We’ve learned a lot in the past transformative year. The bottom line is: it’s not enough to just be a broker anymore. Organizations expect their broker partner to get creative (and aggressive) when it comes to guiding their total rewards package.
Organizations of all types are beginning to focus forward to their “new normal” and with that comes the opportunity to look for the total reward and human capital strategies certain to be game changers. We asked Lockton thought leaders and clients to share how they’re thinking bigger, exploring further and focusing on what really matters.
1. Hope (is still) not a strategy.
As you look ahead into 2021 and beyond, improving the value and efficiency of your total rewards program is 100% achievable, but it won’t be easy. Perhaps no increase to health insurance costs was a win for your organization in 2020. It won’t happen on its own unless your organization gets aggressive and develops a plan. Ask yourself: What is the target? What hurdles persist? How are your partners supporting, solving and driving superior outcomes?
2. Blockbuster Video called. Your PPO and HSA are overdue.
Did you know Blockbuster tried to buy Netflix in 2000? Strange, considering today Netflix is worth $200 billion and Blockbuster has one store in Bend, Ore. Blockbuster knew the market was changing but could not respond quickly enough to avoid eventual bankruptcy. Spoiler alert: in 20 years, it’s likely the healthcare industry will have a few “Blockbusters” of its own.
The next generation of healthcare solutions are fundamentally different because they align consumers, employers, insurers and healthcare professionals. Organizations have access today to more progressive solutions built to lower cost, improve health outcomes and drive higher patient satisfaction.
3. Raise your hand if you know how much a broker reduces an organization’s risk.
For decades, organizations have developed, implemented and managed wellness programs that achieve hazy return on investment (ROI) results. While ROI has been questionable, data show the most effective wellness program results come from simply keeping the 80% of your organization’s “healthy” population healthy. That’s a great strategy for individuals not using the program, but what is your broker doing about the other 20% actually driving up the cost?
Studies show a shrinking percentage of the population is responsible for the most rapid increase to overall cost. In 2019, less than 4% of those with employer sponsored coverage generated more than 60% of total medical and prescription spend. The success of your ability to deliver a best-in-class risk management strategy must address this changing reality.
4. It’s no accident that voluntary benefits can be as important as medical benefits.
Supplemental benefits have become an important part of total reward strategies. By offering critical illness, accident and hospital indemnity coverage, organizations seek to provide employees with an affordable financial safety net that strategically aligns with their healthcare options. Through a more transparent and balanced approach, organizations can maintain coverage levels and reduce employee cost.
If you or your client are a large organization, explore new dividend-based arrangements designed to capture excess margin from the carrier to reinvest back into the total reward program.
5. Times change, needs change. Life and disability strategies should change, too.
When was the last time your broker audited your organization’s life and/or disability programs? You’re not alone. Many organizations miss out on significant opportunities to reduce cost, enhance coverage and secure subsidy dollars by keeping life and disability coverage an afterthought.
Perhaps you’re thinking the “juice isn’t worth the squeeze,” but you’re misinformed. Organizations can achieve significant cost reductions (more than 20%) by optimizing their life and disability programs, even in advance of the renewal date, many times without even changing carriers.
6. Tis the season, to rethink your pharmacy benefits strategy … again!
In 2021, it’s projected that just 1% of medications will drive an increase of more than 10% to total pharmacy inflation. This may not come as a surprise if you’ve been managing your pharmacy strategy. Specialty medications, which account for more than 57% of total drug spend, are increasing at a rate of 10% per year.
With this changing trend, brokers must guide their clients to consider both retail and specialty medical utilization to properly conduct an analysis and/or market review for pharmacy benefits.
7. Leverage (verb): to use something that you already have in order to achieve something new or better.
Between 2016 and 2019, nearly one in four employers had a single claimant cost more than $1 million. Along with opportunities to improve the efficiencies of your purchasing process, organizations are looking closely at risk, which is the ultimate driver of overall plan cost.
Risk is predictable, changeable and avoidable. A broker’s ability to execute a best-in-class risk management strategy should incorporate a range of capabilities to manage chronic and complex claims risk. Ask yourself: what leverage does your broker/consultant have to protect you during times of changing market conditions? Unfortunately, scale alone will not drive outcomes.
8. Get back to the future — of compliance.
Change is coming. From Proposition 22 in California to the federal “No Surprises Act,” compliance is going to be an exciting area to watch this year. The 117th Congress is already at work assembling efforts to reinstate provisions of the Affordable Care Act while contemplating key initiatives proposed by President Biden.
Organizations cannot afford to wait. New rules, which take effect Jan. 1, 2022, will require thoughtful guidance and new solutions.
9. Remember the three E’s: Engage; Educate; Evolve.
Are your employees passionate about the compensation and benefits you provide? If not, it’s likely that they don’t understand your organization’s total reward vision. As an industry, we’ve made employee engagement incredibly complex when the “why” is rather simple:
- As humans, we’re more likely to learn about something if we feel a personal connection.
- As organizations, we provide meaningful compensation and benefit packages to attract the best talent, then to provide for and protect their families.
- The employees (and dependents) who understand the purpose of an organization’s compensation and benefits are more likely to find that connection.
Start with a foundation that communicates your organization’s employee brand through print, digital and social channels. With that framework, educate your employees through year-round campaigns that drive specific actions. Anchor campaigns around the behaviors your organization needs to drive better behaviors.
10. Resolve to change with the times.
Change is happening all around us, and keeping up means staying relevant. We asked high performance organizations to identify the number one thing they believe leads to superior employee satisfaction, greater efficiency within their own HR departments and more efficient financial outcomes. The most common answer: “LISTEN MORE, TALK LESS.”
In 2021, there may be a new normal but there will be normal. With 2020 behind us, workplace culture and competition will again drive talent management strategy. Our best performers admit it takes time to listen intently to employee (and candidate) feedback, but it pays off in the long run. As talent preferences are changing and the workforce becomes more distant, diverse, and discerning, developing an employee-centric north star keeps organizations laser focused on what really matters.
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