CEOs and CFOs have tended to look at health insurance with a mixture of skepticism, confusion, and outright dread. They think: “Another year, another large portion of our income eaten up by the big insurance carriers.” Making it worse is they often don’t even understand what they’re getting from those carriers, thanks to the fact that the word “transparency” doesn’t seem to be part of the carriers’ vocabularies.
But what if you, the leader of your company, looked at health insurance a bit differently—not as a cost driver, but as a growth enabler? How can you provide your employees with exceptional coverage while saving money to help you achieve your business goals?
I recently had the pleasure of speaking with the CEO of a company that asked these questions and made figurative lemons out of lemonade. Or, in their case, turned whiskey into money.
The company is a small but fast-growing whiskey distillery. It needed to build new warehouses to store its rapidly growing inventory. Warehouses are an expensive but necessary component of a distillery’s business. Without additional warehouses, the company would not have been able to grow its business.
The company also needed to provide its employees with exceptional healthcare coverage, including a large network of providers, prescription options, telehealth, and more. This coverage needed to be as cost-effective as possible for both the business and its employees.
The distillery reconciled these two needs by switching from their fully insured carrier to a partially self-funded plan. Instead of paying an egregious 25% margin for claims they may never incur, the company only pays for actual claim costs. That alone led to exceptional savings—which the company proceeded to put toward funding the construction of new warehouses.
The company didn’t sacrifice coverage, either. Management provided employees with everything they needed to receive great care, from a large network of physicians to pharmaceutical savings, mental health and telehealth services, and more.
Traditional insurance plans are notoriously opaque, making it difficult for companies to see their actual plan data. That’s not the case with partially self-funded plans, which are transparent and allow organizations to access all the data they need to run their businesses more effectively and plan for their future.
This transparency allowed the distillery’s management team to approach health insurance in terms of their organization’s Net Present Value (NPV). For them, benefits became more of a long-term investment in their business’s future, rather than a current expense. It allowed them to set aside funds to expand their operations.
In addition to using savings to build out their warehouses, the company’s move to partially self-funded insurance resulted in cost savings for its employees. Meanwhile, the company was still able to offer great benefits—in many cases, better than what they had offered before. Both benefits will serve the company well today and, in the future, as it continues to attract and retain employees.
It’s hard to put a price on that kind of value. Even if the price is significantly lower than it would have been had the distillery continued to work with its fully insured carrier.
The point is, health insurance doesn’t have to be painful, and it doesn’t have to adversely affect your business. That’s what makes partially self-funded insurance such a great option; it combines excellent coverage with significant cost savings that can be used to support and build other aspects of your business.
That’s what the distillery did. They took a different perspective and approach toward health insurance, one that’s good for their employees and their bottom line. As a result, they can implement great plans and enjoy significant cost savings while protecting their company and giving management the ability to plan for the distillery’s future.
Do the same thing for your company. Contact us and let us show you can leverage health insurance to help grow your business.
Alan Wiederhold is executive vice president at EVHC. Alan oversees EVHC’s strategy for providing brokers and their clients with cost-effective health insurance options that save money without sacrificing care. He is an author, national speaker and self-proclaimed healthcare nerd focused on creating new strategies for employers.
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