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Break The Cycle dives deep into the issues that keep renewals bad, costs rising and employees frustrated. Each episode breaks down what’s really happening and how employers can change the trajectory.
Amber Chittenden (00:00):
If their benefits aren't to par because they aren't able to control the cost within their benefits, they may be losing good talent as a result of it. It's costing employers a lot that they don't see on paper because it is harder to track and measure.
Josh Schumacher (00:17):
The employee benefits industry has been stuck in a cycle that keeps costs rising and plan members underserved, but there's a better way forward and it starts here. Welcome to Break the Cycle. Welcome back to Break the Cycle. Today I'm joined by Amber Chittenden, president of Apex Benefits. With over 30 years of experience in this space, she's going to help us explore the evolution of brokers from transactional partners to trusted advisors and what that shift costs employers who haven't made it yet. And then we're going to look a little bit at how an employer can look for a holistic partner who actually owns outcomes. Amber, thank you for joining me.
Amber Chittenden (00:56):
Thank you for having me, Josh.
Josh Schumacher (00:57):
So Amber, you spent nearly two decades at Cigna on the carrier side sitting across the table from brokers. What did that vantage point teach you about how the broker-employer relationship works?
Amber Chittenden (01:09):
So when I started in the insurance industry, I really didn't know all of the pieces and parts to it. So I quickly heard the term broker and honestly, it wasn't a great term to hear. It was more of, "Oh, we have to deal with the brokers." And so there really wasn't that respect I will tell you from the carrier side. And it was the traditional, "We're just going to broker services. We're going to go get quotes. We'll bring back quotes to you. " But there really wasn't a lot more to it than that. And so I think there wasn't a high expectation of what a broker would do in the traditional space when I started, which is why I think we've seen such an evolution over time and what that means and the value that it brings to an employer.
Josh Schumacher (01:56):
Why did that work then or maybe why was it common practice then and why won't it cut it anymore?
Amber Chittenden (02:01):
I will tell you, it did work. So I do think that there was a role for brokers then, and I do think it was because no one knew where to go, what to do, how to get the best price, how to create the leverage that was needed to get the most effective price for employers. So I do think it was a needed role. It's just continued to evolve over time from just getting those quotes to really focusing on what's the end goal for the employer? What is the strategy that they're trying to deploy? And honestly, kind of being that person who pushes back to say, "What's the goal that you're trying to achieve? And let's make sure it's the right goal that you're trying to achieve. And then let's make sure that we're going after the right partners who we believe will be able to help us achieve that goal."
Josh Schumacher (02:44):
How has that role shifted over the last couple decades? And do carriers, do you think, still view brokers that way? How's the role of broker kind of evolved over that time period?
Amber Chittenden (02:54):
So I think again, it was just very transactional to begin with. It was give us the best quote, give us the best rate. We will advocate on your behalf and we will close the deal with the client, was really what that traditional broker relationship was like at that point in time. I think because our healthcare industry has changed and has been more complex and the cost of services significantly higher, we've had to evolve. And so the role of the broker has evolved from just being that advocate for the employer who is shopping the insurance carriers, making sure you're getting the best rate, making sure that you have the right coverage for employers and their employees and their families, along with making sure that they have the right providers to even access the care. Benefits have evolved over time. When I started, we had PPO plans everywhere.
(03:48):
You had a primary care physician who would refer you to a specialist. You weren't able to just go see whatever specialist you wanted to. We had it so that there were different hospital systems and you would enroll into each different hospital system that you wanted to select. And so there were a lot of intricacies even back in the day, I would say, that a broker had to be aware of. What has changed is that we have open access and people want to be able to select whomever they want to go to at whatever point in time they want to go to them. And that creates a challenge in and of itself. And so because healthcare has changed significantly, so has the role of the broker. And as a broker, the thing that I think people have to realize is we have to be the experts with every single insurance carrier.
(04:35):
So during my time at Cigna, I knew everything that we had to offer at Cigna. About Cigna products. Yes, I knew it inside and out. I knew how to sell against my competition. So I knew what the other carriers were doing, but I didn't have to know the devil in the details. On the broker side, you have to know those details if you're advising your clients correctly. And so you have to know the details with every single different organization that you're working with to be able to represent your client appropriately. And so we've had to become more specialist. And that's one of the reasons why we focus on employee benefits only is because it is such a complex world of benefits that if we lose sight and we are looking outside of employee benefits, our focus is elsewhere, which means our outcomes are not going to achieve the same results.
