Vendors, vendors everywhere

By Annmarie Geddes Lipold

Their numbers have nearly tripled in five years. Finding the right match demands clear goals, astute questions and perseverance.

Texas Health Resources set classic goals for its absence management program: reduce time off, manage costs effectively, standardize benefit delivery and increase satisfaction among its 15,000 employees, says Michelle Kirby, vice president of human resources for the Arlington, Texas-based health care system.

A multidepartment task force developed the program, pulling together Family and Medical Leave Act administration, leave-of-absence programs, workers' comp and short and long-term disability. But when the company took its comprehensive design to market, they found the program a bit "more progressive" than the available offerings, Kirby recalls. Texas Health wanted one vendor to handle the whole program, but the candidates wanted to manage individual parts. "It has been challenging to find an external partner to integrate their processes with ours," Kirby reports.

Nevertheless, the expert consensus says Texas Health took the right course. "Don't start out by looking for a vendor. Decide first what you want to accomplish, and then figure out who can do it for you," affirms Richard Babcock, program director of The Hartford absence management initiative.

Veronica Hellwig, national leader for absence management for Watson Wyatt Worldwide, concurs. She says employers should first identify the services they want and what parts of the program might be self-insured or self-administered.

With the program up and running since July, Kirby summarizes from the Texas Health experience: "Hold to your guns, put the process you think is appropriate together and take it to the market. There are enough companies out there that want your business."

Actually, there are 96 vendors offering various combinations of service, according to the Integrated Benefits Institute's Marketplace Review released March 2001, compared with only 36 five years ago. Sixty-five of the current vendors offer to manage benefits on an employer's behalf, while the other 31 help employers manage their own programs. Forty-three percent of the vendor programs offer benefit administration that goes beyond integrated disability management, reports William Molmen, general counsel of IBI.

Molmen cautions that some are limited by geography, and others are limiting their customer base so they can improve their product. Unfortunately, he adds, some vendor representatives are simply unfamiliar with absence management programs and may not even know their firms offer such a service.

That can leave the blind leading the blind. Babcock notes that many employers do not know what services are available or what to ask for. Look for a true partner, he suggests, be clear about what you need, and be careful to make sure that the model the vendor offers is compatible with your own plans. "No two employers are exactly alike," says Babcock, "and it's a vendor's job to understand your individual needs."

Babcock further suggests that vendors should provide a detailed implementation plan. Questions to consider include: How will employees report an absence? Will they reach a live person, leave a voice-mail message or send an e-mail? How is the employer kept in the loop? How will the vendor capture and store data for program evaluation? His bottom line: "There's no such thing as asking too many questions."

Finally, finding a vendor that offers "one-stop" shopping might be difficult, says Hellwig, although large employers are in a better negotiating position. Many employers are pulling together the best vendors and having them work together, while many others are building on their positive relationships with their current insurers.

Peg Haennicke, senior vice president of Kemper National Services, cites pros and cons for each approach: Hiring one vendor will result in greater integration, but the wrong choice could wreak havoc through an entire program. And while it's easier to limit damage and release a poor performer among multiple vendors, the employer takes on extra coordination responsibilities and must be familiar with multiple processes.

A freelance writer based in Arlington, Va., Annmarie Geddes Lipold has been reporting on workers' compensation, disability and employee health issues for the past decade. She is a contributing editor to Business & Health.

Resource Links:

The Hartfordwww.thehartford.com

The Integrated Benefits Institutewww.ibiweb.org

The Washington Business Group on Healthwww.wbgh.org

 

Annmarie Geddes Lipold. Vendors, Vendors Everywhere. Business and Health Time is Money: The Mechanics of Absence Management;21.