cancer, there's going to be train wrecks, there's going to be bad things that happen and I can't control that expense, so they shrug their shoulders. 

And I think therein lies the problem because there's a lot of waste in the US healthcare system that can be worked out by employers and actually addressed by employers. But let me rewind with, so it'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 CFO of that company knows everything about this, the price of aluminum, their suppliers, the supply chain, they've probably hedged against inflation, they have futures contracts locked in, I'll bet you they can tell you everything about the price of aluminum. And I wonder why companies don't universally attack healthcare in the same way, because you don't see it often. 

But I go back to why? Well, because it isn't a natural act for companies to be providing health insurance benefits. And that's thing one, that it's complicated. It's strange. It's, I don't condemn companies for not being in a hundred percent sure what to do with it. In addition, I think it's misplaced.  

The Role of HR in Managing Healthcare Benefits

[00:09:01] Andreas Mang: We lobbed this expense and control of it onto HR teams. 

I was in front of a huge group of HR leaders when I got on stage, 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 benefit leaders. And I said, got into this business so that you could run a small insurance 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 who are being asked to manage this, but being told create no noise, there's a conflict there manage this second biggest expense in the company. That's growing out of control, but create no noise because we don't want employees to be feeling any friction. 

So that's a conflict right there. And then you have your HR leaders who say, well, this, there wasn't a class in when I was getting my degree or learning about HR that that was a class on running a small insurance company. So I'm going to look to my advisors and these are brokers and there's a broad range of brokers out there and their experience and they may have little experience managing insurance risk. 

They may have misaligned incentives. And so you have this combination of all these things where these programs become structurally unsound, right? So you have all of those forces working together.  

[00:10:15] Stacey Richter: Let's talk about what happens if you have alignment between the investor group, senior leadership, the board of directors. 

And the HR team, if you have that alignment, what is possible to achieve? Like what's the why here? Because everything that you have said and others have said, we did a whole show on employer inertia. We called it the inertia show with Lauren Vela. This is tough stuff. So like, why bother?  

[00:10:42] Andreas Mang: Here's the thing. I think some of it can be pretty technical. 

Well, some of it can be tough, but some of it can actually just be enforcing. purchasing discipline across the, across your company. Let me talk about what's possible.  

The Potential Savings From Better Healthcare Management

[00:10:54] Andreas Mang: So let me start with a Blackstone. Currently, my team is managing a portfolio. We're, we have about a little over 70 companies, 250,000 lives. 

We're managing about $2 billion in spend. Our 13 year track record for medical and pharmacy inflation trend has been hovering around 2%. We have delivered solutions to our companies that are improving the experience for their employees that are providing a high level of clinical support that is delivering a different concierge service experience that by the way, as rated by the employees and their dependents who are using our solutions have provided an 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 hovering around 2 percent for 13 years, and that has not been done by stripping things down by taking things away. To the contrary, what I just said was what we have provided are solutions that give a lot and sort of fill the holes in the healthcare system. 

But let's say you don't have the size or knowledge that, that you can build a platform that is enhancing clinical support and all that. There's at least four or five, six things that I think any company can do that can deliver an easy 10 percent right off the top in terms of savings. And if you think about 10 percent on what a company is spending on healthcare, that can be a really big number. 

[00:12:23] Stacey Richter: I definitely want to get into those things to reduce spend 10%. I think it would be important to point out. You know, if you've got multiple middle people companies, and then you go on the stock market and look at what their profit margins are, if those companies are working unhampered for your company, then that profit margin, speaking in total broad strokes here, your company is paying for. 

But like, this is what you're talking 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 that you are currently paying for that are not actually providing or accruing any health to your member population. 

It's basically just excess financial spend that doesn't amount to anything.  

[00:13:16] Andreas Mang: Yeah, I think that's fair. A lot of companies are leaving dollars on the table that is unnecessary. That is not delivering a lot of value. Now, look, I'm not gonna say every company is set up this way, but I have seen many and the usual standard engagement model. 

The CFOs get involved with healthcare once a year. During the renewal, they'll work with the HR team. They'll see what the numbers are coming in at and however that conversation goes, it's accepted. There's pushback. It's or not, and they sort of go on with their day. Better is to have CFO engagement throughout the year and what I said before is providing air cover to the HR team so that they have the support and sort of the cover to do the things that I think many know need to be done. 