(05:27):
So we've had to transition and become more experts in diving into the details to understand what's available in the marketplace, what does it cost, and how can we effectively make an impact in the overall landscape of employee benefits.
Josh Schumacher (05:44):
Given that increased complexity, how much things have changed, are there still employers working with what you would describe as transactional brokers? Are transactional brokers kind of a dying breed? Give me a little bit of the lay of the land as you see it when it comes to that kind of transactional broker versus where we've evolved to over time.
Amber Chittenden (06:02):
It's a mixed bag. So I will tell you, we still run into those traditional brokers. They tend to work with, I would say, small to mid-size organizations where we still see that traditional broker that is in place. Many of those really haven't been able to sustain the changes in our industry because if you're not growing, you are dying in our industry today. And so there are still those traditional brokers out there who are still just looking at what can we do to negotiate the best cost? They're not looking at what's really driving the cost and what they can do about what's driving the cost.
Josh Schumacher (06:43):
Speaking of costs, benefits are typically the second or third largest line item for most organizations, but there seems to be a disconnect in how employers react to them, treat them. Why do you think that is?
Amber Chittenden (06:54):
We've almost been trained to think that way. I can't tell you the number of times that I have heard a claim is a claim and there's nothing we can do about it. I think people feel helpless. They feel like it's outside of their control. They're not sure what the next action step is other than just getting rid of benefits altogether. I can't tell you the number of conversations that I've had to just say, I just want to get rid of providing benefits altogether because it is so complex. And so I think we've been trained that way and because of the complexity, no one historically has really been able to figure out what's driving the cost and what they can do about it.
Josh Schumacher (07:32):
So in a sense, no one's really looking under the hood. What does it really cost an organization? Maybe let's start with the financial impacts of not looking under the hood of their benefits and really diving into what's driving those costs.
Amber Chittenden (07:48):
It's costing them financially significantly. I would say it's also costing them probably employees from an attraction and retention standpoint. If their benefits aren't to par because they aren't able to control the cost within their benefits, they may be losing good talent as a result of it. They're probably losing their sanity. What's the definition of insanity doing the same thing over and over again and expecting a different result? And I think it's costing employers a lot that they don't see on paper because it is harder to track and measure.
Josh Schumacher (08:24):
And so with all this additional complexity that I think we just talked about when you look at how benefits work, I'm sure it's very overwhelming. You mentioned that lack of agency. What does that look like in practice? Are employers overspending, misallocating? Again, if they're paired with that current transactional broker, what are some of the biggest challenges they're facing when it comes to allocating their benefits dollars?
Amber Chittenden (08:48):
I think the biggest challenge that they're facing is they're just looking at it as a transactional cost rather than the overall cost of benefits and really leaning into what can they control? What are the things that can be controlled? I think people have always thought it's only the fixed cost. And if you focus on the fixed cost, which generally is 20% of the overall cost of benefits, if you're only focusing on the fixed cost, you're not making a significant dent in the overall cost. You have to focus on that 80%, which is the variability. And if you don't get into the devil in the details with the variability, you're never going to make the impact that you need to. And so it's costing employers significantly because they're not able to invest in as much in other areas of the organization because they've allocated it to benefits and think there's nothing that they can do about managing that cost.
Josh Schumacher (09:40):
That's a great point. I think it reminds me a little bit about how you mentioned transactional brokers. So when I think transactional versus strategic, the question that comes to my mind is what would you say to that transactional broker partner who brings you your renewal close to the end of every year and basically claims, here's your benefit strategy for the year?
Amber Chittenden (09:59):
I would say to that traditional broker, thanks, but no thanks. I call that a passive approach and it's really a reactive approach to, all right, well here's your renewal, what are we going to do about it? Versus an active management approach and really more strategic in nature. So if you are not actively managing your benefits on a monthly basis and you're only waiting until renewal, there's only so much you can do about it. You have to take an active claims management approach so that you are looking at what's driving your cost every single month and saying, is that the right way for us to be spending our benefits dollars? And if it's not, we need to take action. You don't want to wait to take action until your renewal. By then you've wasted probably another six to seven months of dollars that are being spent on your benefit plan and you're not going to be as effective at your renewal and setting yourself up for the next 12 months.
