“Alexa – What is my deductible?”


When it comes to adoption of technology simple is most often better than complex. Steve Jobs and Apple went to great lengths to make their products simple. Without user adoption products fail. Current technology trends continue the move towards simplicity with the advent of artificial intelligence and personal assistant tools like Amazon’s Echo and the Google Home. Before you know it, these tools will enter the benefits world. The question is, who is going to be first and best? And if I am a benefits broker how does this impact my business?

While many brokers are aware of the vendors that call on them or have tradeshow booths at industry conferences, I believe the benefits technology race is going to heat up with new competition entering the market. These new competitors see the market opportunity to automate large segments of our economy including health insurance and health care. You may have heard of some of these companies like Microsoft, Google, Salesforce.com, and Apple. This would be in addition to current leaders such as ADP and Paychex. The stakes of the game will change and the price of entry, from an investment standpoint, is in the hundreds of millions of dollars. Those with the capital will quickly outpace those with less capital.

Don’t be surprised when you start to see major mergers and acquisitions in the HR and Benefits space. Could Microsoft buy Ultimate Software? Why not? They already purchased LinkedIn and recently hinted at getting deeper into the HR space.

When I look at products like the Amazon Echo and Google Home I see products that have very quickly grabbed market share with high rates of adoption. My wife, who is not an early adopter of technology, quickly became a user of Google Home. Why? Because it is easy. Would she have a better understanding of her health insurance if she could simply ask Google? Absolutely!

Benefits technology, on the other hand, has not had broad adoption by employees. Yes, employers have bought systems or brokers have given them away, but when you look at utilization on the employee side it is abysmal. I believe the reason for this is because there is not enough value as a stand-alone solution to generate broad adoption. Keep in mind that the majority of people hardly use their health care in a given year so there is little need to access such a system. I don’t know about you but I can hardly remember the login to my computer never mind something I may not use for 6 months.

The next generation of technology in the HR and Benefits area is going to have broader and “everyday” value, while being much easier to use. Market leading vendors, especially those with a great deal of capital, will invest in the latest technologies to try and win the technology race and gain more customers. And before you know it you will be saying the following:

“Alexa, is Dr. John Smith from Boston in the Blue Cross network?”

“Ok Google, request Friday off from work?”

“Hey Siri, how much does the average office visit cost?”

“Alexa, what is the balance of my 401k?”

“Ok Google, transfer $500 from my savings to checking?”

The advancement of technology and artificial intelligence has enabled many to have more personalized user experiences. Your Amazon Echo will “get to know you”. Maybe in the near future your doctor will get to know you a little better too.

Many benefits brokers have chosen some technology vendor with a mission of putting as many clients on the system as possible. This is a risky position competitively as more advanced solutions from highly capitalized companies come along. I don’t know many sales people or business owners in any industry who like running around with the 8th best product. Even more so when it is not necessary. The market and your customers do not care if you have invested thousands of dollars on some technology that may quickly fall out of favor.

One should take the advice of Jack Welch, ex- CEO of General Electric who once said,

“If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”

For those that have purchased the Amazon Echo or Google Home you don’t have to look far to see that the outside world is changing faster than the inside. The health insurance and health care industries often feel like they are moving at a snail’s pace. Private Exchanges were lauded as change when they really are a reincarnation of cafeteria plans from the 80’s.

With the Trump administration, changes in health insurance legislation may create a shift that empowers the consumer. The industry may need an army of people on the front lines to help the industry move to a whole new paradigm. The vendors will need help and the employers and employees will need it too. The technology is there. Alexa is ready. Are you?

Your Competitors May Not Be Who You Think


This past week there were two press releases related to the benefits brokerage business that were fairly significant. One of them was picked up by the industry publications, generated some kudos on LinkedIn, and created some noise in the benefits community. Brokers were talking about it and many emailed me or called me to see what I thought.

The other one went mostly unnoticed in the benefits world. The industry pubs didn’t pick it up and I did not get a single phone call asking my opinion. Yet, from my perspective, the second press release will have a greater impact on the average benefits broker than the first.

