In the last year, manufacturing firms across the U.S. have grown at a rate of 2.1%. However, issues loom on the horizon that threaten to slow that progress. Tariffs, trade restrictions and rising oil prices are all impacting the industry. Knowing all of these issues, you want to take every step you can now to improve cash flow and allow your business to grow. Tackling inefficiencies in your employee benefits plan will allow you to predictably and repeatedly free up money by focusing on the 80 percent of your health plan’s expenses that are manageable — yet regularly ignored by most insurance brokers.
Use the table of contents below to find out how:
Your insurance broker’s compensation may influence the type and amount of service they provide when designing the “best” benefits package for your company, relative to cost. How your broker is paid (i.e. commissions, fee-for-service, fee-for-performance) will factor greatly in the plan recommendation.
Learn the various compensation models you can use to align your insurance broker’s compensation with your organizational goals and take back control of a top three expense that is hindering your company’s ability to grow.
Most insurance brokers who work in the manufacturing mergers and acquisitions space don’t take a sophisticated look at employee benefit strategy during a potential transaction. They focus on the acquisition cost of the coverage and consider a reduction in that cost a strategic win when it’s nothing more than a realization of synergies.
Understanding the lost revenue buried in the 80% of health insurance expenses that are variable can give you the ultimate advantage whether you are selling your business or acquiring another.
A key problem facing manufacturing firms is the uncontrollable and unsustainable rise of healthcare costs. If insurance was the source of this problem, we could fix it with insurance. We're here to tell you that insurance is not the problem and it's not the solution.
Here’s a hard truth for most manufacturing firms. You’re not managing the supply chain when it comes to your employees’ benefits, which means you’re losing money. Learn how to take control of 80% of your healthcare costs by managing variable expenses.
Typically, the way manufacturers manage healthcare purchasing involves choosing the least bad option from a variety of carriers who are all presenting a premium increase over the previous plan year.
When it comes to improving the performance of your manufacturing firm’s health plan, it’s not what you buy, but rather how you buy it. Understanding how your benefit plan can direct cost within the healthcare supply chain is the key to taking control of your benefits expense.
Most business owners do not look at insurance professionals as being able to help their business grow and produce free cash flow in the process. This is because, historically, insurance professionals have never been able to manage or reduce costs. Understanding that 80% of healthcare costs can be managed allows you to find an insurance professional who can free up many thousands of dollars currently wasted by your benefit plan, that immediately goes into your free cash flow and operations.
The same way that manufacturers expect a certain number of units per hour from a given machine, the best manufacturers understand their benefits are an investment. As such, they expect a return on the investment through little to no premium increases and higher employee satisfaction.
In the same way you invest in, say, automation technology to increase factory production, invest in new ways to manage the 80 percent of benefits expenses that are within your control to improve benefit plan performance.
The operational performance of the benefits plan is a critical role, rightly led by HR experts. But, the strategy behind financing the healthcare supply chain needs to be set by someone at your manufacturing firm with P&L responsibility and expertise.
The goal is not to dismiss HR but rather connect them with your person, or perhaps it’s an entire department, assigned with sourcing your manufacturing firm’s raw materials. Allowing HR to tap into an existing resource that specializes in sourcing can change the way you procure your benefits for the better.
As a manufacturer, you likely have a procurement strategy for your raw materials, overseen by a sourcing or supply chain manager who ensures efficient and effective use of that material, with the goal of increasing or at a minimum maintaining your profit margins.
Deferring management of your benefits expense to a non-P&L manager is a glaring oversight given that statistics show 80% of health insurance expenses are variable.
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