Josh Schumacher (10:59):
So speaking of the right way of doing things, we talked a little bit about the transactional approach, how that's evolved over time now to brokers who have more expertise, who are more focused on this. Do you think that brokers across the board are in a better place today? Is there another shift that's needed in the broker space as we look at how they can partner with employers?
Amber Chittenden (11:21):
We will never stop growing. We are in an industry that continually changes on a daily basis. And if you are working with anyone who isn't continually innovating and changing, you're going to get lost in the shuffle and your benefits are not going to be as effective or as valued by your employees as you want them to be. Have I seen that change in our marketplace? Yes. There have been some great movements in our marketplace with brokers who have continued to evolve and who have continued to change. I think what I look at now is, well, what's next? What is the next thing that we're going to focus on that we are going to help control the cost of healthcare within our state and across our nation? This is not a challenge that we specifically have in one state or one area. It is a problem we have across the country.
(12:12):
And what we talk about internally ourselves is what we do for our clients today is not good enough for tomorrow. And we look at that and realize that we can't continue to point at the healthcare system, the carriers, the insurance companies, the hospitals, the providers, and expect that anybody is going to be the one person to make that change. And so our role now as trusted advisors and consultants is bringing everybody together to make sure that we are all working towards one common goal. And that is to ensure that people have the right quality access to care. They're getting the right care at the right place at the right time for an affordable cost. And once we can all align on that, what we're brokers are now consultants and what I would call them trusted advisors are really those people who are continuing to evolve and advocate to make sure that we are all working towards that same goal together and are going to be part of the solution, not part of the problem.
Josh Schumacher (13:19):
So yes, clearly a transactional approach that's passive as you mentioned it, instead of proactive is not a strategic path forward that's probably sustainable, but I'm sure that's news to some people. I think there's a lot of organizations that are in a relationship with a transactional broker, that's what they're used to, that's kind of how it feels to them the space operates. So what would you say to someone in terms of how they can take a better path, maybe start to alter their current approach?
Amber Chittenden (13:49):
Yeah, we've seen that a lot. We've helped a lot of employers through that. And the first thing that we go back to is what's the foundation? I think you always need to go back to why are you offering benefits? What is the goal and what are you hoping to achieve through that strategy? So it's getting back to the basics and understanding what that foundation is and then aligning on those goals and sitting down and talking through and understanding what are the goals of the organization? How do benefits play a part in the overall goals of the organization? We just talked about the fact that it's the number two or number three expense. Every CEO, every CFO is looking at that expense. And so if we aren't getting back to the basics and understanding what the foundation is and creating a strategy to actively manage it, that's where people miss out on the opportunity to create that better path and understanding what can they do about benefits that they thought were off the table and that they couldn't really make an impact with before.
Josh Schumacher (14:56):
And so to tie that alignment of strategy back to this conversation of the shift in the broker space, what role should the broker play in that approach to offering benefits that are built on this strategic foundation?
Amber Chittenden (15:12):
They should be your strategic advisor. They should be sitting at the board meetings with you. They should understand what your organization is trying to achieve, what the goals are, and they should be held accountable for the outcomes as well. So they need to be part of building that foundation. They need to be part of building that strategy and they need to be held accountable for the outcomes just as anybody else within your organization is held accountable for those same things.
Josh Schumacher (15:42):
So in practice in such a complex space, what does holding that partner accountable look like? Because there's all the carriers, all the vendors, there's pharmacy, there's employee benefits. There's so many different solutions that these broker partners need to pull on in order to deliver that strategy. So what does one broker who's an accountable partner actually look like?
Amber Chittenden (16:06):
I think the broker who is an accountable partner, one, you've got to set the goals. What are we trying to achieve? And you will have a lot of bolt-on experiences or solutions, I guess I would say.
Josh Schumacher (16:19):
And what do you mean by a bolt-on solution?
Amber Chittenden (16:21):
So a bolt-on solution, think of anytime you use a third-party vendor. So when you are outsourcing work to someone else instead of holding that expertise in-house, that's a bolt-on vendor.
Josh Schumacher (16:33):
Okay. And when you talk about accountability, then that's where the challenge arises because you're outsourcing a major component sometimes of your strategy.
Amber Chittenden (16:43):
Yeah. It's harder to hold a third-party vendor accountable than holding yourselves accountable. And so when you are managing eight to 10 different bolt-on vendors, the accountability is spread and you have less success in holding those vendors accountable.
