3 min

Corporate boards have historically relegated employee and workforce concerns to management. In 2020, COVID-19’s dramatic impact on operations and employee health began changing that perspective in significant ways, leading to a more expansive approach to how boards fulfill their responsibilities.

In a recent publication, Deloitte’s Center for Board Effectiveness confirms that:

“Events related to the pandemic … have … thrust workforce management to the forefront of board agendas. In many cases an afterthought, a lagging consideration to the business and technology strategy, workforce management is now a leading priority, on an equal footing with other key areas of board focus.”

This much-needed emphasis is both timely and necessary. There is organizational risk for boards that do not press for better performance beyond the status quo. Enterprise risk programs should do more than “check the boxes” and boards must challenge those who insist they’re doing “everything they can” for employees as well as shareholders.

Mitigating Employee Health Plan Risk

ERISA, which ensures that both retirement and health plans are managed in the best interests of plan participants, tightened its regulations around retirement plans after rising numbers of class action suits resulted in billions of dollars in settlements. From imprudent investments and grossly high fees to mismanaging shared plan assets, employers were called to task for reduced earnings for employees.

As for healthcare benefits, boards can (and should) urge organizations to move away from legacy health plans that prioritize insurer and PBM profits over plan participants. This has fueled runaway employer costs, siphoned employee income, and burdened employees with medical debt when they need to use their health insurance.

Most employers and their employees are overspending on healthcare by 30% or more. This drain on corporate profits and employee income can be addressed by a modern health plan administrator with leading technology and a moral imperative to represent the best interests of employers and health plan participants.

Although it is unlikely that ERISA-driven regulatory changes around health plans are imminent, ERISA does expect organizations (and by extension, their boards) to manage health plan expenses. It is not difficult to envision employee health plan participants initiating legal action because employers and benefits consultants maintain plans with legacy insurance carriers that fail to demonstrate any cost control. Boards are encouraged to be more diligent and take proactive steps to mitigate the risk of such a scenario.

Board Responsibilities to Society

Deloitte cites the 2022 Edelman Trust Barometer, whose top ten findings reinforce the role business plays as the society’s most trusted institution. Respondents affirm that “societal leadership is now a core function of business” and that “business needs to step up on societal issues.”

There are few societal issues or obligations more critical than addressing the challenges of today’s healthcare system. As an integral part of this system, employer health plan sponsors have an enormous responsibility and cannot afford to be complacent actors. A greater emphasis on employee health and wellbeing is needed, as supported by Springer, which finds that some boards “view health as a business opportunity or even a moral obligation.”

Although 54% of the population receives health insurance through an employer health plan, 29% of those with employer coverage are functionally uninsured. Legacy health plans subject employees to immense financial distress and instability, often resulting in bankruptcy and crippling debt from which many struggle to recover.

Corporations and their boards have responsibilities to employees as well as shareholders and when it comes to employee health, those priorities are not mutually exclusive. Private sector employers need to embrace the growing workforce stewardship taken by many state and municipal government leaders as they root out unnecessary spending and seek more cost-effective, member-focused health plan alternatives.

2 min

The outdated health insurance system is feeling increasingly less safe and prudent for employer-sponsored health plans, making change more attractive and attainable. What’s behind this significant shift?

In a recent Vitori Health Digital Forum, hundreds of advisors and employers shared the key factors that have heightened their willingness to take a more progressive approach to employer-sponsored health plans. Behind these dynamics is a compelling impulse to seek a competitive advantage, avoid future risk, and not lag behind more forward-looking peers.

1. Health Care Cost Increases
   Employers and advisors are tired of the continuous cost increases in the legacy insurance system. They are no longer willing to shift these costs to employees, who have seen their disposable income dwindle.
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2. Self-serving Industry Practices
   Continual revelations of unethical and potentially criminal practices on the part of hospital systems, insurance carriers, PBMs, and traditional insurance brokers have raised employer awareness that the legacy system does not serve their interests.
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3. Talent Acquisition and Retentions
   To win the war for workers and talent, employers must free up money to increase salaries and bonuses, improve benefits, and more.
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4. Reduced Market Competition
   Mergers and acquisitions among and between health systems, insurance carriers, PBMs, and pharmacies continue unchecked, each one reducing competition and increasing prices. Employers are demanding more competitive and more cost-effective health plan options.
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5. Increased Adoption of Alternatives
   Approximately 1 in 15 employers currently deploy an alternative to legacy insurance carriers and PBMs. That number continues to grow as employers realize the benefits of alternatives.
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6. Regulatory Actions
   Incumbent stakeholders are under tighter scrutiny from the Healthcare Price Transparency and No Surprises Acts, elements of the Consolidated Appropriations Act, proposed prescription drug pricing legislation, and more.
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7. Fiduciary Responsibility
   Employers and their boards of directors, are increasingly concerned that they are breaching their fiduciary responsibility to manage shared employer and employee health plan assets and expenses, exposing them to the harsh litigation risks that have impacted employee retirement plans.

