Life and Death Decisions in the C-Suite

The following is bonus content to Ray Kober’s , Life & Death Decisions In The C-Suite:

Congratulations.If you are here, it tells me that you are looking for ways to improve healthcare, gain transparency, reduce costs and improve quality, all of which is attainable! If you’ve had an opportunity to read Life & Death Decisions In The C-Suite, awesome!

It is packed with a ton of valuable information, and I applaud you for taking the time to educate yourself.

Here is what you need to focus on to master the finance and culture of healthcare:

1. Understand and acknowledge that publicly-traded insurance carriers and brokers have a fiduciary obligation to their shareholders, not their policyholders.
2. Large privately held brokers and brokers in general earn disclosed and undisclosed compensation from insurance carriers. The undisclosed compensation includes trips to exotic destinations, cruises, private jet transportation and huge bonuses accounting for a significant part of their revenue.


Warren Buffet said that GM is a healthcare company with an auto unit attached. His point, they/you are in the healthcare business. And in healthcare, the name of the game is claims. Claims account for 80 percent of your healthcare spend. Wrap your arms around your claims expense and manage claims the way that you would any other item or service that you procure.


Would you imagine that you can control claims by relying on a broker whose incentives are aligned with the insurance carriers’ incentives? When your rates increase, they prosper! The definition of insanity is doing the same thing over and over again and expecting a different outcome. You must break out of your comfort zone if you plan to master healthcare.

“The definition of insanity is doing the same thing over and over again and expecting a different outcome.”

Understanding & Managing Risk

Actuarial science tells us that 80 percent of claims come from 20 percent of your members, 50-60 percent of claims come from 5-6 percent of members, and nearly one-third of claims come from 1 percent of members. It is also worth mentioning that 40-60 percent of claims come from spouses and dependents of employees.

Given the numbers, doesn’t it stand to reason that if our focus is to reduce costs that we must reduce claims? How are claims managed in your plan? What’s the cost of a doctor’s visit? What’s the cost of an MRI or a CT scan, with or without contrast? What’s the cost for a total knee or hip replacement? Oh, you don’t know? Bingo! You don’t know! And as a leader in your organization who’s talking about a top 5 SG A expense that’s a red flag!

I laugh when CFOs tell me that a self-funded plan, is not for them because it’s too risky. Let’s examine that:

In a fully insured plan, the insurance carrier reinsures their risk, but they get to control the mechanism. In a self-funded plan, a stop-loss plan is most often part of the package, but the employer gets to control the mechanism.

“What if I told you that there was a way to reduce your risk from $1M on that family of four to a maximum of $17,400…?”

Here’s a real-world scenario
Your employee is rolling around in his compact SUV with his wife and two kids. In a fully insured plan, your risk is unknown; in a partially self-funded plan with a $250K stop-loss policy on each member your liability is capped at $1M; in a self-funded plan with no stop-loss policy your liability is uncapped!

Let’s say lightning strikes, there’s an accident and all four family members end up in the ICU for 30-days, and then require organ transplants, reconstructive surgeries, and long recoveries with ongoing care. The fully insured plan pays $1.3 M in claims. You are not on the hook for $1.3 M, but good luck with your renewal from the insurance carrier. This is especially true if you have
members who manage an ongoing chronic illness. [I don’t want to get too deep into the weeds, here but suffice it to say that a chronic illness represents ongoing risk as opposed to an injury which is generally treated and finished in a short period. Actuarily, the risk for the illness is greater to the plan on a year over year basis.]

If you have a partially self-funded plan with $250K stop-loss per member, your risk is capped at $1M, but you also have opportunities to reduce claims by managing non-emergent care, so although your risk is $1M, your plan does a good job of managing claims and actually pays $600K.

What if I told you that there was a way to reduce your risk from $1M on that family of four to a maximum of $17,400 (the ACA limit in 2022)? That’d be a pretty neat trick, right? Worth the price of admission? Read on

There is a little-known strategy that serves as one of the greatest financial hedges in healthcare. You don’t know about it because it takes members off your plan and that does not serve your publicly traded insurance carrier’s shareholders or your broker’s shareholders. In other words, ;what’s good for your bottom line is bad for theirs!

Let’s give names to our mini van family. Jack is driving, Steph, his wife is sitting in the passenger seat, little Johnny is in the back seat with his baby sister Uno. Let’s say that Jack is your employee and right now the whole family is on your plan even though Steph has a job too, because lord knows it’s impossible to make ends meet on one income these days, and it’s just ;more affordable for them to be on Jack’s (your organization’s) plan.

What if there was a way to attract them to another plan that you offered that cost less and simultaneously reduced risk? That’s what I’m talking about!

At Benefixa, we endorse a plan that specializes in de-risking your plan and best of all, when Jack and Steph and little Johnny and Uno migrate to the plan that we establish, they will pay nothing out of pocket – ZERO for healthcare!

Best cases for this strategy include plans with over one hundred employees and ideally over one hundred employees on plan. It really shines in large groups with thousands of employees, but no matter the size of the group the plan works just the same. It serves to reduce costs for employees and deliver 100% healthcare for those enrolled in the plan. We call it The 100% Plan.

Here is the cover page from an impact analysis prepared for a bank with nearly 13,000 employees on plan spending approximately $115M annually on health insurance. Adopting The 100% Plan strategy reduces their risk by over $500M (not illustrated), hard costs by up to $48M and creates shareholder value of over $600M.

Want to see how The 100% Plan can work for your organization? All we need is information that you have at your fingertips. Complete this form and we’ll take the time at our expense to prepare an impact analysis for your review.