BETTER HEALTH FOR PEOPLE AND FINANCES

 

The group I was working for had acquired several businesses in order to come to the country. It was like a patchwork and the challenge was to create a shared service center for HR.

 

Just a few weeks after I joined the company, we got a letter from the health insurance company informing us that it would raise its fees 70%. Now, try to go to your boss and give the news…well, you can imagine the reaction mine had. Can´t blame her for that…

 

Despite our best efforts, the supplier was adamant about that raise, claiming that the usage had been too high and he was losing money with the contract.

 

We decided to open a bidding for a group contract. The challenge was that our employees were spread out among the country and many of them were living in cities where the supply of physicians and hospitals were short. How does one solve that than?

 

The first question I needed to ask was about the possibility of lowering the prices to current market levels.

 

I am not a fan of reading big contracts…even though I know how important they are, I must admit that I´d rather negotiate and ‘Do’ stuff than sit and analyze financial figures.  But, there comes a time where it is needed and that was the case, so I decided to dig into the financial side of the health plan contract.

 

The contract stated that there is a limit in usage that once reached, gives the health plan provider the right to raise the prices to match this limit and that was when the contract reached over 70% usage. Meaning that if we were paying 100 and spending 71, they could charge it back as a raise, instead of a one-time payment.  The contract, however, did not mention that one time cases could be used for raising prices, which was our reality. We had a one-time case that had caused a severe increase in medical expenses: a cancer case that ended up with a several months stay at the ICU.

 

That fact was, the patient had passed away, and so, as cold as it may be, the “reason” for the usage was no longer there.

 

The current supplier, however, was not interested in negotiating with us, regardless of the above mentioned fact. So yes, I had to change supplier and find a matching medical network that would please most of the employees within the group.

Some may disagree with my approach. “The hell with coverage, we need to save money! Besides, it is not like they will not have a health plan…”

 

Let me try to put it this way: you have a blue collar that works in your plant. His child gets sick and his wife needs to take several buses or wait in line for several hours before the kid gets decent treatment. How motivated would he be on that specific date (and maybe some days more)? Even if he was an engaged employee, his thoughts would be elsewhere. Now, can you measure the loss that such a state of mind can bring to the company? Is it worth to risk that?

 

The unification of health care providers for the entire group would also benefit with easier contract management and cost savings. Doing so, however, meant looking over plans, dealing with bids, and creating services that would greatly benefit everyone.

 

The health plan service we implemented did just that. For the employees, the services covered checkups, access to a wider selection of hospitals, “Health Days” to ensure that the health of the employees is in check, checkups for management, and better reimbursement rates. These are merely a handful of the available benefits for employees.

 

This meant that employees could expect the same, or better, coverage that they had previously. Keeping the coverage in line with the previous coverage avoided changes in cost to the employees and benefits when visiting a doctor. It was applied to all employees, including those with serious illnesses.

 

The savings per year for implementing a unified health care service came up to $300,000 USD per year.