Utilization matters (it really does)

I really ticked off one of my biggest competitors years ago and since it's a story that easily explains utilization, I've decided to share it with you.

You may be curious enough to wonder 'What is utilization?' It's a term used in the insurance industry to guess how many people are going to use the benefits of the health care plan and factors greatly into how much you pay in premium. So it's kind of a really important thing that most normal people could care less about.

Here's the story:

I was marketing a vision plan created by optometrists to employers and we were priced at the upper end of the market: about $14-18 per month, per employee (PEPM). My biggest competitor - the one I had to beat - was selling their plan for $1.62 PEPM.

Yes, one dollar and sixty-two cents per month, per employee... and I was having a really tough time getting employers to chose my plan that was so much more expensive.

For a buck-sixty-two, I knew a couple of things had to be true:

• The competitor plan had far higher copayments for exams and glasses (it did, about $45 compared to my plan at $10) as the less the plan has to pay out, the lower the premium.
• The competitor plan had to be paying the doctors significantly less according to their contract, and the doctors were willing to accept less in exchange for an increased number of patients.
• The competitor was living in Hope-A-Hope-A Land that people would forget they had signed up for their plan, that they would overlook $1.62 was being taken out of their paychecks every month, and that they wouldn't go get their eye exam every year.

Let's talk about that last point: that they wouldn't get the health care they had signed up for every year.

This competitor was literally banking on the hope people would sign up for a health care plan for a really low price and not use it. That's shooting for a really low utilization rate.

In this case, if utilization went above 12.96%, they'd lose money and I'm not even considering their cost for administration and marketing. This is pure dollars in and pure dollars being paid out.

12.96% utilization means for every 10 people who signed up, they had the money to pay for care for 1.29 people. If a second person received care, then they were losing money.

So how did I tick off this competitor? When I was in a sales situation and discovered the company I was meeting with had the competitor's plan, I simply encouraged them to remind their employees to go get their annual eye exam... because, after all, it could be a safety issue if employees had vision issues. Right?

The competitor's utilization shot sky high, they were losing money left and right, and they found out I was the reason for their losses. How do I know this? Because they repeatedly filed complaints against me with their state's Department of Insurance. The insurance commissioner had a file on his desk that was an inch thick with my name on it... and I was exonerated.

There is a Moral to this Story (and I'm going to tick off a bunch of health care funding companies - i.e. 'employee benefit programs' - by telling you this)...

Learn about utilization. Is the company you're working with secretly hoping no one will file claims/use their benefits? Start asking the health care companies (medical, dental, vision, workplace wellness, etc.) about the utilization rates they're using for the plans they're selling to you. You probably won't get an answer, but whatever you're told will tell you a lot.

I'll share with you the utilization rate You Define Wellness factors in for our Healthy Living & Wellbeing Plan for the workplace... it's 100%. We WANT every single person who signs up for our program to use the available wellness services with our network providers; and if your employees DON'T all use the benefits designated for services, we will return to you the value of those unused services. No one else will do this because unused benefits = corporate profit.

Schedule a time to meet with us and learn more HERE.