The $64,000 Question (Small Business Secrets)
By Howard Danzig
What’s the answer to the $64,000 Question? Unbundling.
ECCHIC recently took on a client in northwest Missouri who operates three small pharmacies with a total of 27 employees. Like so many small business operators, the owner was conditioned to believe that he had little choice when tasked with providing healthcare to his employees. He knew much bigger companies had advantages that were out of his reach – or so he thought. His story is the subject of number eight in my “Frankly Speaking” series, which you can find on our YouTube channel, titled Secrets of Small Business Savings.
Instead of dealing with an insurance agent who merely gathers up quotes, he went with a cost-management team, a system that cuts out the “middlemen” and saves significant money while providing the employees with proper health care that is so important to getting and retaining good workers in today’s economy. (Also, being a small town business owner, it was important to him to do right by the people who work for his business.)
Let’s look at some numbers: Prior to June 1st, 2017, he was paying $24,000 a month to a bundled off the shelf Blue Cross/Blue Shield plan. What was he paying for? He didn’t know – there was never a breakdown of costs, because big insurance operators want to keep it a “mystery” which is how they achieve such large profits. But we believe the secret of small business savings is knowing what you’re paying for and why you’re paying for. We also don’t believe in paying for things you don’t use.
By putting a cost management team in place, he was able to break down the expenses and stop paying for what he wasn’t using. We separated expenses from the medical, the pharmacy, and the administrative costs. The results were that $216,000 a year costs were lowered to $152,000. In just eight months of being an ECCHIC client, he saved $64,000. Now keep in mind there was no sacrifice or compromise involved: Employees received the exact same benefits with the exact same doctors. He just stopped paying for things he wasn’t using.
Like so many small business owners, he was close to reaching a breaking point, a point where the employer is merely working to just provide access to health care for his or her employees. Without this “secret” of cost management, of unbundling, he would have to somehow produce an additional $1 million in sales annually just to keep up with it the rising cost of health insurance.
The “secret” is working with a cost management team, not just an insurance agent who gives you quotes. As we like to say around here, if you want a quote, read Shakespeare; if you want to provide for your employees and save money, go to ECCHIC.