Risk & Business Magazine CEO/CFO Business Today Magazine Fall 2017 | Page 29
HEALTHCARE CONSORTIUMS
Group purchasing of administrative
services, network access fees, pharmacy
benefit manager fees and stop-loss
insurance has allowed us to keep these
expenses at approximately one-third of
those seen in a traditional fully insured
arrangement.
Involvement of key decision makers within
each member organization is critical.
Membership meetings are held on at least
a quarterly basis and participation is
near 100 percent. These meetings allow
for an open sharing of ideas between
organizations. An ongoing review of
both successes and failures helps to
define future initiatives for the member
organizations within the consortium.
Continuing education is a must as this is a
concept, not a product.
to protect the member organizations’
account balances from the effect of large
claims. Varying levels of internal pool
deductibles are available. Obviously, larger
organizations are able to accept more per-
claimant risk and, therefore, may want an
internal pool deductible of $100,000 or
more; smaller entities may participate at
deductible levels as low as $35,000.
Traditional stop loss is in place at a high
deductible level to protect the integrity of
the internal pool.
TRANSPARENCY
There cannot be any secrets or surprises!
This is the member organizations’
consortium, and they need and deserve the
appropriate data to make good business
decisions. All member organizations
receive detailed monthly reports which
show all income an d disbursements from
their respective balances.
STABILITY AND PREDICTABILITY
Cash flow stability and predictability is of
the utmost importance to public entities.
This is accomplished by the use of level
funding factors. In good years, excess
funding stays within each member’s
allocated balance account. If the account
balance grows beyond the amount
required by the consortium’s funding
guidelines (IBNR plus a claims fluctuation
surplus), the member organization may
apply for a funding moratorium. In
bad years, a supplemental increase to
the funding factor allows the group to
replenish the deficit but still maintain a
level funding approach. INNOVATION
Properly managed group purchasing
can help provide the most cost-effective
acquisition of administration, network
discounting, pharmacy pricing and the
like, but it cannot in itself reduce the
number and severity of claims. A well-run
consortium allows members to share best
practices in the areas of wellness, disease
management and consumer engagement.
We have spent a tremendous amount of
time and effort in these areas, and the
results have been exciting.
The use of an internal pool which operates
at a significantly higher tolerable-loss
ratio than traditional stop loss helps Public entities that enter into a well-
designed and properly funded consortium,
and groups that understand this is a long-
term arrangement to control both their
costs and all of the plan design features
and components, can better gain control of
their otherwise out-of-control plan costs.
A careful review of the options available, a
checklist to be sure many of the features
we listed here are included and references
from employers participating in the
consortium should be part of your due
diligence decision-making process. +
Kent Miller has 33+ years of experience in
employee benefits, including individual
health, life, group benefits and consortium
developments, Kent is the owner and
a consultant of Miller-Lewis. Kent
currently sits on the board of Lancaster-
Fairfield Chamber of Commerce, is
a member of Professional Insurance
Agents of Ohio (PIA), and is an active
member of the Columbus Association
of Health Underwriters. He has also
helped develop a member association plan
for the Lancaster-Fairfield Chamber of
Commerce, formed South Central Ohio
Insurance Consortium (SCOIC) in 1996
(a 17 entity public employer consortium
in Ohio covering approximately 3400
employee lives). Kent is very active in the
ongoing service and continuity of care
as he sits on many insurance committees
and is involved in Labor/Management
negotiation of entities across the Midwest.
Kent is married to Judy (Reed) and enjoys
golf, travel, entertaining and gardening.
740-654-4055
[email protected]
29