Josh Schumacher (17:00):
So how do you find, I think you called it a strategic advisor. How do you find that strategic advisor when you're pushing your broker and you're trying to identify are they a strategic partner, just a consultant, or maybe just a transactional broker? How do you find that versus just someone labeling themselves as like, yeah, we're your strategic advisor?
Amber Chittenden (17:19):
Everybody labels themselves as one, I will tell you that. I think the best recommendation I would have is to first understand what's driving your cost. Where are you trying to control cost the most? And as you are speaking with someone who is a strategic advisor, ask them what their outcomes are for those drivers of your healthcare cost. What have they been able to achieve? How do they hold themselves accountable and what will they guarantee that they will do for you?
Josh Schumacher (17:51):
Outcomes are clearly critical. How does a trusted advisor actually deliver on those outcomes work with you? We talked about the strategy, the foundation. How does a trusted advisor partner with you to make that happen?
Amber Chittenden (18:04):
As I mentioned before, they need to be sitting at the table with you in those boardrooms and those executive meetings because a trusted advisor is one who is not just going to say, "Yes, I took your direction and ran with it. " That's more the traditional broker model that we had years ago, but it's more of one who's going to challenge the why. Why are you offering the benefits? What have you put together from a benefit strategy? Why do you believe that it's important to provide that benefit? It's somebody who's really going to challenge you. I think the best relationships that I've been a part of are those ones where we challenge ourselves and we challenge our way of thinking. You need somebody who's your trusted advisor who is going to challenge the way of thinking so that you can rest at night knowing that you've thought about every possibility that's out there from a benefits perspective and that you are making the best decision with the information you have in front of you at the moment.
Josh Schumacher (19:01):
We've come a long way from transactional broker through a strategic consultant, maybe we'll call them, all the way to a trusted advisor. Where I like to always go from here is just asking, maybe there's someone out there that's sitting there thinking, wow, maybe I am in that transactional relationship. Maybe we're branching into the consulting, but I really want a strategic trusted advisor on my side. What's the first step? What can they do Monday morning when they walk into their office to actually start breaking the cycle of transactional renewals that just come year after year?
Amber Chittenden (19:35):
Yep. I would say when they go into the office Monday morning, they need to dig into their plan. They need to understand what is driving the cost of their benefits today. How do they themselves value benefits? When you think about it, if you're the person who's managing benefits and you don't value the benefits that you're offering yourself, there's probably a misalignment in the benefits and the goals and what you're trying to achieve. So do a quick inventory of what you have and then think about the partnership to say, who I'm working with today? Are they challenging us? Are they advocating on our behalf? And if I were to go to war with them and we were to have a fight over benefits, is that who I want in my corner? And do I trust them that much that I know that they are putting our best interest first?
(20:25):
That's the type of a relationship that you're looking for.
Josh Schumacher (20:28):
It sounds like the bar has changed in the broker space.
Amber Chittenden (20:31):
Absolutely it has. I always take a step back and look at to say, okay, what have we implemented? And so I would say to any employer, think back and say, what have you implemented in the last year to two years that you believe has created the innovation that you were trying to achieve? If you are not satisfied with the fact that you're continuing to innovate with your benefits year over year, if you feel that it's become stale, you probably need to reassess who you're partnering with and whether you have a trusted advisor by your side. It's a holistic approach that you need to take. You can't just focus on one area of benefits. Most HR people, CFOs, CEOs, they're running an entire organization. Benefits are one piece of it. And so you need to take a holistic approach and understand how do benefits play a role in the overall success of your organization and are you doing your part within benefits?
(21:29):
And if you don't have the right advisor by your side, you're going to fall behind.
Josh Schumacher (21:33):
Continued innovation, an accountable partner, a holistic strategy, someone that's really going to advocate for you. That's what I'm
Amber Chittenden (21:40):
Hearing.
Josh Schumacher (21:40):
Yep. Well, Amber, thank you so much for this conversation. I think there's so many takeaways for employers, so thank you for joining me for this episode.
Amber Chittenden (21:46):
Thank you for having me.
Josh Schumacher (21:48):
Remember, you don't have to keep repeating the same outcome. You're built for better and we are here to help you see how you can break the cycle. Thanks for joining us for this episode. For more on how to break free from the cycle of rising costs and painful renewals, subscribe wherever you get your podcasts.