This contrast made me think of a quote I keep on my wall that reminds me to not be complacent. It is from Jim Keyes, the former CEO of Blockbuster Video, who once said:

“Neither RedBox nor Netflix are even on the radar screen in terms of competition,” he said. “It’s more Wal-Mart and Apple.”

We all know how that turned out.

The first press release announced the merger of 20+ benefits firms, many who I know. While this is noteworthy, I am not sure that the world is any different today because of it. Yesterday they were wearing one uniform and today they are wearing another. They are the same people, in the same locations, and until there is some other new big announcement they are probably doing pretty much the same thing today that they were doing yesterday.

From a competitive standpoint, I am pretty sure this event won’t change the landscape much. Most brokers are already competing with larger firms that use their size and resources as their competitive advantage. Some brokers may even think this is good for them competitively because their market just lost another boutique firm and the competition of local boutique firms just got smaller. In reality, not much has changed until someone brings something new to the market.

The second press release was from a company called Namely. Namely raised an additional $50 million in capital bringing their total capital raise to $157.8 million. (Source: Venture Beat January 5, 2017) Concurrently, Namely also announced the following:

“Namely also announced today a new benefits offering called the Namely Health Advantage, which groups together similar companies to offer their employees health benefits at preferred rates.”

What makes this significant is that Namely has brought something new to the market. They have developed an engaging HR-Benefits-Payroll platform promising simplicity and ease of use. They also act as a benefits broker, creating a single source technology and service offering to employers. And as can be seen from the quote above, they created a new health insurance offering for their clients.

Namely claims to have 650 clients totaling 120,000 employees which would be an average client size of around 185 employees. Unlike companies like Zenefits, that targets much smaller employers (< 50 employees), Namely targets mid-market employers ranging from 100 – 1000 employees. From a competitive standpoint, this is the sweet spot for many benefits firms.

If you do the math and assume they are generating revenue at a $25 per employee per month rate, then their annual revenue would be in the range of $36 million. This is a real rough guess. Even if I am off by $10 million it would not be bad for a company that was founded in 2012. That would make them one of the fastest growing benefits brokers in the country. Though I am sure they would not classify themselves as such.

In 2015 there was $2.4 billion invested in HR Technology type companies. And as one industry analyst said, “Do you know what they will do with that money in 2016 and 2017”? Spend it. They will spend it on marketing and sales. They will have Ads on LinkedIn and Google. They will be at all the HR trade shows. They will be everywhere marketing to your customers and prospects. Namely has even had TV commercials on Fox News. I don’t see many brokers advertising on TV.

I could imagine asking the average benefits broker about their competition and it would not surprise me if they responded as follows:

“Neither Namely nor Zenefits are even on the radar screen in terms of competition,” he said. “It’s more Gallagher, Mercer, and USI.”

You may not have recognized this competition yet. Many brokers say they never lost a case to Namely or similar companies. What they don’t know is how many prospects they lost to these firms. How many employers looking for solutions found Namely but did not find you? How many prospects would respond to their value proposition versus yours? Do you even know what their value proposition is?

There is a way to meet and beat this new competition. But is takes work, planning, investment, and risk taking. Or maybe these firms are really nothing to worry about. Ask Jim Keyes what he thinks.

It’s a Saturday night and I should go. I could end this article by saying I am going to be watching a movie on Netflix tonight but playoff football is on, and anyone who knows me would know I am lying. But if you want to learn about these new competitors and what you can do to compete with them, check out our latest webinar titled, “The Future of Human Capital Management and Benefits” by clicking on this link.

Webinar Invite – Taking Benefits and HR to the Next Level in 2017


I know, another webinar invite. This is a really good one though. If you are a benefits broker I guarantee this is worth 45 minutes of your time. Here is the bottom-line with this webinar. We have been delivering technology solutions to both brokers and employers for 16 years now and have seen gaps in the market over that time that are actually being magnified now as the market changes. Many brokers and most employers are often not recognizing those gaps. We think that by filling those gaps you can take an employer’s HR from a 3 to a 9 and improve a broker’s operation in similar ways.