But again, they may have some conflicting imperatives coming down around how to manage this spend. And so I think C-suite, broad C-suite engagement, but at a minimum CFO engagement, especially if you're self-insured, is imperative. Create that teamwork, create that buy 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's sort of first and foremost because then that opens up the doors to a lot of other things that, that we'll talk about.  

[00:14:26] Stacey Richter: Tracking this back and connecting some dots here. The point is there is a lot of waste that unchecked vendors will basically take advantage of an employer. 

So you have a bunch of excess spend. Transpiring, which is going to continue and the CFO, as you said, and the C-suite are best equipped to be able to sort of ferret that out, probably doing what they do all day in their normal day jobs, buying aluminum or whatever it is that their core business deals with. 

So main point you're making is if you want to trim back the dollars, which the company is spending, maybe frittering away imprudently. The CFO, the CEO must be involved and then just kind of connecting it back to the larger point. This is another reason why boards of directors, et cetera, probably should be paying attention here and helping the CEO, CFO, almost providing air cover for them or the imperative at a minimum. 

So that then they can help the benefits team do what they do as well and then you have the entire organization in alignment as opposed to no air cover, don't create any noise, but at the same time control the spend, which is never going to work in any world. Did I nail that?  

[00:15:40] Andreas Mang: Nailed it. Exactly. I want that. 

I'd like every CFO to be as knowledgeable about what's happening with their healthcare spend as they are about the spot price of aluminum. If they're a canning company,  

[00:15:50] Stacey Richter: Let's talk about number two on your list  

[00:15:52] Andreas Mang: Funding, self-insurance, self-insurance will save a company in the range, depending on the state, depending on a few factors, et cetera. 

But it's going to save a company five to 9 percent automatically because of a number of fees and taxes and mandated benefits and things that go away when you become self-insured any company from our perspective, the threshold, I know it's gotten smaller and smaller companies have decided to go self-insured. 

We get comfortable with companies going self-insured at around 400 employees on their plan. So if you have at least 400 employees on your U. S. medical plan, you should be taking a very hard look at going self-insured because you're automatically going to eliminate 5 to 9 percent of costs. Without doing anything that affects your employees at all, you are simply changing the funding mechanism. 

[00:16:46] Stacey Richter: 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 list here, which is to be self-insured folds into number three, because companies rely very heavily on their brokers slash benefit consultants. And if that broker slash employee benefit consultant has book a business, goals and bonuses, etc, then you could still be winding up in a situation where the broker is steering based, I'm going to say a little bit more on their own self interest and may not be guiding the company toward a solution that is necessarily best for the company, which is just another reason why the CEO, CFO, and board of directors needs to get involved here because these are big decisions that really need to be made and at the level of a senior exec. 

[00:17:40] Andreas Mang: I agree with that. I agree with that a hundred percent. Again, the funding isn't a healthcare thing. It's a CFO thing. It's sort of a risk thing. It's a funding mechanism, but we're not getting, we haven't, look, I just talked five to nine percent savings. Boom. We haven't gotten into anything healthcare yet. 

[00:17:56] Stacey Richter: Let's talk about number three on your list, which is ensuring that you have a broker slash employee benefit consultant that is very trustworthy, you can rely on to work in your best interest.  

[00:18:09] Andreas Mang: And has the experience to do so. Look, In, in my experience, and I want to be careful, this isn't universal, but in, in my experience, there tends to be a dividing line, brokers, benefit consultants. 

There are those who spend a lot of time on the fully insured sides. And then there's a group that spends most of their time on the self-insured side. And I would argue that the skill sets, the experience required to do the self-insured is different. The math is going to be different. You do require a team who can project medical 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 broker who has experience with self insurance is really important. Something we do a lot with our companies is we do broker RFPs. Look, it's just like any business, you know, there's good, there's less good. Our job is to bring the best we can to our companies. We've helped north of a hundred companies now run broker RFPs. 

There's five things I look for. First is experience. Do they have a broad set of self-insured clients? You want a broker who has spent many years. And he was a broad book of almost exclusively self-insured clients 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 a pharmacist, but also ran clinical programs at a large blues plan. Great if you can find people who have that experience, hard to find, at least a broad set of self-insured clients. With appropriate resources to support that. So you're not going to build up a team of actuaries and clinical folks and compliance experts, but the broker that you employ has to have those to look for actuaries, not just finance guys. 

[00:20:05] Stacey Richter: So number one on your list of things to look for in a broker, when you are self-insured is absolutely number one. Does this broker and their organization have the talent that is required to actually help you manage the plan? You said you had five things that would be number one. Give me number two. 

