Competitive group health benefits are the key to recruiting and retaining talent that empowers business growth, according to this PEO insider.
Jennie Casaday spent over 15 years working on group products at some of the largest health insurers in the country. She encouraged the early adoption of predictive models and helped manage the tricky transition when the Affordable Care Act upended small-group insurance.
Today, she’s combining that big-company actuarial and underwriting discipline with entrepreneurial flair at a PEO, ExtensisHR. In this role, she sees group health insurance from a new perspective—as a critical part of customers’ benefit packages and a tool that allows them to attract the talent they need to grow and prosper.
Her point of view is intriguing, so we asked her to share her expertise.
ExtensisHR is in growth mode along with much of the PEO industry. Now that you’ve had a year or two to find your footing, what’s your take on ExtensisHR’s competitive situation?
ExtensisHR has experienced tremendous growth with consistent double-digits year after year. But you can’t just add headcount to support that; you have to do things better, smarter, and faster. At the same time, we have to maintain the high level of customer service and solution-oriented approach that sets us apart. That’s not always easy when you’re scaling a fast-moving business services organization.
It takes real effort to balance growth while delivering the highest possible level of customer service in the PEO industry, and offering attractive employee health, welfare and retirement benefits, all while managing the risk attributes of these plans.
We’re a top-25 PEO; most of the companies in our peer group seem to be backed by private equity or going public. One thing that’s unique about us is that we still have a founder’s culture. We understand the mindset of small to medium-sized business because we are one. And that connection shows in the way we support them.
It can be tough competing with rivals that are being groomed for an IPO. A lot of them are focused on the top line, not the bottom line…
Yes! It really makes a difference when you’re still owned by the original founder and investor. Being well capitalized also means we don’t have to chase top-line growth for the sake of it, we can just stay focused on our customers. This focus has really enabled us to differentiate ourselves in the PEO space. New customers quickly see we operate differently and that’s why they choose to work with us. We’re not growing by acquisition, we grow organically, one customer at a time.
But customer retention is even more important. We put a lot of energy into making sure our customers stay with us for the long haul. When a customer joins ExtensisHR, they truly join a partnership in helping them grow their business.
How is working for a PEO different than working for a carrier?
The advocacy is different. If I’m acting as the actuary for a major carrier, I’m focused on the profitability of the medical plan and that’s my job. At ExtensisHR, my job is to retain the client, so it does look very different.
We provide a full suite of HR services, but medical benefits account for about 70% of the total benefit spend. And health coverage is the benefit that employees care most about. Our customers want to attract and retain talent; for smaller companies, the most important part of that often comes down to offering employees the same kind of benefits and name-brand network they’d get if they worked for Home Depot or Bank of America.
Smaller companies not only lack purchasing power, they also probably lack the specialized knowledge they’d need to choose or negotiate coverage. How do brokers figure in the relationship between a PEO and its customers?
You see a lot of brokers in the small-employer market because, as you said, these businesses need some additional advice. We can give employers and brokers options; the client doesn’t have to go at this alone. If you’re an entrepreneur with 30 employees, it can be a challenge trying to understand all the options available to you, and it can be very confusing. I don’t know if I’d be comfortable trying to shop for coverage without a broker or a certified PEO.
The upside of having good broker partners is that they are engaged in the results of your book. They’re not just trying to earn commissions or incentives; they want their groups to get low renewals and keep the same coverage when it comes up again next year. But the challenge is that some brokers feel it’s necessary to shop and move the business every year based on medical rates alone, and that isn’t always what’s best for the client or managing the risk of the overall book.
As an actuary, you probably see that as a form of adverse selection, but in your current role, does the profit or loss on health insurance even matter?
Not directly, but it’s in our best interest to ensure favorable renewals for our clients. We use predictive analytics tools like Curv Group Health to make sure our clients are on the right product for their expected claims cost. We may not have a carrier’s perspective on the profitability of the plan, but we definitely want to manage the book and prevent premiums from climbing too quickly or getting too high for our clients.
Speaking of renewals, how do you retain customers once you’ve won their business?
Like I shared earlier, working with the right broker partners, ones who care about the overall book of business and their clients, definitely helps. But it’s really our service model that drives retention. We do a great job of vetting our groups on the front end to make sure we’re pricing the risk appropriately, which helps minimize high renewals down the road. So, between our pricing strategy and our service, we’re able to retain clients year over year.
That said, it’s not a perfect science. There will always be clients who shop every year, and there will always be someone willing to offer something similar at a lower price. But in many of those cases, that other PEO may not have everything we offer, and that matters over time.
At the end of the day, enabling smaller companies to offer big-company benefits also means helping them see that service and transparency matter just as much as price. That’s why we manage our health and welfare partnerships with a long-term focus on retention and customer satisfaction, so our clients and their employees always feel supported.