In this webinar, we will share some but not all the secrets. We then introduce a model that we think is quite unique.

The dates are: January 5th, 10th and 12th at 12:00 – 1:00 Eastern Time

If you are a broker and have an interest in attending feel free to click on the link below to register. If we don’t know who you are we may give you a call before approving access to the webinar. Thanks.

Register Here

“Fire” – Obamacare is Not the Only Healthcare Plan That is Burning


I had a short conversation today with a woman that was somewhat surprising and maybe very telling. I was having a prescription filled and I spoke briefly with the women handling my order. I had to give her my new insurance card (third carrier in 3 years) and mentioned how I had to switch often because of price increases. She then told me that she had a $4000 deductible and close to $15,000 in debt from medical bills. I was shocked. Her employer is a major employer and more than likely a benefactor of Obamacare, yet her deductible is $4000 and she has medical bills causing financial duress. I would imagine this story plays out across America. It is a system that is more than broken. It is on FIRE!

In this political environment where Obamacare is in the news daily I think the problems with employer-based insurance gets lost in the discussion. It seems like people have created a one-to-one relationship between Obamacare and the Exchanges. It is the Exchanges getting huge increases. Insurance companies are leaving the Exchanges because of big losses. Many markets only have one option. And of course you won’t have to switch your doctor. All this noise may be hiding the fire that is also burning in the employer healthcare market.

On the employer side, some of the same dire stories are playing out except the press seems to be ignoring them. Sure, if you look for stories like I do you will find them, but they aren’t on the front page of the NY Times or the lead story on the Nightly News. Relative to the fire burning in the Exchanges the employer fire is smaller, but it is still a big fire. I am sure the woman at the pharmacy was much more concerned about her personal “fire” from her healthcare expenses than what is going on with the Exchanges.

If you have employer based insurance, then you more than likely have a single medical insurance option. Your contributions may have increased by 30% or more over the past few years. Your deductibles and coinsurance may have doubled. You don’t even know what coinsurance means. And the odds are greater than 50% that you don’t have enough money in a savings account to pay for your deductible if needed.

If you are an employer, you are tired of the regular rate increases and delivering bad news to your employees. You have not been able to give employees raises. You may have tried PEO’s, captives, wellness programs, cost shifting, HSA’s, self-funding on smaller and smaller groups, or private exchanges, to try and control costs, but at best, are these are temporary fixes if they even work at all. I was once asked how can you reduce health care costs. I said don’t hire anyone old. Is that what this will come to?

While the focus of Obamacare has been on the Exchanges, Obamacare technically covers health insurance in its totality. Employer based insurance is a part of it and it is part of the problem. Fixing health care includes all of it, not just the Exchanges. It is all related. Government intervention putting the squeeze on individual policies, small group, Medicare and Medicaid only shifts the problem to employer plans. And when an employer with a younger population counters that action by going self-funded this results in the younger, healthier people, not contributing to the pool. We heard this before, you need the young to participate for this to work. The recent race to get younger groups self-insured impacts the entire system. The game goes on.

We can all speculate as to what Trump is going to do to try and fix the healthcare problem. Based on what I have been reading his focus is not limited to the Exchanges. He recognizes the problems span the entire healthcare industry and that includes the problems with employer-based health insurance.

For benefits brokers it would be naïve to think that the only change to employer-based insurance will be the elimination of the employer mandate. There is a fire burning at the employer level too and this fire is not unrelated to the other fires burning on the Exchanges. Most of the conversations I hear, or articles I have read, reference the Exchanges as something totally separate from employer-based insurance. I believe one can’t be solved without significant changes being made to the other. Anticipating what those changes will be and becoming part of the solution is a big opportunity. Stay tuned because we are about to see what the next administration has in store.

Beware the Benefits Blind Spot


In the most recent election the one thing we learned was that the media, and probably most Americans, had a blind spot. For some reason, they did not want to see or hear what many Americans were thinking. And maybe, for some reason, people did not want to say what they were thinking, until that is, when they went to vote. Now this is not a political discussion as I am sure many are tired of political debates by now. But this does remind me of an article I wrote this spring titled, “Two health care stories – Which do you believe?”, that is worth bringing up again. In the article, I wrote about two stories being told about how to solve the health care problem in America. The problem is the noise created by one side was drowning out the other, creating a benefits blind spot.

