EP419: The Financialization of Health Benefits for Boards of Directors and C-Suites of Self-Insured Employers, With Andreas Mang

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 (EP418) also.

For a full transcript of this episode, click here.

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 healthcare 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.

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 healthcare 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% while improving employee satisfaction and health. Saving 10% 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:

1. Have CFO engagement throughout the year. (We talked about that with Mark Cuban also.)

2. Be self-insured once you have reached a certain size. (Andreas gets into this in more detail during the show itself.)

3. Be very, very careful who you hire as your broker or benefits consultant. There are five things that need to be true:

• They have the experience to do the job.

• Flat-fee model compensation

• No product pushing

• Fees at risk (30% or more)

• Simple termination provisions

4. Do carrier/ASO/TPA RFPs once every three years or thereabouts.

5. Do dependent eligibility audits. (Cora Opsahl talked a lot about this also in an episode [EP372] last summer.)

6. 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 (EP418), 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 ’em, confuse ’em and all that.

This is a business strategy. 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. 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.

You can learn more at Blackstone and by connecting with Andreas on LinkedIn.

Andreas Mang is senior managing director, portfolio operations, and chief executive officer of Equity Healthcare, where he is involved in managing medical benefits spend across the Blackstone portfolio. Andreas brings 20 years of healthcare experience to Equity Healthcare, having held various roles in healthcare finance, operations, and strategy.

Prior to joining Blackstone, Andreas was the vice president responsible for national provider network operations at CareCentrix, a PE-backed, leading home health benefit-management company. At Blue Cross Blue Shield of Massachusetts, he held a variety of roles, including a leadership role identifying and implementing administrative cost savings opportunities throughout the organization and ultimately designing a new corporate business model. In addition, he held roles as the manager of strategic financial planning at Harvard Pilgrim Health Care and was a senior consultant with Deloitte Consulting’s Strategy and Operations group in Boston.

Andreas has a bachelor’s degree in healthcare management and policy from the University of New Hampshire and an MBA from the University of Rochester’s Simon School of Business Administration. He currently serves on the board of DECA Dental.

04:19 Why Andreas starts every conversation with the question, “How’s your healthcare company?”

07:04 Why is it important, as a self-insured employer, to treat your business as a small healthcare company?

08:42 Why is it unnatural for companies to be providing health insurance?

10:13 What can be achieved when there is alignment between employers and insurers?

12:07 What things can a company do to reduce spend by 10%?

13:40 Why is it better to have CFO engagement in the benefits plan throughout the year?

15:51 Why does self-insurance save 5% to 9% for companies automatically?

17:41 “The funding isn’t a healthcare thing; it’s a CFO thing.”

17:54 Why is it vital to have a reliable, trustworthy broker?

24:38 When is the last time your company has RFP’d their health plan?

27:06 Why does changing a health plan feel scary but is necessary?

27:58 What is an independent eligibility audit?

30:48 Why are employers better together?

34:02 How do employers truly get a flat-fee model with brokers?

You can learn more at Blackstone and by connecting with Andreas on LinkedIn.