Here to talk about reducing healthcare costs and improving your dealership’s bottom line is Keith Lemer, CEO of WellNet Healthcare Plans.
I’d like to welcome in Mr. Keith Lemer, who is with WellNet Healthcare. Welcome to CBT News.
Keith Lemer: Thanks very much, Jim. Thanks for having me.
Jim Fitzpatrick: Great, great. So dealers are out there, there’s every dealer that’s watching us right now is challenged with keeping their expenses low in their dealership. Always at the top of the list of expenses is healthcare costs, as you know. Talk to us a little bit about your background and your company, WellNet Healthcare. Touch on a little bit about how it can help dealers.
Keith Lemer: Sure, absolutely. So if you think about this right now, the American healthcare system, it’s an absolute unaffordable mess. Businesses, whether they be auto dealers or others, they need a solution to cut healthcare costs immediately. Profits are getting squeezed right now, they’re figuring out ways to sell more cars, sell more service. The one area where they can actually make an impact in their business, is to focus on the reduction of healthcare expenses. That’s something that WellNet, now being around 25 years this year, is something we do very well.
Jim Fitzpatrick: Okay, so let’s drill down a little bit. Is WellNet a health insurance company?
Keith Lemer: So we’re a health insurance company that is a direct competitor to the large carriers. All the big boys that you know that are publicly traded. We compete head to head with those organizations. The companies that we target and that we work with, are businesses 50 to 5,000 all over the country, whether it be an automotive owner, or any other vertical out there.
Jim Fitzpatrick: 50 to 5,000 employees?
Keith Lemer: 50 to 5,000 employees. And what we do that’s different is we sit on the same side of the table as the business owner. We actually help them manage their costs, as opposed to the traditional carrier, who all their interested in typically, is escalating healthcare costs.
Everybody surrounding the health insurance business, it could be the carrier, it could be the broker, typically, the pharmacy manager, the healthcare system, the more money you spend as an auto dealer owner, the more money those entities make. We’ve gotta put a stop to that.
Jim Fitzpatrick: That’s right. Every year, every dealer will tell you, regardless of how great they ran their business, and how healthy their group might be, there’s an increase in their insurance right off the back, which is crazy, right?
Keith Lemer: It’s a minimum of 5% to 25%, year in and year out, and there’s no reason for it. What business owners need to do is they need to dig in to their health insurance expense like it’s another business unit. It’s the one area where they can make a big impact on. If you think about a business that does, let’s say, $100 million, and maybe their health insurance expense is 10%, or $10 million. If we can cut that health insurance expense by 20%, $2 million, and they may do it on the high side, $5 million in profit. We could take that business that’s doing $5 million and now have their profit to $7 million. On the flip side, that same business has to do about $30 or $40 million more dollars to get that same profitability. So it’s cutting 20% of your healthcare expense to improve your profits of about 40%.
Jim Fitzpatrick: Right. Now, for the dealers that are watching, and I know because I was there, to move your healthcare policy to another company to save this … to realize this savings, is just a major pain in the you know what. Right? I mean, it really is. If I have 200, 300, 400 employees, and we’re gonna shift now to another provider to save for the next year, maybe a couple million dollars, and then all of a sudden I find out at the end of the year, guess what? The one we moved to, they too are now gonna be charging me what the old carrier was charging me. How do you prevent that? Is it possible to stay with my current provider and still realize a savings?
Keith Lemer: It’s interesting. The possibility for that is no, because if you look at the large health insurance companies, the increases those entities have had have been triple over the past 20 years. It’s unaffordable. So in order for these businesses to save, they do have to switch out their carrier to WellNet. We still have access to the same name networks that they’re looking for, it’s simply that we manage the benefit differently. It’s like swapping out a credit card for a lower rate. That’s the real difference. The opportunity though is, and if you think about it in terms of car insurance, or homeowners insurance, what’s driving those premiums are claims cost. No different than in healthcare. So if you can lower the cost of the claim, and you can lower the number of claims, you can lower the premium, and that’s what we focus on doing. No insurance company and no typical broker consultant will traditionally have them focus in on that, again, because the more money they spend, the more money those entities make.