Collectively, these factors are accelerating employer transitions to health plans that reduce overspending, offer better member service, and free up money for workforce and business investments. Our ability to meet this market-driven need with a unique and comprehensive next-generation health plan helps to explain Vitori’s exponential growth.

3 min

We are living in a time when leadership is at a premium. This is especially true as we adapt to a “new normal” in our personal and professional lives. In the healthcare arena, the premium on leadership is multiplied by several factors.

• We have a costly, opaque, anticompetitive, and inefficient system.
• Health care represents 1 in every 5 dollars of Gross Domestic Product and continues to grow faster than any other consumer price index category.
• Like food, housing, and a means to support oneself and one’s family, health is a deeply personal necessity. Illness, injury, and disease compromise our ability to meet life needs. A lack of access to health care or to affordable health care compounds the consequences of personal and family health challenges.

These factors should elevate the expectations of next generation leadership in the health sector and hold us to higher standards in our current efforts and especially in our capacity to influence change.

It is not my intent to define leadership here. This has been done many times in many places. However, I’d like to suggest that as executive leaders within a healthcare ecosystem that needs great improvements, we should hold ourselves to next generation aims and actions. Here are some tenets that might help to keep us pointed in the right direction.

Leading Healthcare with Integrity

1. Do no harm.*

Questionable practices across stakeholders in the U.S. healthcare, pharma, and insurance systems have shaken the foundation of trust. Many “solutions” created by the legacy industry and new entrants inherit the current system’s ethical challenges, such as egregious billing and shared savings, hidden fees, and unscrupulous contracts.

Many are smaller versions of the same problems. For example, direct contracting meant to address valueless provider networks is often based on the same model of discounts off price-blind billing.

As next generation leaders, we need to ask, and answer, hard questions. Are we creating and delivering integrity-based products and services? Are our decisions and actions improving affordability? Lowering barriers to access? Increasing transparency? Creating more competition? Eliminating conflicts of interest? Making things better for patients, care providers, and payers?

* Contrary to popular belief, “do no harm” isn’t actually a part of the Hippocratic Oath.

2. The majority is almost always wrong.

This is the reason ingenuity, innovation, and positive change can take hold in the first place. Consolidating entities in a compromised system, like the unchecked hospital, PBM, and insurance carrier acquisition activity over the past decades, worsens existing problems, monopolizes thinking, and homogenizes behavior. This creates a spiral of further system regression, making change much harder.

Next generation leadership asks “If we could start anew, what would we do?”

3. Incrementalism is a way to avoid real change.

Incrementalism is an attractive proxy for standing still. In our current healthcare system, staying the same means getting worse by default. We see this in the form of minor tweaks staged as major advances, such as ACOs and value-based care attempts to blunt out of control fee-for-service.

A variant of incrementalism involves offerings designed to “manage the racketeering.” Examples of this include industries that have cropped up attempting to optimize PBM contracts or engage in an auditing arms race with hospital revenue maximization specialists and systems.

Next generation health leaders are not afraid to create much needed separation from the mainstream with offerings that will seem audacious to the status quo.

4. Look out-of-field for solutions.

This is a hallmark of innovation and invention across all disciplines. What can we learn and adopt from operational efficiency in other industries? From healthier buyer-seller-customer arrangements in unrelated arenas? From financial transaction reinvention in other sectors? Or from businesses that take care of people in spaces outside of healthcare? Importantly, what can we learn from those at ground level every day in the current system?

5. Take risks.

Outside of medical research, the established system is averse to risk and change. This prohibits progress. It requires courage from leaders who will embrace the unknown to step away from the majority and make real change happen through better solutions. We need leaders who are not afraid to ask “What if…?”

v2.0 Healthcare Leadership

In our new normal, we are at a time and place that is ripe for next generation health leaders who have the morals and courage to lead with bigger, bolder steps. If not us, who? If not now, when?