[00:20:25] Andreas Mang: Compensation, flat fee model, a broker who is willing to disconnect their compensation from commissions, et cetera, really important. So when we do a broker RFP, we do a flat fee. It is disconnected from all commissions, and that flat fee must encompass a robust scope of services. One thing that companies need to be aware of, beware of being statement of worked to death. 

A bunch of statements of work for every little thing. No, you want a broad scope of services 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, well-detailed scope of services. You can find those online pretty easily. 
Third, product pushing. It seems that in today's world, many of the consulting houses have put together suites of products, solutions that are pre-baked for employers. Well, we don't like those, but that's a red flag for us. Better are those who are not pushing solutions. Have access to them, have awareness of them, suggest deploying them if the data supports the need for a solution. 

For instance, one of our companies in investment just had, they had a lot of babies. And so for them, solutions around fertility and healthy babies, those things made sense. If you have a workforce that may be different, right, is older, probably don't need to push that solution. It might be something else that they need. So beware of brokers who come with a full set of solutions that are pre baked. You want, you want the brokers who come 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 a significant portion of fees at risk, call it 30 percent or more, For a very simple 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% or more fees at risk for that simple question, I think that's a red flag. Those that are willing to do that, I think it says something about their service model. 

[00:22:37] Stacey Richter: So fees at risk to assume an NPS net promoter score of 90%? Is that what you said?  

[00:22:43] Andreas Mang: It's a nine or nine or above. Which says I'm delivering on the promise that I sold you when you chose me. Saying fees at risk for service is a really big one. And finally, simple termination provisions. There should be easy out clauses without penalties. 

If a company has chosen to go in a different direction. Too often we have seen punitive contract provisions, termination provisions. We're involved with one right now where a consulting firm is demanding millions of dollars from a company who wants to go in a different direction. I think those are things that you can head off in, in the beginning during the, called the procurement process. 

Again, if you're in the service business and the person paying you has decided that you're not meeting their needs, it should be that company should be able 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. 

[00:23:39] Stacey Richter: And I probably could underline everything that you're saying because I have heard horror stories about every single one. So I appreciate you putting the what's in your broker RFP into such a concise list here. Going back to the very top of our conversation, we started out talking about what are really important must haves for any company who's looking to not get taken advantage of by vendors, you had listed number one, the C-suite absolutely must be doing and applying their the skills and authority that they have. That's your number one. Number two is making sure if the entity, if the company has 400 or more employees in the United States, they are being self-insured and as you said, you're going to save five to 9 percent right off the top there. Just by doing that. And number three, we've just spent a bunch of time talking about brokers and employee benefit consultants and the importance they are well aligned. Is there anything else on your main list here?  

[00:24:40] Andreas Mang: Really big. 

When is the last time the company has actually done a carrier RFP? When is the last time they RFP their health plan?  

The Importance of Regular RFPs for Health Plans

[00:24:49] Andreas Mang: On average. Hospital contracts turn over every three years, so every three years, there's a pretty big shift out there in terms of what carriers are paying provider systems in terms of unit price, 90, let's call it 95 percent of what you're spending is on claims. 

Claims is being driven by price and use. And so three years ago, five years ago, you may have decided health plan a was the right one for you. But Hey, have you done an RFP and check? Because if the discount has shifted three to 5 percent with another health plan, three to 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're going to check provider networks. You're going to make sure your employees aren't going to be disruptive, but you can save three to five or more percent on your total costs just by doing that. 

We find that a lot of companies haven't done that as frequently as we might want to see them do it.  

[00:25:50] Stacey Richter: Again, going back to boards of directors or others who have an interest in ensuring that a company is not getting taken advantage of. Every time I hear of a company that has been with the same carrier for 17 plus years or whatever, insert a timeframe way longer than three years here. 

Sometimes the reason why there's not an RFP for a really long time could be a sign of certain conflicts of interest going on amongst the C-suite or maybe amongst. Benefit leads and the vendor, and I'm certainly not stating any of this as any sort of broad stroke here, but there's definitely examples of where the CEO or a CFO even has an, what I'm going to say, not in the best interest of the company at large relationship with some vendor. 

And so that actually could be a warning sign also, if there's too long of a time that's being spent with one carrier, there might be reasons why, especially if there hasn't been an RFP. And I certainly, again, don't want to state that as any sort of broad stroke, but it has come up enough that it would be a red flag of sorts. 

