Self Funding: Making Good on a Bad Decision

Even the best brokers can misadvise clients through no fault of their own. After all, every business – even the insurance business – has its moments. Recently, a client of one California broker demanded a change to their third-party administrator. The client asked the broker to prepare a request for proposal to bring in alternatives. Of three potential candidates, the client selected a third-party administrator based on pricing and the impression it made at its onsite visit. Ultimately, the decision to change to the new administrator resulted in more problems for the client. Even though the broker didn’t make the decision, he still felt responsible for bringing the administrator to the table.

Situations like these aren’t uncommon, whether there’s an issue with a benefit plan change or a suggestion to change vendors, third-party administrators, medical networks, or stop-loss carriers. It’s called “the politics of decision-making.” Although some situations are unavoidable, there are some steps you can take to remove the politics from decisions and keep your clients when things don’t work out well.

Do Your Homework

Dennis Lee, a broker who serves clientele out of his own shop, Lee Insurance Services, always errs on the side of caution. “I see my role as an advisor more than anything,” he says.“It’s my job to make sure my clients have all of the information they need to fit their situation. I do my best to stay out of the decision making process.” He does his homework. He reviews the legal implications, researching possible discrimination issues and whether the advice he is planning to give his client adheres to federal and state law. Before making any recommendations about changing some facet of the self-funded program, he confides in various vendors and business partners for advice and looks at trends in the marketplace to determine if the client’s benefit plan is competitive in the industry.

Remember, a Number of Variables Are Outside Your Control

There may be implementation problems or the vendor may not be meeting the client’s expectations based on what it initially delivered to win the business. You and your client may have swooned over the presentation, seeing dollar signs and savings, not realizing that there would be a downgrade in customer service, reporting, functionality, or any number of services that made up an integral part of the client’s health plan administration. If there has been a network change, provider disruptions may upset the ongoing health related services of the employee population or the savings aren’t what you or the client expected. In any event, you advised your client and your client made a decision.

Avoid the Blame Game

Whether the vendor misguided you; you misunderstood the data that supported the final decision; or you didn’t ask enough questions in the beginning, someone will be pointing fingers and someone will be held responsible for the perceived lapse in judgment. Employees are upset; the client’s HR department is flooded with complaints; the TPA is getting an excessive number of customer service calls; and your client is frustrated. Whether things actually went awry or it’s just the pains of change, spreading blame, expressing denial, or trying to force things to work will only make a bad situation worse. For example, an implementation issue is usually first blamed on the previous vendor, then on the current vendor, and then on you. But it doesn’t matter whose fault it is; if you assisted with the decision-making, expect to be held accountable.

Don’t Act Based On Assumptions, Reactions, or Opinions Alone

Take the politics out of decision making and avoid the blame game by sticking to the facts. How much would it affect the client financially to make it work? How significant would it be financially to turn back? Survey the customer satisfaction of your client and its employees. What is the feedback? All of these things can and should be measured to determine next steps and control the damage. You can help reverse a bad decision and put the client back on track by offering the following:

  • A cost-benefit analysis that examines the bottom line and reviews the decision in terms of dollars and cents.
  • A customer service and satisfaction survey.
  • A strategy to align the client with their ultimate goals.

Keep Your Client’s Business

The broker who assisted his client with the third-party administrator change realized that he would have lost the client’s business if he had been defensive about his involvement. He knew enough to remain humble and to try and rectify the decision on their behalf. By reviewing the third-party administrator’s performance metrics, he advised the client to wait out the year to allow the business relationship to fully develop. If it didn’t improve, he would help the client leave. At the end of the contract year, the broker went back to the bargaining table with the previous third-party administrator ironed out performance guarantees; and moved the client back. It was a good decision for everyone and things are going well for the client.

Honesty Is the Best Policy

Lee advises that, if there is ever a time when you may have misled a client, it’s always best to be honest. “Don’t ever hide that you may have misguided the client,” he says.“The last thing you want to do is besmirch your reputation, or worse, have someone come along and do it for you.” Whether  a mistake was perceived in the decision-making process or the end result wasn’t what you or your client expected, you can’t offer a pragmatic solution until you admit that things didn’t go as planned. Not every decision that you or the client make is going to work out. Yes, there will be consequences to face, but unless you advised your client based on some personal incentive, blamed others for your own actions, or have been forcing it to work because your pride will not allow you to turn back, there is an upside to being honest and working it out for your client’s best interest. It retains your dignity and dignity, above all else, helps you remain credible with the client.