Jim Fitzpatrick: Right. What do you say to the dealers that say, “Well, I hear what you’re saying, Keith, but whenever I move, it seems like it’s an enticing low number in the first year, and then once they got me, bingo, we’re right back 30% increase, and we say goodbye to that savings over the course of that first year.” Does that happen?
Keith Lemer: Yeah, Jim, we haven’t seen that. The customers that we have, we have them for 3, 10, 12, 15 years. These are multi year clients. Most of our customers are entrepreneurs, they dig in, they get involved, they wanna understand a way that they can control what really, traditionally is an uncontrollable expense. So if you look at a region in the area, let’s call it the Washington, Virginia, Maryland area, and you’ve got a couple of health systems there. Those health systems all have contracts with the big insurance companies. Those big insurance companies will never tell you that pricing at certain hospitals are different. Meaning, a knee surgery at one health system is $25,000, and at another it’s $50,000. If you can steer an educate people to go to that $25,000, you as the business owner just saved $25,000. Why not consider waiving the deductible for the employee? This is really no different than putting in a travel and entertainment policy for your employees. Not everybody can stay at the Ritz Carlton, not everybody can have steak every night. Members, employees of those dealers, they simply need to be able to think and act as a appropriate consumer before just going and using that open-ended credit card. If they do that, both they and their family, and the business owner, the auto dealer owner, will save money.
Jim Fitzpatrick: Right, right. And is this something that your company takes care of, because if I’m a dealer, I wanna be selling cars, and servicing cars, and managing my business. I don’t wanna be steering my associates in certain ways.
Keith Lemer: So it’s WellNet and our team of representatives, account managers, member service specialists, and concierge advocates that do all of the hand holding. All we simply do is, we’re a replacement of the carrier. So it’s the same doctors, the same hospitals, the same drug stores, just less money, and all that margin that was once going in your carrier’s pocket, whether you’re fully insured, meaning paying premium every single month, or you’re paying claims as a self-funded employer. Now, you’re basically stopping the bleeding, because you now have somebody that’s minding the back of the store for you.
Jim Fitzpatrick: Right. So if I have a dealership and I’m with Aetna, for instance, and I give you a call and say, “Hey, my healthcare costs are just getting crazy. Can you help me with this?” Is it conceivable that we will maintain and stay with Aetna, just under a better deal through what you guys are able to do?
Keith Lemer: So there’s two networks that I bring to the table. I bring the Aetna network and the Cigna network to the table, and if a client happens to be with Aetna, I can move them to Cigna. If they’re with Cigna, I can move them to Aetna. We kind of have this crawl, walk, run mentality, which is pull a few levers, but keep them with the same coverage in terms of same doctors, same hospitals, same drug stores. But, because I’m getting access to Aetna, they won’t allow me to take their margin and simply gut it and keep it with them. I have to move it to another carrier.
Jim Fitzpatrick: Gotcha. Kind of a political play.
Keith Lemer: Yes, exactly. That’s exactly right.
Jim Fitzpatrick: So how do you guys stay on top of all of the incredible changes and the uncertainty in the healthcare industry? I mean, it’s crazy out there.
Keith Lemer: So healthcare moves fast. There’s a lot of talk right now about single payer. There was an article today in the New York Times about single payer will never happen because you gotta foot that tax bill upfront, and then maybe see the benefits later on. It was a column written by David Brooks. What’s really the challenge is, all that’s going to do is just implode your taxes and pay more. So that will never happen. If you look at both of those items, as well as the lobbyists, and the medical device manufactures. All those items will not really, I think, allow single payer. So what we’re stuck with right now, is at least the private insurance market. If you’re going to continue to offer health insurance in the private health insurance market, the thing to do as a business owner, as an entrepreneur, is don’t allow somebody else to dictate and tell you, “Yeah, we shopped the market, and the increases are 5% to 20%, and in order to reduce it, we’ve gotta raise the copays and increase the deductibles.” No, there is a better way. There’s another opportunity to dig in and get inside. You just have to ask the right questions.
