California liquor distributor contains benefits spend by creating a culture of consumerism.
Due
to historically high claims and low
employee engagement, Young’s Market Company experienced a double-digit increase
to their medical premiums. It was imperative that they control costs and
transition to a culture of consumerism that would give
employees more influence over their benefits choices and spending. They hoped
this shift would make them more competitive at recruiting and retaining
employees as well.
The successful California-based
liquor and wine distributor that employs 3,000 (and provides benefits for 1,500
non-union workers) across 11 states came to HUB in 2013 after working with large
brokerages that didn’t understand their mid-size company needs. The first order
of business was to move to a self-funded insurance model, which they estimate
saved them $1.3 million in the first year. This first change revealed:
- the
demographics behind the organization’s benefits expenditure
- the
medical services most utilized
- the
medical services that were underutilized
- the
groups of employees who generated the majority of claims
“We came to the conclusion that we had a lot of employees that
virtually didn’t touch the plan and a few employees that were really sick. The
large claims were really driving the expenses – 90 percent of costs were
incurred by five percent of employees,” said Brian Clelland, VP of Employee
Benefits for Young’s Market Company. “This told us that adding copays and changing
employee contributions wasn’t going to do much to change how employees access
medical care. We worked on a different approach – to drive employees to make
better decisions about the services, providers, and facilities they’re using--leading
to quality outcomes--which ultimately would help mitigate some of the costs.”
A
year later, in 2014, Young’s Market Company switched their medical network
saving them an additional $320,000. They
rolled out a new high deductible health savings account (HSA) plan. They
continued their drive toward consumerism with the rollout of an additional HSA
plan in 2015. With about 40% of the
deductible contributed by the company, both plans allow employees to accrue
funds for their health care expenses and become more conscientious consumers of
their own health care. Out-of-pocket limits were reduced to align more closely
with local competitors. Additionally, back in 2013, Young’s, while moving to
self-funded, decided to maintain a legacy HMO plan which they converted to an Exclusive
Provider Organization (EPO). HUB and Clelland’s team, worked together to create
an educational program aimed at converting employees from the EPO plan to the
more consumerism driven plans they launched in 2014 and 2015 with the new HSA
options.
Initial cost containment strategies
saved Young’s Market Company over $1.6 million within the first two plan years.
Enrollment in the consumer-directed health plan (CDHP) increased to 67% with
the addition of the HSA offerings. Employee
contributions were eventually cut by 20% and out-of-pocket limits were reduced,
making the company’s benefits more competitive and further solidifying employee
engagement.
Premium increases – stopped in their tracks
“Just
about every plan change has been received very well. The employees have been
appreciative that we haven’t increased contributions since 2011,” said
Clelland. “Since then, we came out with an actual cut, and people were
surprised and appreciative. Response to the other initiatives has been positive
as well. People who use our benefits tools find them very useful.”
Clelland says
the multi-year plan framework shouldn’t be underestimated in achieving cost
containment and employee engagement success. If he could give any advice to
other companies it would be to “spread it out and pace yourself.”
“Unless you’re under the gun
and the company is hemorrhaging money, I would say, think through a strategy of
where you want to be in three to four years and do it in smaller bites,” he
said. “Employees
can only absorb so much, especially if they’re not used to being responsible
for their own health care. If you give them too much to do it’ll overwhelm them.
Instead, split it up and pace yourself. The bigger things should be planned out
a few years in advance.”
Re-aligning the total benefits package – 2012 - 2016
Young’s Market Company’s newfound focus
on consumerism led to the integration of multiple employee benefits and cost containment
strategies that have successfully driven employee engagement over time,
including:
Best Doctors – In an effort
to eliminate unnecessary and costly medical testing and treatments and validate
diagnoses, Young’s Market Company engaged Best Doctors, a source for physician referrals
and an in-depth second opinion with an “Ask the Expert” option. To ensure
employees use the service, Young’s recently instituted a $1,000 cash incentive
for those who engage Best Doctors for a second opinion.
Healthcare Bluebook – As if health care choices
were as simple as buying a car, web-based mobile app Healthcare Bluebook helps
employees find local, comparable medical services and procedures for a fair
price. For those with a high deductible health care plan, this service can save
by providing fair price comparisons and rating providers by their price and
quality of care.
Pharmacy
Negotiation
– In late 2015, HUB renegotiated the company’s
existing drug discounts saving Young’s Market Company as much as $260,000 in
2016 on pharmacy spend with the same vendor.
Oration – Similar
to Healthcare Bluebook’s services, Oration evaluates where employees purchase
their maintenance medication in an effort to eliminate variance and seek out the
best prices. Together, Oration and Healthcare Bluebook saved Young’s $31,000 in
2015 and 2016.
Telemedicine – In
conjunction with all medical plans, Young’s Market Company offers a
telemedicine service that provides employees with 24/7 access to U.S.
board-certified doctors, reducing costs by minimizing doctor and ER visits for
common ailments. There is also a reduced
copay/coinsurance for using telemedicine versus onsite visits or urgent care.
Voluntary
Benefits – Additionally, voluntary benefit options were introduced to
provide employees coverage options to bridge the out-of-pocket expenses gap
often created by high deductible health plans.
Young’s offers voluntary benefits, including hospital indemnity,
critical illness, and accident plans.
Due
to the convergence of rising health care costs, employee
needs, and health care reform compliance, the story of Young’s Market Company is significant, but unfortunately,
not unique. Contact HUB employee benefits advisor if your company is looking to revamp its employee
benefits package to focus more on consumerism, drive down costs and increase
employee engagement.