With deep experience building data-driven, cost-effective benefits plans for thousands of employees across the nation, we're proud to announce that Todd has officially joined the Nava Benefits Advisory Board.
We sat down with Todd to talk cost-containment strategies, the importance of finding a reliable partner, and how brokers can help (or hinder) healthcare reform.
For such a large company as Caterpillar, we know that your work has had an impact on so many people — both in their careers, and also their lives. That being said, I'd like to hear about your ethos when it comes to benefits. How can employers use benefits to shape their employees' experience while balancing their impact on bottom line?
Our people are behind every success we have, and our focus on their health and well-being represents Caterpillar’s commitment to giving employees and their families the benefits they need to thrive. As a company, we have to consider what we can afford to keep our products and company sustainable. So, we want to find a sweet spot: an offering that can be both cost-effective and evidence-based.
We want to develop an offering that doesn't compromise medical best practices, while keeping in mind that there's more than one way to get the outcome you want.
We want to find ways to maximize people's value — which includes both the outcome they receive, and the cost they spend to achieve those outcomes.
So how does this make people happy? Well, people are generally more happy when they are healthy. But they're also happy when they can spend less money. So if we can find scenarios where we strike that balance — where we can get people healthy at a cost lower than they had before — that's a win for everybody.
You previously mentioned that your goal at Caterpillar is to help your people become as healthy as possible, as quickly as possible. You've also managed to do that while containing costs for the last 15 years, which is an undeniably massive feat. So how did you do this?
If there was an easy, one-size-fits-all answer, nobody would have trouble with healthcare. But that's not the case. Healthcare costs are very specific to a company, and it takes a focused approach to achieve that level of cost containment.
But if you want high-level principles, start by eliminating waste in healthcare. I define "waste" as any penny more than we need to spend to get the optimal outcome for the employee who needs care. If we could spend a dime to help get someone healthy, and we spend a dollar, then we just wasted 90 cents on the same outcome.
If you focus on finding places where there's waste in healthcare, then you can squeeze all that waste out. That's what we were able to do at Caterpillar: We found the waste and eliminated it, and that allowed us to maintain expenses without increasing costs for employees.
That's great advice. Any guidance on how this technique can scale for small and midsize businesses (SMBs)?
This can be harder for SMBs, especially if they only have one or two staff dedicated to benefits. But first and foremost, it starts with reliable data that helps shine a light on what's being wasted. Being able to do analysis on your own data really helps to drive the right dialogue with your partners — whether that be vendors, brokers, or whoever.
To get that data and leverage it in their dialogues, SMBs most likely need a partner, like Nava, who they can trust for their unbiased expertise. Nava aligns its incentives with its clients — in other words, they’re trying to give employers the best value for the dollar spent.
You've mentioned that you wanted to join Nava because you want to improve healthcare by helping others understand and navigate this space, particularly for smaller employers. If you could help demystify three concepts or best practices in healthcare, what would they be?
First, the quickest place to start saving is the prescription drug space. The supply chain is very complex and challenging. You need to find the right partner and the right scenario to not only get some savings, but to optimize your savings.
Second, find partners who are willing to be transparent with you. If you're dealing with a partner who won't openly disclose how they generate revenue from you, then I would find a new partner.
And lastly, don't forget that at the end of the day, it's your money they all want. You need to start thinking of your company's money as your own, and spending it like it's your own. Instead of letting the market tell you what they'll give you, you need to find partners who will sell you what you want.
I understand that the smaller the company, the less leverage you have in that space — but that's one of the problems Nava is trying to solve.
This upcoming renewal season could be a make-or-break moment for many smaller employers. What should be top of mind for SMBs during this renewal? Any advice you could give?
I think it's really going to come down to data. You have to understand what's driving your renewal prices.
There is some uncertainty due to Covid. In 2020, we saw healthcare costs drop in many places, because a lot of discretionary care was deferred. The early parts of 2021 showed the same trend, but I think now we're finally starting to see some of the bounce back, where those knee and hip replacements that didn't get done last year are going to start getting done.
So the small- to medium-size employers, who are often on fully-insured plans, have to be careful about what kind of numbers get thrown into their renewals. Carefully analyze how providers’ actuaries are pricing things based on some of these unknowns, and whether that aligns with what you think your spend is going to be. Again, it comes down to data and transparency in who you're working with.
Clearly this has the potential to be a cataclysmic moment for healthcare. Knowing this, what role can brokers play in transforming the space, post-Covid and beyond?
If I'm in the market for a broker, I want to work with someone who helps me understand their revenue streams. Someone who's transparent in how they're conducting business. Someone who lets me see the data they're using, and I can trust that it's all accurate. That's what they really need to be looking for when they select a broker.
Ask yourself — is there something better out there? You want to try to get the best value for your employees.
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