Jim Fitzpatrick: Right. And that’s where you guys come in, right?
Keith Lemer: That’s where we come in.
Jim Fitzpatrick: Because, typically, what will happen is the insurance agent that you’re working with will come in and say, “Yeah, you’re gonna get an 18% increase this year. We shopped it around, and we did the best we could do, and that’s what it is.” You never know if they really shopped it around or not.
Keith Lemer: What they did likely is they took that 18% and they said, “We’ve got such a big block of business with one of the big carriers, we got that 18% knocked down to 12%,” so meanwhile, the owner still got a 12% increase. The owner didn’t want to pass that … didn’t wanna suck all that back, so he passed it off to his members, but the insurance company still got the 12% raise, the broker still got the 12% raise. Those things are unacceptable. What we’re doing is bending the cost trend, lowering it, refunding dollars that are unspent, and improving profitability. That’s the key, all right. At the NADA show, I met with 43 automotive owners in a period of two days, and all they talked about was margin compression. Then, the three days that followed, 19 out of the 25 dealer chair, manufacturer chair ambassadors, in the interviews that were published, they talked about compression of margins, cutting expenses. The only way to really improve dealer profitability was to, ready, sell more parts, service, all those items. Those are in terms of the impact that you could make with healthcare cost reduction.
Jim Fitzpatrick: Yeah. So where does it go from here? If you had a crystal ball, 5 years from now, 10 years from now, what are dealers challenged within this area?
Keith Lemer: I think dealers right now, and if you look today and the next 5 and 10 years, if they don’t begin to implement a solution, and I’m talking in 24 months or 36 months. I’m talking today, they’ve gotta do something about it today. Ultimately, you may see dealers not even offer health insurance, and that will make them less competitive in the marketplace. One of our dealers said to me, he said, “Keith, I love saving $700,000 with you, and what it allowed me to do was to not have to pass along increases that I normally would have before you came in the door.”
Jim Fitzpatrick: Right. Which is a morale killer as you know, especially in a sales arena that you’re trying to get everybody pumped and motivated about a new year. It’s like, “Guess what? Healthcare’s going up 15%.”
Keith Lemer: Right, and it’s complicated, it’s confusing. What we’re trying to do is just make sense of it, hold the employee’s hand, hold the member’s hand, teach them to become more educated consumers, because the other entities on the outside, all they’re gonna try to do is to get as much as they can for the shareholders of their company. That doesn’t work for any small business.
Jim Fitzpatrick: Right, right. So if you’re a dealer out there and you’re listening to this right now, and Keith’s offer, I would imagine the offer stands with dealers that wanna call you or reach out to you to say, “Hey, I’d like to talk to you further, come check my plan out and let me know where I stand.” Is that something that-
Keith Lemer: Absolutely.
Jim Fitzpatrick: … you’re willing to do?
Keith Lemer: We have 12 sales representatives all over the country, they can contact me personally. I don’t know if I’m available to share my contact-
Jim Fitzpatrick: Whatever you wanna share, we’ll put it on the screen.
Keith Lemer: They can call me directly through my mobile phone, 301-996-1500, or my email is KLemer@WellNet.com. What we’ll help them do, whether they wanna talk to us, or any one of our 25 automotive dealer groups that represent about 250 brands, they can talk to those guys. Don’t take my word for it. Talk to the people that got off the hamster wheel and are now doing something about it.
Jim Fitzpatrick: There you go, Keith Lemer with WellNet Healthcare. Thank you so much for joining us. I know that there’s a number of dealers right now that are writing down your number going, “I’m calling this guy. I’m gonna hold him to it and see what he can help me with.” So thanks again for joining us on CBT.
Keith Lemer: Thank you, Jim, I appreciate it.
Jim Fitzpatrick: Thanks.
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