The Foundation of Employee Benefits is Data

Connect with Mike:

Connect with David:

• 
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• david@turetskyconsulting.com

Resources:

• https://global.lockton.com/
• HR Data Labs Season 2 Episode 3
• HR Data Labs Season 2 Episode 1

• “Using data is always a little bit like driving down the highway while using the rear view mirror. So you’ve got to always be careful.” – Mike Smith 

• “You can’t fight the facts and data is the facts.”  – Mike Smith 

• “Taking art and science and blending them together is a great way to make decisions. To take them solely in their own silos, to just think about art, or science, or data, or gut feeling, really doesn’t make sense anymore.”  – Mike Smith

Announcer: 0:03

Here’s an experiment for you. Take passionate experts in human resource technology. Invite cross industry experts from inside and outside HR. Mix in what’s happening in people analytics today. Give them the technology to connect, hit record, pour their discussions into a beaker, mix thoroughly. And voila, you get the HR data labs Podcast, where we explore the impact of data and analytics to your business. We may get passionate and even irreverent, but killed on each episode challenging and enhancing your understanding of the way people data can be used to solve real world problems. Now, here’s your host, David Turetsky.

David Turetsky: 0:51

Hello, and welcome to the HR Data Labs podcast. I’m your host, David Turetsky. Like always, I try and find fascinating topics with fascinating people in and around the world of HR. Today, I have my friend Mike Smith, from Lockton on the podcast. Hello, Mike, how are you?

Mike Smith: 1:08

Good morning, David. How are you? I might be a little early to be fantastic. I don’t know if I’ve had enough coffee yet. But I’ll do my best.

David Turetsky: 1:15

Well, you know, you can actually have coffee while we’re doing the podcast.

Mike Smith: 1:18

It’s okay. Oh, I have a mug right next to me.

David Turetsky: 1:21

All right, good. That’s good to hear. So for those of you who don’t know, Mike, Mike is a career salesperson. But he loves benefits. He loves HR and he loves benefits. And I’ve known Mike for so many years. He and I worked together Workscape many, many years ago. Mike, give us a little bit more about your background.

Mike Smith: 1:38

Thanks, David. By way of background, it’s been 33 Larry Bird years since I’ve been in, in and around employee benefits. I graduated from college and I was hired by Prudential. And as part of their group underwriting and sales program back in those days, we called it group insurance not only benefits and and started in New Jersey as an underwriter and then moved into sales moved up to Boston, and was with Prudential for a long time went to a regional HMO, Tufts health plan. And then actually, ultimately to work in the early 2000s for ADP in their benefits outsourcing group, and sold Benefits Administration and software. And that’s the first time I really got to see the confluence of of benefits and technology and had an opportunity to join Workscape in 2005, where I met fabulous people like yourself and the wonderful Laurie Craig, amongst many, many other people, certainly and ultimately became the VP of sales for their benefits group there. And then, lo and behold, ADP bought Workscape in 2010. We’ll all remember that period. Yeah, absolutely. But throughout that experience, I’d gotten to know Lockton, and just really enjoyed working with the people there. And an opportunity presented itself to join Lockton in 2013, to run what was known as the private exchange practice, which married employee benefits in technology and in kind of a product or service perspective. It did that until 2018, when I decided to put my sales hat back on and I am now a partner and a producer with Lockton here in Boston, or should I say in my Westboro mass office?

David Turetsky: 3:30

That’s awesome. So if you don’t know Mike, one fun thing that could get you to know him much better. Mike is an adult member of the Girl Scouts and you have been for over 10 years. That is awesome. Like, yes,

Mike Smith: 3:44

I’ve sold a lot of cookies. And really, it was a great experience to spend time both with my girls, Jillian and Ryan, as well as with with Pam, my wife who runs one of the troops Ryan’s troop, she’ll be she’ll be graduating high school and graduating Girl Scout soon. So my, my my adult membership and Girl Scouts may be expiring soon, but my my support of them will be forever, including samoas and, and thin mints.

David Turetsky: 4:18

And Thin Mints, especially the frozen ones could be the best thing ever produced.

Mike Smith: 4:23

Yes, exactly. You know, we got to get creative this year with a pandemic cookie selling season. But but the Girl Scouts persevered, and they’re right on track. So,

David Turetsky: 4:34

So I’ll have to get you up for a couple of boxes when your time comes again. Yes, exactly. So Mike, our topic for today is the foundation of employee benefits is data, tell us more.

