Baseball great Ted Williams never wore ties, a likely irritant to then-Boston Red Sox manager Joe McCarthy, who was a stickler for the dress code. But at the first formal team meal he attended, McCarthy wore a casual, open-necked shirt with no tie, to everyone's surprise. "If I don't get along with a .400 hitter," McCarthy reasoned, "it'll be my fault."
Much as McCarthy chose to adapt to his star player, health benefits brokers are choosing to adapt to new, quite challenging circumstances. And they are legion, including lower-cost health plan products and associated lower total commission. Market demand is shrinking, with some small businesses opting out of benefits or employing more temporary and part-time staff. Payers are consolidating, which is reducing choice. Service requirements for producers are increasing, with employers adopting more complex plan designs. The most trying circumstances, however, could very well be the recession, tighter credit and lagging sales -- a market meltdown that is prompting many employers to rethink not just their health plans, but their overall health benefit philosophy.
What's ahead
It is our belief that information technology -- specifically, greater automation in health plan distribution -- will support producers' own efforts to meet these myriad challenges. We also believe that such innovation in IT will redirect both the broker's time and the premium dollar toward health advocacy.
We envision a one-stop Web portal where producers will search, quote, apply and bind health insurance and ancillary policies online from a choice of local and leading payers. We anticipate the complete automation of payers' processes to sell and renew customers, and bind cases. We foresee fully integrated broker-payer connectivity linking the front-end sales and quoting processes to back-end health plan core administration systems. In short, we advocate technology that puts multi-payer and multi-line quote-to-ID-card (and customer service) capability at the producer's fingertips, on the producer's desktop.
This is not some far-off vision; the technology is close at hand, and we're excited about the possibilities. Automation will enhance brokers' businesses by streamlining the quote-to-card process, accelerating the sales cycle and improving their cost and other efficiencies. Further, it will enable producers to respond to growing consumerism by offering vendor choice through multi-payer Web connectivity.
While such change might sound dramatic, it is no more so than changes we see by producers in response to the challenging market realities. In fact, this innovation in technology will support broker innovations that have been both rapid and adroit.
Share the load
Some producers, notes a story in Benefits Selling, are offering health and productivity management programs or partnering with providers who do. For example, brokers are making nurselines available to their employer customers. Other producers are bundling health care and retirement services to provide integrated health-wealth management for clients and to differentiate from competitors. The article points out that, with these offerings, today's broker is evolving "from a purveyor of benefit design and selection to consumer health care advocacy."
A number of producers are restructuring their businesses, embracing a segmentation model. They're analyzing their accounts and identifying caseloads that are less profitable or require inordinate levels of service. These brokers then refocus on a narrower, more profitable book of business or market segment, either selling the remaining cases or partnering with other firms to service them. Still other producers are re-engineering their businesses to exploit opportunities emerging from the consumer and retail trends in group health benefits.
Plan 2.0
Consumerism, segmentation and member health advocacy are just three of many avenues by which brokers are innovating not merely to adapt to today's challenges, but to anticipate tomorrow's demands. IT can support and even accelerate these "extreme makeovers" by driving efficiencies at broker firms, freeing up valuable time, budget and staff resources.
Granted, sales automation has been around for years. But payer-specific platforms have not met brokers' needs. Instead, producers rely on intermediaries to quote comparative proposals from multiple health plans. The consequence of this disconnect between broker and payer? Paper- and fax-intensive processes, particularly in high-volume individual, family and small-group health insurance sales and enrollment. Here, there is considerable data re-entry and many manual steps. Too often, the consequences are data errors, incorrect effective dates, late member ID cards, a quote-to-sale cycle time that is unacceptable to brokers and, ultimately, customer dissatisfaction.
Service help needed
Not surprisingly, a study by The Alan Katz Group and Miller Marketing Insights showed that the average producer spent 63 percent of his or her time on service and administrative work, rather than prospecting for new business. They invested hours in phone calls and e-mails to health plans to correct errors that occurred during case installation. The TriZetto Group wanted to confirm this source of broker angst and commissioned a more recent study in conjunction with the National Association of Health Underwriters. Gantry Group queried 332 brokers on their perceptions of the health insurance distribution process. Producers reported that case installation was their single greatest distribution problem. Specifically, they said the sales cycle should be cut roughly in half. A mid-size health plan on average takes about 17 days from the time a case is quoted to generation of a member ID card.
Ninety percent of group health insurance brokers and 80 percent of carrier executives were interested in technology that would fully automate the sale, renewal and binding of small-group and individual and family policies, according to the TriZetto study. Put simply, most producers and health plans want enhanced broker-payer connectivity that would reduce errors and accelerate the sales cycle.
This consensus does not surprise us. In fact, we're seeing agreement not just on broker-payer connectivity, but on connectivity at all levels of the U.S. health care system among brokers, payers, employers, providers and consumers. As a whole, there's growing support for what we coined as Integrated Healthcare Management: the use of IT to improve information sharing and processes among all constituents, to better align incentives and to enhance the cost and quality of care for this country's consumers.
Supply chain
If one doubts the potential of IT to deliver on this promise and provide newfound efficiencies for brokers, one need only look upstream in the supply chain. Consider what IT has achieved for payer organizations.
Over the past several years, payers have succeeded in driving down administrative costs through increased automation. And by reducing such costs from 18 percent to 22 percent to just 10 percent today, health plans have saved billions of dollars, improved their administrative accuracy and responded to challenging circumstances.
Information technology can deliver similar benefits to the broker community. The key: automation of health plan distribution and improvements to producer-payer connectivity.
More efficient distribution will reduce errors in case installation, offer real-time ID card generation, help consumers navigate an increasingly retail U.S. health care system and, ultimately, free producers to become health advocates for clients. Watch for this technology innovation.
Eric Sevareid, the famous news reporter and commentator, said, "The most distinguished hallmark of the American society is and always has been change." In this challenging economic and uncertain political climate, change has become the hallmark of the U.S. health care industry, and no segment has responded with greater urgency or ingenuity than the broker community. Information technology can ensure that producers' responses -- however urgent, however ingenious -- are successful as well.
Jeff Margolis is the founder of TriZetto and has spent more than 20 years architecting IT solutions for health insurance plans and integrated health care systems. Eric Grossman has more than 17 years of software experience and works with TriZetto in its enterprise strategy and communications group.