[00:26:57] Andreas Mang: Yeah, it could be. It's just it's a good practice because again, I'm sure in other parts of a company's business, they're probably checking suppliers more often. I think it goes back to that issue of if you're in HR and the mandate is, hey, manage this expense, create no noise. Well, let me tell you something. 

Changing a health plan feels pretty scary. Talk about source number one where I could potentially create a whole bunch of noise if you're in HR. Doctors are changing. Hospitals aren't in network. I don't want to do that. So that structural issue of what I've seen too often, where HR leaders are out there on their own doing this, when you bring that alignment, guess what? 

When they feel supported, when they feel like they're getting the air cover they need, they're probably more willing to do things like at least look at the health 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 goes back to that alignment.  

The Benefits of Dependent Eligibility Audits

[00:27:49] Stacey Richter: All right. So let's turn to number five on your list. What do you have for us?  

[00:27:53] Andreas Mang: 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 Our plan membership, because if there's people who are illegally sort of on our plan or who shouldn't be, are not eligible for the plan, guess what's going to happen? 

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 on your plan. They should be on their own. Let's say something catastrophic happens. Your stop loss plan kicks in because it was some million dollar claim. Here's what I can tell you will happen. 

I can guarantee you the stop loss carrier will make sure that the individual is eligible and that I'm going to cover that service. You are going to cover it. There are examples out there of companies who think this million dollar claim is going to be covered by their stop loss carrier and its not because it was an ineligible member receiving these services. 

This one goes back to almost what we've been talking about alignment, especially with the CFO. This is a risk management action. So doing a dependent eligibility audit can feel like, well, I don't want to create noise. My employees are not gonna like being questioned whether the people that they've signed up on this plan Are eligible and should be on the plan. 

However, if you put it in the context of, well, first and foremost, we, as an employer, probably lay out pretty clearly who should be on the plan and shouldn't. And if everyone's doing the right thing, no problem. Also, there's companies out there that do this in a very employee friendly way. But when you look at it from the perspective of the potential risk that is associated with having ineligible members on your plan, again, when you're self-insured, you are running a small health insurance company. 

You've got to take some of the actions that a health insurance company would take to ensure that you're managing your risk appropriately. So dependent eligibility audit, look, we've seen savings of at least 2 percent or more. On total medical expense from doing a dependent eligibility audit, cleaning up your rosters and who's eligible. 

[00:29:54] Stacey Richter: That is something interestingly Cora Opsahl also talked about the risk exposure because if you have a big claim and it's not covered by stop loss, like that's a BFD. So that's number five on your list, ensuring that everybody who is not eligible for the insurance is not still on the plan. If we're going to talk about number six, what do you got for us? 

The Advantages of Pharmacy Coalitions and Stop Loss Collectives

[00:30:18] Andreas Mang: I would lump six and seven together. I'm going to start with the premise that 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 plans are getting bigger and more powerful. Who's left alone in the story? The employer. When you look at it that way and you say this is becoming a little bit of an unfair fight, the employer is bringing a knife to a gunfight. I'm gonna I'm gonna offer the next two quickies on the premise that you're better together, you're better with larger groups than out there on your own. 

And so I understand there's a bit of noise around these next two, but let me just start with leveraging pharmacy coalitions and leveraging stop loss coalitions or collectives are a good idea. However, I would just say there are good ones out there. There are ones that are doing the right thing, and there are ones that can deliver real value around pharmacy and stop loss. 

That's basically an entire other show to dive into those two areas. However, I'd say that it'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 your contracts, look at the results, look at your data, because you should be getting it, and see how they're performing. 

Because again, there are some good ones out there. There are some that have gotten some press for doing things that maybe aren't so great. But again, I think employers are outgunned in this whole game. It's an unfair match. And so if there are opportunities where we can bring companies together, you're better together. 

And that's my list. 

[00:31:58] Stacey Richter: I love how you put that employers are better together, but also keeping in mind the caution you tossed out the opaqueness of health care has huge allure for opportunists to be making money on the back of an unwise or a naive employer.  

[00:32:17] Andreas Mang: 100 percent agree. And I, I would say that it's, it goes back to this unfairness and the strangeness of employers providing this benefit. 