Mike Smith: 4:46

So the reason why I brought up my experience of being hired by Prudential being an underwriter one of the first things we did was literally use data, we took something called manual rates to calculate Life Insurance and disability and health insurance. And we would literally complete spreadsheets on paper of employee census data. So age, gender, industry, salary, all these various elements of data and we would bump those up against manual rates. And that would produce a premium and a quote. And it was they were very rudimentary tools that back then, you know, it was it was on paper and a calculator. And then we would, you know, began to over time, start to leverage technology. So flash forward to today, if you’re a larger employer, above a certain a certain employee count, and I’ll leave that up to the actual insurance carrier to determine what that is, you, you become what’s known as fully credible. So that means that your claims experience or the utilization that your plan has year over year determines your costs. And so that’s why a lot of larger employers self fund, particularly their health insurance and dental insurance. And, and once you get to, you know, very large employers, they self fun disability, they self fund life insurance, all those things. So data truly is the building block of employee benefits.

David Turetsky: 6:32

So the first question I have for you is, so if data really does kind of fulfill on the promise of being the key to employee benefits, How have your clients been utilizing that in the world of the pandemic, to try and deal with the their experience and to try and help their employees out throughout the crisis and even beyond?

Mike Smith: 6:55

So there’s a lot to unpack there. So let’s, let’s, let’s start with a loaded question. It’s my first pandemic. So forgive me if I don’t cover everything. Yeah. You know, HR, and people operations has really been at the crossroads of employers as a relates to the pandemic, right. So, unfortunately, this time last year, employers had to furlough or layoff employees, everybody had to shift to a work from home environment, you know, people worried about company cultures and teams. And, you know, there was a, there’s a tremendous amount of unknown. So HR has been on in kind of peak performance zone for, you know, the last 12 to 14 months. Sure. And in speaking with the head of people operations a couple of weeks ago, he said, he doesn’t see that abating, particularly as people return to the office, right? Because we’re talking about new new ways of work, hybrid models, and the like. And so, to the extent that data can be aggregated and used and shared to make decisions, because a lot of the time, you know, we’re building the airplane as it’s going down the runway, that’s an overused cliche, but I think it’s really a good one in this environment, as it relates to employee benefits, you know, employers are really concerned about their employees health, you know, the health system was shut down for a good part of last year. So their normal experience, if you will, their normal patterns of, of claims and things had been disrupted along with that. And, you know, people are concerned about it, we’re gonna see a bubble pop on the other side, as people weren’t able to go for annual physicals or cancer screenings or treatments and things like that. So, you know, we’re keeping a close eye on data in more as close to real time as possible for a lot of employers, because they are concerned that, you know, this could create a big problem on the other end,

David Turetsky: 9:01

I think there’s another problem, which has been certainly in the media of late, which is the reference to do you have to require people to be fully vaccinated before they do return to work. And there are some states that are mandating that they can’t do that or actually not allowing there to be these vaccination passports which prove what someone has actually been vaccinated. And I think both you and I have them from from getting our vaccines that at whether the Heinz or wherever it Massachusetts but I think one of the issues that I want you to kind of comment on is, how do we navigate this very careful issue with the privacy of even if it’s a HIPAA issue to the privacy around whether someone got vaccinated and trying to keep people healthy in their return to work?

Mike Smith: 9:54

Boy you’re really putting some softballs out here today. It’s my job, my to my job, I did not know there would be math as the old Saturday Night Live skit for saying back to Gerald Ford. Yeah, I mean, employers would love to see their people. First of all, when the pandemic hit, there was a tremendous focus on keeping our people safe. That’s why you move to return, you know, work from home. And, you know, the government obviously, you know, supported that by by asking people to stay home as well. So their immediate concern was around employee health and safety. We’ll talk about this later. But we’re seeing more of a shift now to well being to be, you know, from beyond just being safe and healthy to actually bring your best self to work. But in terms of the vaccines, I’m not aware, I know a few I don’t think you are either. So this is not legal advice. Not even close. Right. But employers do have the ability to mandate that their people get the vaccine as a condition of employment or returning to the office. But they have to be mindful of lots of things, employees have rights to write if you object to the vaccine for religious or, you know, for other reasons, the employer has to accommodate those. Right, so and then you brought up HIPAA, and I think that’s the biggest barrier, quite frankly, to a vaccine passport. Because nobody has the right to see that data. And that’s personal, you know, health data. So right, I don’t see how a national or a regional or whatever, you know, vaccine passport, you know, survives against when you bump it up against HIPAA. Now, there are lots of areas in which we require vaccines, right to go to school, you get to get a vaccine, if you’re going to travel abroad to certain countries, you have to get certain shots in vaccines. So again, it’s an area that, that we’re we’re navigating. And fortunately, we will bring our lawyers into those discussions and help guide employers when they ask us because they are increasingly asking for lots and lots of help, and lots and lots of areas regarding you know, the pandemic.