Now that Trump has won the election the articles and chatter about how Trump is going to reform healthcare is growing at a rapid pace. The noise is getting loud again. Yet, as I read some of the articles, blogs, and chat going on, I am sensing that the benefits blind spot still exists. It may be getting even worse now that the Hillary plan of a public option appears to be in the rearview mirror. Having such a blind spot, when running a business, or when running for President, can have negative consequences.

I don’t recall where I read it but I once read that one of the keys to marketing and messaging is to try to say what the buyer is thinking. And buyers don’t always tell you what they are thinking, even when you ask. So, you need to try to understand the buyer. To do this you need to ask and answer some tough questions, as if you were in their shoes.

What do employers want? Do they want to be worrying about whether they just hired a person who has a wife at home pregnant with triplets? Do they want to be telling their employees their costs are going up again every year? When I spoke at a conference about Private Exchanges I asked some employers why they would be interested in a Private Exchange. You know what the answer was. They thought a Private Exchange would get them out of the health insurance risk business. It was an out for them, at least they thought so.

What do employees want? Or maybe we should be asking, what do consumers want?What is more important for most people, broader access or lower costs? Do they want portable insurance? Do they want penalties for not participating in a wellness program? Do they want national healthcare?

When you think back on the Presidential campaign there were signs everywhere of a potential Trump victory. Trump rallies were like sold-out rock concerts. When I was in Florida on Election Day I mentioned to my wife about how many Trump signs we saw and how few Hillary ones there were. The Trump campaign apparently saw things most didn’t. In the final days, he was campaigning in states like Michigan where most people thought he was going to lose. Maybe the signs were there but people either did not want to see them or were simply not looking. It appears Trump was delivering a message many people wanted to hear.

This may be happening in the healthcare market right now. It is not just ObamaCare that is broken. ObamaCare could be an unintentional distraction that may be creating a blind spot as to what is going on. There may be a silent majority that wants a different type of healthcare system. And they won’t tell their broker or insurance carrier because in their eyes you may be part of the “establishment”. And the establishment often does not want change.

To prepare your business for the future one needs to understand what the future will look like. To do so will require that you eliminate the blind spots. I have shared my personal views about where I think the market is going several times in the past. The Trump election has changed it a little but I too have to be careful so that I don’t bias my own views. If the healthcare market goes to where I think it is going I believe there are big opportunities for those that provide value in the new market. But what about those that don’t change. Well, it was Barack Obama that said clearly, “Elections have consequences.”

What is the Secret to Your Success?


I have been writing blogs, conducting webinars, and speaking at conferences for some time. They say this is what you should do to market yourself or your company. Personally, I simply like writing and speaking. I also enjoy an intelligent discussion with educated people. One thing I have always struggled with is divulging too much information. Everyone says that you should blog and tweet, and do whatever else to get your message out, but you know what, I am beginning to think that this is not always a good idea.

I always refer to “when I was an athlete” which these days seems to be getting further and further in the rearview mirror. But when I was an athlete we always depended on secrets. In football, we would never show the other team our playbook. We would run play-action fakes to make the defense think it was a run when we were passing. When pitching, my goal was to fool the batter. I certainly wouldn’t announce to the batter when I was throwing a fastball versus a curve. Fooling the opposition was a part of the strategy. It was something we did to improve our chances of winning.

In business Steve Jobs would fire someone who would disclose their secrets. Apple went way out of their way to keep whatever it was they were doing secret. In technology, everyone has secrets.

The formula for Coca-Cola was created in 1886 yet only a few people know the formula. In fact, the formula is stored in a vault in Atlanta. And Kentucky Fried Chicken has two different companies create half of their herbs and spices recipe each so that neither one knows the whole formula. I don’t think either will be writing a blog disclosing their recipes.