[00:32:26] Stacey Richter: So let me kind of circle back on a couple of things, something that I think a lot of people fear when they hear a self-insured employer, an employer is going to get more in the mix here. Cost containment becomes the name of the game, and everybody's going to throw their backs into saving money. Saving money becomes a synonym for cutting benefits.  

[00:32:44] Andreas Mang: I would argue employers, especially in this very tight labor market, have a natural incentive not to do the kind of cost cutting things that result in sort of paring back benefits or making unattractive benefits to their employees. 

The incentive to not do that is so strong just by the labor market today that I think, I think you have that as a counterbalance to just doing things just to save money. And what's interesting is if you think about the list I just went through, most of those things on that list have very little impact on employees at all. 

[00:33:15] Stacey Richter: You can save 10 percent plus just cutting waste, which actually is a benefit to employees because if there's any cost sharing involved and everybody is overpaying or if there are, you know, assessments that the CFO is doing to determine how much money is available for raises. Instead of giving the 10 percent which can be huge dollars to your point to some third party entity by saving those dollars as has been said any number of times by any number of people now all of a sudden, we do not have stagnant wages, which has been a result of every year. 

The benefits spend going up because then there's less money for pretty much anything else the company wants to do. A hundred percent. So let me also dig into another thing that you said relative to brokers in your list of five things that you include in your broker RFP. One of the things you said was making sure that the brokers have a flat fee model. 

And I think that bears a little clarification here because there are many brokers who will come to the table saying that they have a flat fee model because they are not disclosing indirect payments.  

[00:34:23] Andreas Mang: Let me, say maybe a couple of things. One is getting your scope of services right is the first step. 

Being careful about how you write your agreement and spelling out what is and is not included in that flat fee. We have found there's a handful of broker teams out there we are very aligned with and supportive of because they're really good at disclosing. 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 going to pay for your fee. Here's how we're going to box this in. And hey, sometimes we even get 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 laying out, Hey, when I say a flat fee, any and all forms of compensation, whether it's core medical pharmacy, uh, ancillary services, employee purchased, uh, insurance products. 

It's up to you to spend the time to educate yourself and to box in those things. And again, it doesn't take a ton of work to write language in a way that says, look, any and all ways of potential direct and indirect compensation. need to be included in this fee.  

[00:35:35] Stacey Richter: If an employer discovers there are fees that are transpiring, that are getting withdrawn from their bank account, like it's kind of too late at that point. 

The fix would be do an RFP and start again, because unless the language is in the original RFP, it's very difficult to adjust on the back end is what I'm understanding.  

[00:35:56] Andreas Mang: But again, what I would say is the teams that you want to align yourselves with are going to have absolutely. No problem being extremely transparent with you. 

We'll offer that transparency and you'll know it. You'll know it when you sit down and have the conversation. You gotta be clear that not every benefits consultant and benefits broker out there is doing bad things. Some do. We've found certainly plenty of bad things. Look, sometimes it's unintentional. 

We've worked with brokers who, they actually are 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 to you and are very willing to be completely transparent and they're out there, 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 health care plan, do it to your medical plan for your employees, do the same things. And you're going to deliver some meaningful results in a way that's not going to disrupt your employees, which is sort of a wonderful thing. 

[00:36:59] Stacey Richter: This can be done incrementally. It's not like you've got to go from zero to the deep ends of the pool. There's a number of things that you said that you could try something, layer on a little bit more, a little bit more, a little bit more in a way that makes everyone feel comfortable.  

[00:37:13] Andreas Mang: I think it's a great point. 100%. You can take this list and lay out a plan and say, look, we're going to do these things. We're going to, we're going to do the eligibility audit next year, check funding, check the broker. We're going to do that immediately. And we're going to do some of these other things down the road. I think it's a great point. 

You don't have to swallow the whole thing in one, one bite.  

[00:37:30] Stacey Richter: Is there anything I neglected to ask you, which you would like to mention here?  

Conclusion and Final Thoughts

[00:37:35] Andreas Mang: What we talked about today are like blocking and tackling. You get those nailed, and then you can get into the next level of things.  

[00:37:41] Stacey Richter: Andreas Mang, thank you so much for being on Relentless Health Value today.

[00:37:45] Andreas Mang: It has been a terrific conversation. I've enjoyed being here with you, Stacey. Thanks for having me.  

[00:37:50] Stacey Richter: So let's talk about going over to our website and type in your email address in the box to get the weekly email about the show that has come out. Sometimes people don't do that because they have subscribed on iTunes or Spotify and or we're friends on LinkedIn. 

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