David Turetsky: 12:17

But but I think it goes back to the question of data. And there’s going to be questionable data on both sides of this, that we need to make sure as HR, that we’re being careful. And as you say, we have to talk to the lawyers about it, we have to make sure that we’re keeping our employees safe. And so there’s no OSHA potential problem with bringing them back into an environment where they could be exposed to the virus in many ways, because they’re now going back into the workplace, which we’ve all been told could be the hotbed of getting in transmitting and receiving the virus. So I think that HR needs to play this very carefully, and work within the confines of the law and the culture. And while the executives might want all their employees back, they may need to be very careful and play this very flexibly, or they may lose very, very key resources who say, I don’t want to go back into the office, because I don’t believe in the vaccine or because I haven’t been vaccinated yet, or because I don’t want to tell you my vaccination status, right. And so they need to be careful. And I, we’ve just seen a couple of large employers say, we want you back. And so how do they navigate that if they’re not going to be flexible about that?

Mike Smith: 13:37

Well, they’ve got to be flexible, because if they’re not flexible, they’re gonna lose their talent. You know, I keep reading your articles that people have really worked hard during the pandemic, they’re burnt out, I think that’s a big concern of a lot of our clients. Absolutely. I’ll give you a for instance, my son graduated from graduated air quotes from college last spring, actually didn’t didn’t have a ceremony or anything. And he took a job with a firm in Minneapolis, and just this past week, he went into that office for the first time. He’s been there since July. So he has spent an inordinate amount of time in his apartment in in Minneapolis. And he’s frustrated because he doesn’t get to network with his peers at work that doesn’t have a social life. So to the extent that employers don’t allow people to come back into the office, particularly the younger cohort that’s really looking for that, you know, it’s it’s not just a job, right? It’s an opportunity to, to build and maintain friendships and build your knowledge and your experience and all those things. And we are still a society that that likes to group together. You know, we and technology is great, but but it only goes so far. So but then you have other cohort of employees that would probably be just as happy to work from home. And so the employer says, No, you’ve got to come in They may decide to look for a job that gives them more flexibility. So that data, tracking that data. And really, you know, using that to help drive your decisions is going to be critical and trying to shrink that time between when the data is incurred and when you could actually use it as is important. Because you’re certain that you’re using data is always a little bit like driving down the highway using the rearview mirror. So you got to just be be careful.

David Turetsky: 15:27

Not driving backwards, by the way, look in the rearview Yeah. Okay. Clear.

Mike Smith: 15:32

Sorry to bring up my past driving experience. Tha’ts okay.

David Turetsky: 15:56

So Mike, the other question I wanted to ask you on this is, how can we use data for cost management.

Mike Smith: 16:03

So I’ll tell you our approach, we made an investment in a data warehouse that brings in an employer’s claim information, medical, dental, disability, HR data, all of those things, what we do is we use it in a couple of different areas. First, it’s part of a large big data set. So there’s about three and a half million lives that we can compare. So you can do benchmarking and norms and you know, outliers. The second is we can, we can truly identify programs that an insurer or maybe a point solution or something might want to help an employer with so whether that’s diabetes or muscular skeletal, or cardiac, or what have you. So it allows you to pinpoint those. Third, it can take those people in those conditions. And we can stratify the risks to say, these people are low risk, and low cost. And these people are high risk or medium risk, and how we can help close gaps in care. So for instance, if you’ve got a population that has an inordinate amount of people with diabetes, having programs either sponsored by the employer or through the carrier to promote diabetes, a friend of mine, Ken Ralph, who runs our office in Boston, tells a great analogy, which is the carrier’s bring a lot of programs and tools to the table, I often compare it to you were going to the Cheesecake Factory.

David Turetsky: 17:34

Yes.

Mike Smith: 17:34

And you know, the menu at the Cheesecake Factory?

David Turetsky: 17:40

Yes, I do. Very much. So it reads like a book.

Mike Smith: 17:43

Yeah. How long would it could it possibly, you know, take to get through all of that, you know, all of that stuff at the Cheesecake Factory? Well, Ken talks about these programs that these insurers bring to the table is not the menu items, but they give you the ingredients and say create your own menu. And so the employer is sitting there saying, Well, what do I want? Do I want protein vegetable, you know, and so they’re confused. So the data allows us to really pinpoint those myriad of programs that the carriers and the point solutions in the marketplace can bring to the table and say, Aha, we have a problem with diabetes, or we have a problem with muscular skeletal, and that’s where our investment in our and our dollars should go. That’s where we should focus communication, etc, etc. So it’s really using the data to get to get well focused on the on the conditions that are driving your costs.

