Chelsea Piers on Manhattan’s lower west side hosted CBInsights “Future of Health” conference On October 2nd and 3rd. Reviewing the agenda over a cup of coffee, it became clear that this event would highlight technology’s promise, threat and opportunities in healthcare fueled by an abundance of capital looking for a home.
Why healthcare? Why not. Every aspect of our lives is being impacted through technology. As US healthcare spending approaches 20% of GDP, an aging global population and disparate access to healthcare, technology holds a promise to revolutionize health in this 4th Industrial Revolution.
Walking the few blocks to the sessions, I thought about Peter Diamandis and his thesis on technology that it “(Technology) takes what is scarce and makes it abundant.” Countless examples come to mind whether it Moore’s Law and computational power / costs or the story of Napoleon III serving the King of Siam on Aluminum dinnerware (Aluminum was more valuable than gold or silver at the time and that’s why six pounds of it sits atop the Washington Monument) or the fact that laboratories can now produce flawless, harder diamonds than the Earth, coal and pressure can.
Technology will democratize healthcare, providing broader access to services, lowering the costs, improving the quality and disrupting the current network in ways that we can see and even more that we likely cannot yet see. To deny these changes is burying your head in the sand.
Summer is winding down here in New England. The kids are back to school, the days are getting a little shorter and the commute to Boston is back to a familiar grind. At Lockton, we are working with clients; finalizing vendors, plan designs, rates, contributions, etc. In the build up to Open Enrollment and the 2020 plan year I thought a good post summer topic would be an ongoing challenge that all our clients are facing and how we might be able to help…Pharmacy Management.
The pharmacy market is changing rapidly and at times might be difficult to follow. In July, in conjunction with NEEBC (New England Employee Benefits Council) we co-presented on this topic with one of our partners, RxBenefits. Hopefully, we shed some light on what’s happening and what it means to employers and their people.
The impact of recent PBM/Carrier transactions will add even more complexity to an already complex market. As the PBM market consolidates (Cigna buying ExpressScripts, CVS buying Aetna, and United Health’s expansion of Optum Rx), disruption will occur as these companies convert clients, systems and deploy new solutions. Understanding and navigating these massive entities was already difficult prior to this consolidation. It will now require additional focus, scrutiny and oversight. They will also undoubtedly introduce new models which will require examination and due diligence as their value will only be proven out down the line.
Of all healthcare spend, pharmacy is the most volatile as it’s expanding to become the fastest growing components of healthcare. In 2008, pharmacy represented 10% of total health spending. In 2018, it has swelled to 19%. The average gross cost per Rx was $72 in 2008 and in 2018, was $126 (75% increase) and Rx costs per member per month (PMPM) also increased by 75% from $66 PMPM in 2008 to $116 PMPM in 2018.
3 months of bad skiing
Since this season can be fleeting, I thought for July and August, my readers might enjoy some Lockton curated content for light summer reading and I would enjoy the weather.
Therefore, I give to you the 2019 Lockton Benefits Survey – Executive Summary. A best seller since April!
Inside, you’ll discover quite a bit including these 3 key takeaways…
If you’d like more information including the full findings of our survey, please reach out and we’ll get them out to you. See you in September!
Last week, I sent an Outlook invitation to a client’s Head of People and her team for our standing QBR (Quarterly Business Review) meeting. I received this response, “We’re just too busy with Recruiting right now to meet. It’s all hands-on deck with my team. Let’s push to late summer / September.” These QBR’s are part of our standard client delivery methodology and are events in which clients find a lot of insight and value, so I was surprised.
But maybe I shouldn’t have been. You’d have to be trapped under a rock or stranded on a deserted island to not realize that unemployment rates are at historic lows and competition for talent is fierce. Here in Massachusetts these pressures are among the highest in the nation.
What happened next was even more surprising! It happened again…with another client…with the same issue, “We’re too busy with hiring talent right now. Let’s skip to Q3”.
This made me start wondering what specifically these clients were dealing with, and I found some answers at a pair of conference sessions.
I was scheduled to attend an upcoming breakfast seminar on the topic of hiring entitled, “How to Hire Talent in a Tight Labor Market” sponsored by Broadreach Staffing Solutions. Timing was great and so was the content.
Right off the bat, it became clear that organizations today must handle a more complex mix of business requirements as well as requisitions which are highly specialized and, in many cases, unfamiliar to the recruiting teams. For instance, 20% of current requisitions are for roles with which the recruiters are unfamiliar, and it takes 38% longer to fill these unfamiliar roles. In addition, 58% of the heads of recruiting have difficulty acquiring the talent to maintain the current business and 64% of the heads of recruiting are having difficulty acquiring the talent to support a change in strategy. And finally, specialization is the name of the game where 71% of organizations recruit for more specialized roles than they did five years ago.
