Companies struggling to contain health care costs

Changes in federal regulations and in the health care industry, in particular, have many businesses turning to benefits consultants for help. PBN spoke last week with Amy Gallagher, a senior benefits consultant with Cornerstone Group, a benefits advisory firm headquartered in West Warwick, about how companies like hers can help.

PBN: Why does a company come to you for human resources help?
GALLAGHER: We see a couple of trends emerging and shaping the HR departments of the future. One is that the HR professional is becoming less of an administrator and more focused on hiring talent. At the same time there’s another shift, another dynamic going on — that’s on the benefits side of things. The HR staff often doesn’t have the internal expertise or enough staff to handle employee benefits, and that’s what we provide. Employee benefits are becoming a lot more complex because of the way consumerism is changing the shape of the market, and the HR person doesn’t have the time or resources to deal with this changing field. So we provide assistance with health and welfare administration, and they’re able to outsource the COBRA [Consolidated Omnibus Reconciliation Act] administration, and the FSA, the HRA, and the HSA administration. There’s also the need for compliance with regulation, something that’s evolving every single day. To help out clients keep up with all the regulation at the federal level, the state level, as well as legislative changes, we provide in-house compliance guidance. We’ve actually instituted an “Ask Larry” section on our Web site.

PBN: What is that?
GALLAGHER: We have an attorney, Larry Grudzien, with more than 20 years of experience in health and welfare. Our clients actually call or e-mail, and he responds back within 24 hours. We also provide call center support for both the administrative side and the benefits side. When employees have questions about a benefits product, we provide a number they can call. They’ll talk to the same person every single time, and we provide that support both in English and Spanish.

PBN: What size are the companies that do come to you for help?
GALLAGHER: It’s a broad spectrum. We have two divisions, our primary market, companies with between 50 to 1,000 employees, and a small-business division, for those with fewer than 50 employees. Those small businesses are a real cross section – manufacturers, startups, non-profits. We have several construction clients. Nursing homes.

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PBN: How long is the average relationship that you have with your clients?
GALLAGHER: We have long-term relationships. We have a 95-percent retention rate. That’s almost unheard of in our industry.
PBN: What are the most requested services you provide?
GALLAGHER: I would say that COBRA administration is very popular. There’s more and more demand for health reimbursement arrangements (HRA) and health savings accounts (HSA). And with that, there’s a need for assistance with complying with regulations.

PBN: How should a company determine if they need your services?
GALLAGHER: We get called in before benefits-renewal time. If they’re looking to hire a benefits consultant, they should not only look for experience, and for a firm that’s able to negotiate a strong benefits package, they should also be looking at how this firm can help with HR duties throughout the year, or in some cases, supplement or replace the HR team.

PBN: What kinds of issues will companies have to deal with in a slowing economy that you can help them with?
GALLAGHER: If they can outsource some of the daily functions to a benefits partner such as ourselves _ a company that gives full-service support _ they’ll probably have a higher level of expertise without having to retain staffing.

PBN: What are the hot-button issues today for companies that you consult?
GALLAGHER: The hot-button issue would be containing health care costs, not just in the short-term, but in the long-term. We’re trying to assist employers with long-term, cost- containment strategies. If we can remove some of the administrative burden from the HR staff, we help them to be more efficient and control costs. The growth of HSAs — that’s a consumer-driven plan – is expected to double during 2008 and 2009. With that comes the need for more employee communication, and increased compliance concerns, and better education all around. We can support and direct that function for the HR professional.

PBN: How have you developed the expertise that you then provide to your clients?
GALLAGHER: We developed the expertise really by listening to our clients over the years. As they mentioned a need for something, we would evaluate and, if appropriate, add the infrastructure and talent to support our client. Some of our competition don’t have full- service capabilities. They might outsource things like COBRA administration or compliance guidance. As leaders in our industry, rather than have our clients deal with multiple vendors, we saw efficiencies in bringing all those services under one roof.

PBN: Have you had any experience with the health care reform package now going into effect in Massachusetts?
GALLAGHER: We’ve had clients affected by this legislation, and we’ve provided them with education and guidance with complying with the new state law. And we’re paying close attention to national health care reform, and watching closely the various state initiatives that are starting to take shape. &#8226

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