David Turetsky: 18:37

Mike, tell me something here, you know, the programs I’ve seen some carriers run where they’ll offer an Apple Watch, to be able to improve some of their outcomes. It comes as you know, we talked about before the double edged sword of of HIPAA, where I know that they’re using the data anonymously, of course, but the the participant really needs to believe that they’re getting something of value, not just the Apple Watch itself, but they’re getting something of value for giving up all that data, because there is an absolute crap ton of data that they’re giving up to, you know, when they when they give the permissions for that carrier to receive all of that insight about who they are, what they do, when they work out when they don’t work out, and how they live their lives. What’s been the thought process of building that into program design?

Mike Smith: 19:32

So there’s been a lot of thought to that because there is an overabundance of that data that’s sitting in the universe, right? But it’s all in disparate places. So an Apple Watch is probably kicking back data to Apple, but it’s not necessarily you know, tying into Blue Cross Blue Shield or

David Turetsky: 19:48

not unless the person says the BlueCross BlueShield can have that data.

Mike Smith: 19:52

Right, right. And right now, those bridges don’t necessarily exist, but they’re but they’re being built and they will happen you know, health care is 20% of the US economy and big tech is turning its eye towards, towards healthcare in a big, big way. You know, I think the example I’d like to use to kind of, kind of, I think answer your question is Amazon. So Amazon, whether you love them or hate them? Probably a little bit of both

David Turetsky: 20:18

a little bit of both everybody. Yeah, I

Mike Smith: 20:21

mean, you can’t get that big with with with without, without that, sir public opinion. But, you know, they they entered the healthcare space a few years ago by buying a company called Pillpack, which provides prescription drugs directly to people and they package it up. So, you know, think about the container of pills, you know, Saturday through Sunday. Sure, what they do is they Pillpack, in essence, provides all those medications. So a person has to open them just once a day or multiple times, that they’re divided up. I don’t want to get into their business models. But they, but they also bought Whole Foods, so that they could build pharmacies, and health care centers inside of Whole Foods. And obviously, they can promote better eating diet and exercise through Whole Foods. Well, Amazon’s moving largely into into healthcare. And the reason why I bring them up is Amazon has done two things that were just incredible around their business. Just before I took the job with Lockton, I met with a senior executive at EMC, who’s a friend of mine, full disclosure, we were playing golf. And I asked him, I said, Darren, you know, who’s your biggest competitor thinking that EMC would say IBM? Or Oracle? Or he said, without hesitation? Amazon. What? Because I hadn’t really thought about Amazon Web Services. Yep. And you know, if you’re an EMC, where you’re, you’re selling data storage, you know, a cloud based system that kind of encapsulates all that stuff, is really a big threat. Sure. What Amazon did, at least in my opinion, is they took something that was a cost or something with little value to the overall business. It was a have to do to have business, right? You have to have technology infrastructure, you have to have hosting if if security compliance. And they said, Hey, wait a minute, why don’t we go and sell this to other people? and create, you know, Amazon Web Services today is probably the most valuable part of Amazon, at least for me, it certainly is.

David Turetsky: 22:23

Even if you’re a small business, you use AWS because yeah, there is I mean, I hate to say it this way, but there’s literally almost no competitor to them, because it’s just so reliable, and it’s just so damn cheap.

Mike Smith: 22:35

Yeah, you know, Shopify, and others, I think are similar if you’re in a retail environment, but if our business is not, you know, retail, if it’s a small consulting firm, say, exactly, like Turetsky Consulting,

