Latest / Break The Cycle / The Questions Every CFO Should Ask Before Renewing Their Benefits Broker
Transcript
- Nolan Pearson (00:00): At the end of the day, you owe it to your business, you owe it to your employees, and you owe it to yourself to make the decision of what's best for the business overall, not just for somebody you like. Again, your obligations to the business, not to somebody else. There is a better way out there, so explore it. Josh Schumacher (00:17): The employee benefits industry has been stuck in a cycle that keeps costs rising and plan members underserved, but there's a better way forward and it starts here. Welcome to Break the Cycle. Nolan Pearson spent nine years running benefits from the buyer side before he ever came to work for a broker. That gave him a front row seat to a question most CFOs never get an honest answer to. This episode is a bite-sized version of our longer conversation earlier this season, and it focuses on the hard questions leaders should be asking. When you have what feels like a reactive partner, can you talk to me a little bit about why you wouldn't just switch to a more proactive partner in the evaluation process? Did you not feel like that was an option? Nolan Pearson (01:00): Yeah, I think the biggest thing for me is about every company in the market tried to sell me at some point or another, and I'll tell you that there are great salesmen out there in our industry. There's money to be made in this industry, so it attracts top talent. There were some amazing people. I actually had very good experiences, built relationships with several of them, but the reality is nobody really offered anything different. They would come in, they'd say, "Hey, I can save you X percent on pharmacy," and that was really the pitch. Everybody can do the compliance, the blocking and tackling piece of it, but nobody really offered me anything different. I think when you're looking at, are you willing to make a change? It is work to make a change, so somebody has to offer you something that is actually worth making a change. (01:41): It's worth the work to go through and really outside of somebody dropping the ball, which did happen with us at one point in time, nobody pitched us anything that was worth making a change. It was just, we can save you money on pharmacy, which somehow everybody says they can do that, but really everybody did the exact same thing. Josh Schumacher (01:57): Nolan calls that pitch the same thing over and over. Here's the phrase he heard most when things actually went wrong. A phrase that I feel like I've heard in this industry quite a bit is the claims are just the claims. Would you say that's the attitude that was presented to you when these high cost claims came in? Nolan Pearson (02:12): Yeah. Well, that's unfortunate. We hope it's not ongoing, but it is what it is. Again, that goes back to that helpless feeling of when those situations come up, you need to be able to speak with conviction that, hey, yes, while this is an unfortunate situation, we know that the cost that we're paying is really what we should be paying. This is the appropriate place to get the treatment done. There's a lot of different angles that you can look at, but not having that peace of mind was always frustrating for me because it was always, what else is coming? What if there's another one? What is that going to do? Unfortunately, it does impact the entire company's benefits plan. Josh Schumacher (02:48): The industry keeps telling leaders that this is just how it works, but why do so many of them just accept it? Here's Nolan's take. Why do you think CFOs, leaders, this seems like it's a very big issue that is causing you to lose sleep, causing more stress. Why do you think people accept it? You mentioned earlier that brokers aren't bringing something that feels worth the work to change. Do you think that's the biggest factor or why else do you think CFOs and leaders accept that this is the way it is? Nolan Pearson (03:23): I think the reality is they haven't been shown that there's something different. When you have a broker for several years, and even when things aren't going poorly and you just assume you're doing the right things and you're managing it appropriately, but then when you talk to the people in the industry and they come in and tell you that the same things that you're already hearing from your broker are what they're going to do, why would you change? So for me, the biggest thing was I wanted somebody to show me something different, something new, something that was actually innovative in our industry and there's all this data out there. What are we doing with the data to actually drive down costs? It's one thing to just report on it, but what are the things that you're doing with that data to proactively manage costs for us to ensure that the money that we're going out the door should have been spent and it was spent in the appropriate way? (04:10): Are there programs out there that exist that we don't know about? There are. I can tell you now that there are programs out there that I wish I would've known about a long time ago. Who's bringing those solutions to the table? Josh Schumacher (04:22): I want to go back really quickly just to what you said about it's very important who you have looking at the data, both on the