I next had the opportunity to attend the Flex Summit sponsored by Fuze here in Boston. It was a great experience focused on engaging in the future of flexible work. The closing speaker that afternoon was Liz Kiehner of IBM who spoke about how their clients are digitizing the workforce. I wrote about IBM’s success and investment in recruitment digitization as well as optimization back in my March blog (“HR recruits AI”).
“It’s a small world…I wouldn’t want to paint it.” I still laugh thinking about Stephen Wright’s deadpan delivery of this classic one-liner. Returning from Lockton’s Global Benefits Forum, my head was still spinning from all the great content that was delivered at these sessions in Chicago (more on that content at the end of this blog).
During the sessions, at breaks and meals, clients kept sharing that while the world may be small in Stephen Wright’s view, it is growing immensely complex regarding Human Resources and employee benefits. Global growth is accelerating and as markets, clients and competitors expand, employers are having to meet their constituents where they are. Increasingly, they are meeting them outside the United States.
It would be nigh on impossible for me to sum up all the content of this forum in a short blog, however, I saw 2 major themes echo over the few days which center on the changes to the world’s demographics…
The world is aging incredibly fast and this aging is reshaping the global workforce. By the end of the 21st century, the populations of the Americas, Europe and Oceania will remain relatively flat while the populations of Asia and Africa will continue to rise. The African population will see the largest increase and by the end of the century, it should be roughly the same size as Asia. Nigeria will be the world’s 3rd most populous nation behind India (#1) and China (#2). These shifts will set up 3 stratifications of a) lower income nations / geographies, b) middle-income nations / geographies and c) higher income nations / geographies.
At a recent seminar sponsored by Prudential, Paul Braihm, CFP of The American College, detailed the challenges of declining US productivity and its main culprit – financial stress by employees that occupy their waking (not just working) hours. With talent at an all-time premium and unemployment rates at historic lows, employers are concerned with making sure their people are healthy, mindful, present, engaged and productive at work. Dr. Steven Covey, Guru of Productivity, said “Having spent my career helping individuals and corporations increase productivity, I’ve become convinced that one of the greatest, unnoticed drains on individual productivity is the distraction that financial stress puts on people.”
These stressors affect people at all levels of organizations including the “Highly Compensated”. All employees can be affected and therefore, all employers can and should provide help. A January 2019 State Income & Policy Report from non-profit ProsperityNOW showed that 43.3% of Massachusetts households did not have emergency savings, 49.2% of renters are “cost burdened” and 9.3% of adults could not see a doctor due to cost despite the lowest uninsured rates in the nation.
Financial stress at work costs employers a lot of money in terms of absenteeism, tardiness, presenteeism, poor health, lower pay satisfaction, higher turnover, lower employee morale, accidents, theft, substance abuse and loss of customers. However, there is an undiagnosed and growing crisis brewing in delayed retirement.
On April 4th, Lockton sponsored an evening of stimulating conversation amongst Global Benefits colleagues featuring fabulous food and drinks with stunning views of Boston Harbor.
Our event started with an hour of engaging peer to peer conversations and then we settled in for dinner. Nick Dobelbower, Lockton’s guru of Global Benefits, led a structured discussion on the latest Brexit issues as well as developing Gender & Diversity issues for US Multinationals.
Regarding Brexit, Nick and his colleague, Selima Crum, authored a prescient article in last March’s issue of benefits magazine assessing the impact of Brexit for US firms focusing on European business, their regional talent strategy and employee benefit plans. A link to that article can be found here
On the last day of the recent WorkHuman conference, 3,000 attendees were buzzing with excitement waiting for Brené Brown (https://brenebrown.com) to take the stage as the closing speaker. The WorkHuman conference attendance has swelled in recent years, and with speakers like Brown, it’s no surprise. The content for those charged with leading people functions at employers is superb. It’s a bucket list event if you’re in Human Resources.
Brené spoke of leadership and how future leaders need courage. To be courageous, she believes you need to be vulnerable. Whether she’s talking to Special Forces units, top global athletes or rooms full of school teachers, when she asks the question, “have you ever witnessed an act of courage without vulnerability?” the reply is always – No. The world is changing fast and we need to be vulnerable enough to say we haven’t got it all worked out.
I can't help but thinking about the past 30 years in the employee benefits space. You see, on July 11th, 1988, I walked through the doors of Prudential's Northeast Group Operations in Parsippany, NJ to begin a training program as a group sales rep. Flash forward thirty years and here I am as a Producer with Lockton.
Some of the same people that I walked through those doors with are still in this business. I've met tons of terrific people over this span. I met my wife as a group rep, befriended clients and associates, moved a few times and joined 7 different firms. My career has allowed me to grow a family, help others, travel, build a home and much more. Sure, there have been bumps in the road (and a few clowns) but I am thankful to have met incredible people and had such wonderous experiences.