David Turetsky: 22:48

exactly

Mike Smith: 22:48

is a good is a good example. So it is, you know, they created and they unleashed that value, by de monetizing it, democratizing it, you know, it really did a good job, the second part of Amazon that I’d like to talk to you about data, or a corollary, there is Amazon Prime. So, you know, fulfillment was always seen as you know, a cost of business, right. And with prime and now Amazon delivery services, they’ve created another hook of value into their customers. So they’ve taken something that was a cost center, or, you know, marginal value, and made tremendous value about it. Why am I going down this path, every employer has healthcare data, when you get large enough, you get some of it, if you’re fully insured, due to HIPAA and other restrictions, you get less of it, if you’re self funded, you get more of it, you don’t you don’t get all of it, because of HIPAA. Right, but you do get a lot of it. And as we talked about before, it allows you to put programs together for cost management, you know, stratifying risks and creating, you know, well being programs and things that that are pertinent to your population. But it doesn’t go to the next level. But what we’re doing is, is taking that to the next level. So to a large degree, that data just sits there. Yep. Right. What we’re seeing our organizations through the phone through your mobile phone, or through your Apple Watch, or, or whatever, you download an app onto your phone. And, you know, we have we have this data warehouse at Lockton called Infolock. And then we int grate, let’s say my data thr ugh Infolocked with with an app n my phone. So I was rece tly diagnosed with psor atic arthritis. And I will be a le to get specific content abou because I’ve opted in, righ , I’ve downloaded the app. Yep. And the database knows to send this information to me and then I can self select. I’m inte ested in these topics. Sure And so that’s really How empl yers are going to keep thei people healthy going forw rd. So it’s not only prov ding the cost management prog ams from a macro pers ective at the employer leve , but it’s truly unleashing data into the hands of the empl yees to the people that that need it. And that’s going to c eate tremendous ability for peop e to better navigate the heal hcare system to truly beco e healthier, talked about earl er that employers are real y concerned about well bein . So whether it’s mind ulness practices, or medi ation, or financial well bein or community or work life, all f that now can be really unle shed through you know, lett ng that data flow to that next level into the employees hand .

David Turetsky: 25:47

Mike, I think you use the term democratizing data before. That’s what this does. It provides them with facts about where they are, that person is it personalizes not only the insight about who they are and what they’re doing, but also how to improve their outcomes, how to improve it, not just from their health perspective, like I feel better because I ran two miles today. But also, what does that mean in terms of your healthcare costs, or your health care, treatment plans or other things, so you can bring that holistic approach so the person can really feel like not only do they own their the costs or how much they have to spend, but they own their outcomes, they own their life? And now we’re actually giving them the tools to make better decisions. Do you want to have that hamburger? Or do you want to eat a salad that may have crumbles have a little bit of a hamburger on it? Or if you don’t use the meat, the real meat? Do you use the vegetable substitute which actually tastes almost exactly like hamburger?

Mike Smith: 26:47

Well, I think you know, one of the one of the benefits to the extent that there are any of the pandemic is it did accelerate a lot of change into our society. So people’s acceptance of telemedicine, telehealth, I think people are taking a step back and have over the past year I know I have and reevaluate, you know, choices and decisions that they’re making. Certainly, I’ve started, but six months ago, I started daily meditation, and I think it’s awesome. You know, it’s it’s definitely helped helped me and I think those around me even more. So. Try think, you know, the pandemic has broken through a lot of those barriers that were with us for a lot of years.

David Turetsky: 27:31

So Mike, we talked a lot about using data as the basis for good employee benefits programs, we talked about how you you’ve have utilized throughout history, in the in the world of benefits, how data has actually gone from the cost side, we’ve transitioned to how we’re actually using it every day in our health management, or people’s health management. We’ve also talked about using data as a cost management tool in organizations. And we’ve also talked about how we can democratize data and give that data out to people so they can really make decisions for themselves about managing their own health care costs, as well as benefits. What else did you want to cover? or What else did you want to impart before we close up?

Mike Smith: 28:17

I think there’s been a movement, you know, you can’t fight the facts, right? And data are the facts, or is the facts. And so you know, that that’s really where, where we’re placing a lot of our bets going forward is to say, taking art and science and blending them together is a great way to make decisions to take them solely in their own silos to just think about art or science or data or gut feeling really doesn’t make sense anymore. Sure. And so and the world is, is continuing to speed up and get fast. And so data data is gonna help us, you know, bridge what the what the next future is, and it’s finally become continuing to come faster and faster. So I don’t know if that answered your question or not. But I am in sales. So you know, I have to check everything, right.

David Turetsky: 29:11

No, no, that was good. And I think what we’re gonna do is we may actually have to have more conversations around this topic, because you just can’t fit into one episode. all there is to know about the world of HR analytics in benefits, because there’s so much more to talk about. And so I’m going to probably ask you to come back and we’ll have another topic for the day. How about that?

Mike Smith: 29:33

That sounds great. I’m working from home these days, David.

David Turetsky: 29:37

All right. Great. Well, Mike, thank you very much. And as I said, we’re gonna invite you back soon. Thanks, David. My pleasure. And thank you for listening. And hopefully you enjoyed this episode. And if you did, please hit subscribe. And if you know somebody who might enjoy the episode, please forward it to them. Please take care and stay safe. And thank you very much for listening to the HR data labs podcast. Bye bye.

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