We talk about Value that Executives provide to their customers. We tend to highlight when Executives go above and beyond or out on a limb and take a risk that provides true Value to their customers. From time to time, certain critics like to focus on challenges that Executives make while trying to provide Value. What we do not often see is examples of tough decisions that Executive have to make as a means to operating their business. Many of these decisions are regulatory or table stakes to business operations.
In this post, we will focus on the tough decision of Executives providing Value through decisions in corporate healthcare. Lets start by stepping back in time. It was not too long ago that corporations did not have the pressure that they have today to provide competetive healthcare options to employees. This paradime has shifted from employees seeking positions, titles, power, and pay to a job market where employees expect competetive, complete employment packages. Employees used to be thankful to have a job and now they tend to demand a job. This mindshift has escalated the importance of using differentiators during the employment hiring process – with one of the biggest items being corporate benefits.
Back in the 90′s we experienced the ‘dot-com’ boom. There were new companies popping up everywhere and providing Value-added services for free. This added to the overall mindset of corporate culture, in that they could make demands of their employer at low to no costs.
So Executives did what they do best….they gave their customers what they wanted. In this case their customers were their employees and what they gave them was great benefits at low to no cost. There was a time in the late 90′s where some Executives were giving their employees free dry cleaning delivery services. More importantly, Executives were practically giving away health care coverage to their employees.
So, let us fast forward to the current century, specifically 2005-2010. All of those companies that were giving away free services in the late 90′s are now defunct or are struggling to stay afloat. Remember Lycos, AOL, or NetZero? The same is true for corporate healthcare. The price of healthcare rose and these Executives had no option but to pass these costs on to employees. What was practically free – now is expensive and is at the expense of the customer (aka the Executive’s employees). In a recent article by Lisa Gillespie titled AS COST INCREASES STABILIZE, EMPLOYERS REMAIN AGGRESSIVE ABOUT HEALTH CARE COST-CUTTING, she writes about how “total health care costs per employee are expected to rise 5.9% to $11,664 in 2012, compared to 5.4% ($10,982) in 2011.”
There are two main issues with this scenario….first we are talking required health benefits. The is a big difference between getting a connection to the internet for free for 6 months and then having to pay $50-60 month for spotty service (er..Comcast) and paying practically nothing for a serious health condition for years and then having to fork out large sums of money to cover a ‘pre-existing’ condition. The second issue is that these companies are trying to re-coop prior losses on a service that has become increasingly more expensive. This business model never works. Cash is king and revenue and profit is all that matters. And what is worse is that monopolies have formed (ie United Healthcare, BCBS) that work the numbers between risk and premiums so that more profit is available with less coverage.
This is serious stuff and it all started with Executives placing a low Value on the cost of healthcare. Consider these two short stories as prime examples. An African American, retired single mother of three lost everything in the unfortunate Katrina hurricanes. She was forced to drive to Houston, Tx and fill out piles of paperwork to get her basic healthcare and other benefits. She had nothing….no car, no friends, no ability to read or understand the paperwork. If it wasn’t for a good person that offered to help her where would she be? In another example, how many injured vets are returning from the Gulf war as heros? What do we do when they want simple medical benefits….we send them to the VA hospital and ask them to wait for 45-60 minutes to be treated. They can’t go to the local clinic without paying out of pocket. These are our heros!
As Executives, we need to focus on Value for our customers, while understanding the implications of our actions. We need to lead our customers to the best solutions at the right cost – this is true value. We need to always remember that there is a “U” in both “EXECuTIVE” and “VALuE” and that our customers only care about themselves and how Executives decisions impact them.