pharmacy side and on the medical claims side. I'm sure most people come to the table, again, they say they have someone that's experienced, we have a clinician, we have a pharmacist, whatever it may be. What would you advise a CFO, a leader trying to make this decision, trying to evaluate between brokers on how to evaluate the credibility of that claim, whether they have the right experience, whether they have the right knowledge in the marketplace to actually make an impact? Nolan Pearson (04:54): I think it starts, you have to make sure whatever partner can do the blocking and tackling. Again, that's the compliance, that's 5500 filings, all that stuff's incredibly important. Most people want a wellness plan, so you got to be able to accommodate all of those. Then I think it goes to how do you differentiate between somebody who says, "Hey, I have a pharmacist and they can negotiate your deal." I wish I would've said, "What's their experience? How many pharmacists do you have on staff? Do you sell your product to anybody else? The fact that we're a separate company is a big deal. What level of experience do they have negotiating with PBMs? Are they PBM agnostic or do they have a specific incentive to go from one PBM or the other? Josh Schumacher (05:34): Yeah. Are they acting in your best interest with everything? Nolan Pearson (05:37): The same thing really on the healthcare risk management, I would want to know who is managing that claims review process? Do they have a process? What's their experience? How long have they been doing it? What solutions have they found? What savings have they found other clients in the past? For me, it was, I don't need a guarantee that you can save me money, but I need you to be looking. So either save me money or give me the peace of mind that you looked and that there wasn't an opportunity to save money or do something different. Josh Schumacher (06:04): Yeah. Nolan, what would you say to someone who sat in your shoes, CFO, leader, someone responsible for benefits who is going through the motions, accepting that claims are the claims, accepting that we get a 10% increase year after year and that just is what it is. What would you say to someone like Nolan Pearson (06:22): That? I would say I've been in those shoes. Again, there's a lot of great people in this industry, a lot of people that I really like, but at the end of the day, if you ask those questions and they can't answer it appropriately, if they can't give you the answer that's best for your business, you have to make a move. I mean, at the end of the day, you owe it to your business, you owe it to your employees, and you owe it to yourself to make the decision of what's best for the business overall, not just for somebody you like. Again, your obligations to the business, not to somebody else. There is a better way out there, so explore it. If you ask those questions and you don't get an effective answer from somebody else, you can stay. But once you find there's a better way, you owe it to yourself and the company to make a move. Josh Schumacher (07:01): To a degree, as we come to a close here, I think there's a lot that we covered, but to a degree, it feels like CFOs, leaders, this is kind of a core piece of your job that is in someone else's hands. Maybe give me two or three questions you think every leader should be asking their broker to make sure that, "Hey, this major part of my responsibilities is in the right hands." Nolan Pearson (07:26): Yeah. I think the big thing is who's going to be running the relationship going forward? That's a big one. You don't want the person selling you to disappear, so who's going to be running that? What is your strategy to approaching the pharmacy negotiation and then the ongoing review? Again, what is the claims review process? What are you doing to use all of the data to drive an actionable cost reduction? Josh Schumacher (07:48): Yeah, I think if you're going to spend eight hours a year on something, you need a partner that's bringing some pretty serious solutions to the table to make sure that you have what you need to make that decision well and to implement the right strategies and improve those outcomes that we talked about. Nolan Pearson (08:02): Yeah, absolutely. Again, I never needed to guarantee that you could save me money, but I wanted somebody looking. I wanted somebody losing sleep over me. I wanted somebody out in the industry paying attention to new trends, bringing new solutions to the table, being a true consultant versus just a broker. Again, I value partnerships, so what are you bringing to the table as a partner that helps me drive my business forward so that I can go to either my CEO, my board of directors, whoever I report to and say with conviction that we have the right partner, that we're doing everything we can to drive down, it was what, a top two or three expense for us. We're doing everything we can to drive down those costs and really do what's best for our employees in our company. Josh Schumacher (08:42): Yeah. Well, Nolan, thanks for your time. Appreciate the conversation. Nolan Pearson (08:44): Thanks for having me. Josh Schumacher (08:46): Thanks for joining us for this episode. For more on how to break free from the cycle of rising costs and painful renewals, subscribe wherever you get your podcasts.