When it comes to business I often refer to a quote from Mark Cuban that says, “The best way to predict the future is to invent it”. Peter Thiel thinks that the key to a successful business is discovering a “secret” that few others have yet to discover. I agree with them.

So if I were to ask a person what they think the secret to their future success will be I would not expect to get an honest answer. Yes, you will get an answer like “hard work”, or “treating your employees well”, or some other comment that sounds nice that everyone uses. But the key may be in their secrets. Because business is a very competitive environment and to win you need the element of surprise. It works in sports and is critical in war, so why would it not be in business?

I think there are some secrets yet to be uncovered in the benefits business. Secrets that maybe can make the difference in the future of one’s business. But you won’t find those secrets in some blog. You won’t read about them in some industry magazine. You won’t hear them at some broker association meeting or in some little broker group. And those that are tweeting all day probably don’t have something valuable to tweet because if it was that valuable they wouldn’t be tweeting it.

You shouldn’t expect to find any secrets in this blog either. Because the good secrets – the ones that can bring in customers at a rapid pace – the ones that take weeks or months of thinking and years of planning and execution will not be found in the public domain. If you want to find the secrets you need to start looking in the right places. Sometimes those places are staring you right in the face but you don’t see them because your thinking has blinded your vision. In fact, close your eyes. And open your mind. Challenge your thinking. And stop looking on the outside because the answers will come from within. Because to win the game you may need to strike out the next batter. And it may not come from the 92-mph fastball. It may come from the 75-mph curve.

Is Your Benefits Firm Built to Handle a Benefits Bear Market?


I often reference a quote from Mark Cuban that says, “Everyone’s a genius in a bull market.” When you think about the benefits business it has really been a bull market since I have been in the business, which is 30 years now. Everything seems to be going up, up, up, regardless of the quality of the product or service. Benefits brokers have benefited significantly, getting medical inflation raises for years. Admittedly they have also been adding more services, often at no cost. But this is behavior you see in a bull market. It is easy when the math is in your favor. However, do we even know what a benefits firm would look like in a bear market?

I know what a benefits bull market looks like. Companies good and bad are thriving. Money is spent fairly recklessly. Wages are often above the averages for similar jobs in other industries. There are trips and more trips. Everything is great. Those are the good parts.

Bull markets can also have some negative effects. Weaknesses in one’s business or value proposition aren’t easily recognized. Inefficiency is hidden. Complacency can creep into the organization. There can be a failure to recognize competitive threats. Common business practices aren’t practiced. And a belief that one’s world will never change can blind one’s vision of the future or reality.

But what does a bear market in benefits look like? What can cause a bear market? Commission compression? A move to fee for service? Government intervention including changes in tax laws? Obamacare collapsing? The budget deficit getting higher with rising health care costs being a big contributor? The MLR? Hospitals getting squeezed? Higher deductibles and employee contributions? All these factors appear to be present right now, favoring a need for change. Could it signal a coming bear market?

Warren Buffet loves bear markets because he thinks there are deals to be made. And it is bear markets that allow the cream to rise to the top. Bear markets eliminate a lot of competition. But do we really know who the superstars are? Can we tell the real genius from the bull market only genius? And what does a bear market benefits firm look like? Without really having been in a bear market I am not sure what one really looks like.

If a benefits bear market hits there will be opportunities. Opportunities for those who have anticipated changes; for those who built a model to sustain over the long haul; for firms whose infrastructure can adapt quickly to change; for those who have worked hard to expand their non-medical revenue reducing some business risk; for those who have differentiated their value proposition not by giving things away but by delivering products or services of value that an employer would pay for. Think about that one for a second. Of all those “value added services” a firm provides, what would an employer pay for and what would they pay? Would they pay anything at all?

Much like my financial advisor I don’t have that crystal ball. And it is hard to run a business when things you don’t have any control over can cause you chaos overnight. But hoping the benefits world doesn’t change isn’t a strategy. You also can’t put your head in the sand either. Recognizing business threats is a critical component of any business. Even Apple assesses business threats. So don’t let the first benefits bear market get you down. Some good planning can reap great rewards, even when the world changes. Or maybe we will have a bull market forever. Place your bets!