Fast Focus
	Healthcare costs will remain a problem until employers and brokers change their approach to the solution.
	The industry has reached a crossroads between old-school brokers and new-school brokers.
	While old-school brokers stand to become irrelevant, new-school brokers understand their changing roles—from providers of benefit design and selection to consumer healthcare advocates.

Abandon Old School Ways

The new benefits model: Healthier workers cut costs by reducing demand.

By  Rob Lieblein

As we enter the new decade, I have a suggestion for forward-looking employee benefits brokers: Stop worrying about the fallout from any healthcare reform that might come out of Washington. Focus instead on other changes.

I believe we can expect to see the employee benefits distribution model significantly altered over the next three to five years—with or without Washington. Yes, it is clear we will likely have some degree of healthcare reform, but brokers will be just fine based on the existing proposals (thanks in large part to The Council’s efforts). However, the future does not look all that promising for many in the industry. Let me explain.

Any healthcare reform from Washington will not reduce healthcare costs for employers and employees. Many well informed experts, like those of us in the industry, argue that costs will actually go up. I agree with that assessment, and I am sure many of you do, too. Yet we all know that the rising cost of healthcare is a significant issue for employers and employees, and it will continue to dominate the headlines until both employers and their brokers proactively change their approach to the problem.

Dangers of Being Old School

Here is the industry shift that you will be facing: Having specialized in the employee benefits market for the past 15 years, I believe we are at a crossroads regarding the way many employee benefits brokers approach their business. Meeting at this crossroads are old-school brokers perpetuating legacy business models and new-school brokers better suited to tackle current challenges.

The old-school approach is based on some common traits:

• Continue business as usual and wait until the market goes back to “normal”
• Believe that differentiation comes from great service, technology and old-fashioned relationship building
• Focus on “spread-sheeting” and cost-shifting
• Focus on short-term results and ignore the system’s underlying problems.

The new-school broker understands that the world is changing as it relates to the delivery of employee benefit services and they need to be ahead of the curve. Common traits for the new-school broker are that they:

• Focus on innovation and long-term implications to reduce healthcare costs
• Include actuarial services, data analytics and claims analysis
• Incorporate wellness programs and disease management
• Reorganize the sales and service models to focus on different skill sets to address market challenges.

My belief is that the crossroads is dominated by old-school brokers who ultimately will become irrelevant in the market.

The old-school strategic course of action—to milk the cow—will ultimately result in falling revenues until they finally just disappear. Alternatively, some will play wait-and-see when considering selling their firms. Before they know it, the market will pass them by. They will ultimately sell at a significant discount.

The new-school brokers recognize that change is already here. To remain relevant, their strategic course of action is to focus on innovation. They’re grappling with the question of how to provide a fully integrated solution of products and services that will ultimately reduce healthcare costs for employers and employees. They know it involves changing attitudes of employers and behaviors of employees so that employees are held accountable for making better decisions that improve their own health. In the end, this is the only way to reduce costs and generate savings.

Some new-school brokers, while they understand what is needed to prosper in the future, recognize that they cannot do it themselves. These agencies are selling to larger, better-capitalized firms that can help them succeed down the road. These agencies are selling at a premium.

I believe it will come down to a simple equation: Can you adapt? Fine, then go forth and serve your clients in a truly transformative way, helping them make significant changes to their healthcare programs that will help bring down costs and result in a healthier workforce. Are you unwilling to adapt or too small to provide the necessary new services? Merge or sell to a larger, better-capitalized firm, or see your business slowly sink into irrelevancy. Sorry to be so blunt, but that’s what you get at the start of a new decade.

Changing Skill Sets, Clients

It is perhaps easier to proffer a prognostication on what’s going to happen than it is to offer concrete suggestions on how to successfully tackle these changes. But these ideas can be a starting point.