Imagine, that as a business owner, every month you get a delivery of office supplies from one of the national big box chains. The bill comes, and it’s just a number – and it’s a big number. There is no itemized list, so you don’t know what you got. Worse, you don’t know what you paid for each item. Then, every year, the cost for these office supplies goes up plus there seems to be cuts – “no more paperclips, you have to go out and get them elsewhere.”
Ridiculous? Of course it is. There’s not a sane business person on the planet that would put up with that. Yet that’s exactly how the vast majority of companies get health insurance for their employees. What we think is the better option is to understand the expense involved with healthcare and pharmacy needs and then control them. Then, just like business owners and association and nonprofit heads do on pretty much every single other expense, the final cost are negotiated.
But you’re thinking, “I’m not a big company, I can’t get the deals that businesses with thousands of employees get….” well that’s just not true. A good managed care provider gets in there and fights for you, works out deals, keeps costs down – all while making sure you have the benefits you want. This would be the opposite of a broker who simply gets on the phone once a year and calls around and offers you various plans from traditional sources.
It does require some additional understanding on the part of the small business owner, though:
- Healthcare is sold to medical networks at wholesale discounts.
- Prescriptions are sold to Pharmacy Benefit Management companies (PBM’s) at discounts.
- Insurance companies buy the above at the discounts and sell it to groups through premiums at a substantial mark-up.
- Major employer groups bypass the insurance companies and buy directly from medical networks and PBM’s at discounts; unbundling the medical, pharmacy and insurance components in order to do this.
- Small independent employers can and should do the same – you aren’t shown how. Insurance is meant to protect against the unforeseen. It was not meant to buy basic services.
To control your cost – you must:
- Be in a position to actually know your cost of services used.
- Make your cost efficient by only paying for what is used for basic healthcare and prescriptions; Plus position yourself to pay at the institutional wholesale rate, not the marked up premium rate.
The option to all of this? ObamaCare, and trust me, you don’t want to go there!
Whether it’s here in St. Louis, or in small town America, taking care of your employees is important, and the insurance industry is overwhelming by design — but a proactive team can save up to 40 percent and take care of all these issues for you. It’s worth looking into.