It’s easy to think that best-in-class employee benefits equate to the steepest costs. But we know—and have proven—that when it comes to healthcare, the reality is quite the opposite. Providing high-quality primary care for employees is not only the right choice; it’s also the financially savvy one.
But you don’t have to take our (or the Validation Institute’s) word for it. In 2015, we pioneered the largest, most meaningful performance guarantee in the employer-sponsored healthcare space—a stark contrast to the falsely inflated and overly-segmented industry standard. Six years later, we’re seeing the tides turn toward better guarantees for employers across the board, but there are still plenty of less-than-transparent ones out there. So today, we’re breaking down three simple steps to help determine if you’ve got good performance guarantees.
It shouldn’t take a PhD to understand your guarantee.
The metrics that your PGs are tied to matter—a lot. The success markers that a vendor measures and how they choose to measure them are the foundation of your financial security. It’s a common misconception that a longer list of metrics creates a higher level of accountability, but the opposite is true. The more metrics a vendor builds into their guarantee, the lower the vendor’s risk becomes, since every added metric divides the overall percentage of fees at risk (i.e., in a 20% performance guarantee with 10 metrics, each metric equates to 2%; in a 20% performance guarantee with 4 metrics, each equates to 5%).
If you’ve got a long list of metrics, take a moment to evaluate them. Do you know the definition and purpose of each one? Do you know how each is tracked and measured? Our guarantee is tied to four simple metrics: risk-stratified patient engagement, clinical outcomes, return on investment, and overall service levels. During contracting, we lay out exactly what criteria must be met to fulfill our commitments in each of these areas and how we will calculate success levels. We review progress quarterly with our clients to transparently track progress toward these goals. If you don’t have this level of clarity, you probably don’t have a good performance guarantee.
…for your vendor, that is.
The purpose of a performance guarantee is to incentivize your vendor to deliver a successful program. And for the majority of vendors, the most incentivizing thing is their own bottom line. Your guarantee should put a high percentage of fees at risk—but it’s not as simple to evaluate as you may think. Many vendors will inflate the guarantee percentage by calculating it from a small allocation of total fees. For example, a vendor could offer a 100% performance guarantee on “management fees,” but if “management fees” only account for 10% of the overall program cost, you would only have a 10% performance guarantee.
Ultimately, evaluating your PG comes down to dollar amount. Ask your vendor for a total of the fees that they are risking based on your quote and remember: if the guarantees have a simple structure, this isn’t a difficult ask! Our guarantees are based on total service fees, meaning if a client’s comprehensive fixed fee is $500,000, we risk $100,000 per year. We welcome the risk, because it solidifies our commitment to care that won’t quit. If your vendor isn’t willing to assume financial risk for the success of the program they’re selling, it may be time to ask why.
Good guarantees have good goals.
Easy-to-understand metrics and vendor-absorbed risk mean nothing if the guarantees aren’t making an impact on your employees, your culture, and your costs. For example, you could have a 100% performance guarantee that vendor employees will be in uniform at all times, but that will have little to no meaningful impact on the success of your program.
Make sure that your performance guarantees are targeting your broader strategy for the vendor partnership. Our metrics were designed to guarantee the highest-impact program possible. In fact, we only offer our most robust guarantees to the clients who adopt our preferred staffing model, because the results we promise are so significant (for example, 80%+ employee engagement) that we know it will take nothing less than all-hands-on-deck excellence to achieve them. If your guarantees aren’t targeting what actually matters, they aren’t serving you or your employees.
What effective guarantee could you be getting? Contact [email protected] to find out.