How to Build and Review a Benchmarking Report for Your Company’s Health Insurance Policy

The term “benchmarking” has its roots in the military, like many popular business concepts today (including the term “C Suite”). Early generals, like business leaders, were responsible for directing a team, delegating roles, and organizing resources effectively (the same is true for many sports!). So while the term ‘bench mark’ appears for the first time in conjunction with land surveying, the concept of a “marksman” has its roots in target practice: if all projectiles are launched from a designated line (a benchmark), it's easy to see which travels fastest or farthest!

Why should companies use benchmarking?

Gaius Marius’ reforms in Ancient Rome began what we can think of as early “process improvements.” Roman armies needed to improve both speed and consistency to deal with new enemies. The Marian reforms methodically introduced improvements to meet these needs. Armies were trained on endurance and made to carry their own gear, eliminating the need for long baggage trains. Equipment, training and camp-making was standardized. Marius himself made improvements in weaponry (like the javelin, which would now break when it hit your enemy, so they couldn’t use it on you!).

Xerox made similar process improvements in the 1980s. With printing giants at Canon and Ricoh taking up market share, Xerox established a baseline and worked to find gaps in its performance compared to the competition. Closing these gaps necessitated standardization of processes, making improvements all the way down to the layout of its factories. Company performance improved considerably. In this Xerox pioneered “benchmarking” as we know it today, calling it “the process of measuring products, services, and practices against its toughest competitors, identifying the gaps, and establishing goals.” Many of the tools from Atomic Habits, for example, are in essence benchmarking exercises for your skills or abilities.

In essence, benchmarking provides the “constraints” required to unlock innovation, lets you strategically overcome obstacles, and make plans that will achieve meaningful goals. When business owners think about desired targets (like KPIS) they can make informed plans and make incremental changes. The same is true for organization health insurance policy.

Benchmarking Report for Health Insurance Policy 

In health insurance, the benchmarking report helps companies to understand whether its current health benefits plan is competitive within its industry, location, or hiring base. Health Insurance benchmarking is frequently used by benefits consultants and brokers to help advise clients on where they can grow faster or save money. This is done in several phases:

1) Define your goals for the report

Benchmarking your health insurance policy will depend on your organization: do you want to keep up with competition, cut costs, or use what you have more effectively? Who would you like to emulate? What does it look like to win? Plan out: 

• Comparison companies or peers who are doing well. These benchmarks may include:
  
  • Internal benchmarking from within the organization or from prior years
  • Competitor benchmarking from the same industry
  • Generic benchmarking within different industries (Xerox took lessons from brands like LL Bean, Motorola borrowed supply chain insights from Dominos Pizza!) 
• Metrics (dollars saved, total premium per employee paid)
• Employee participation
• Number of claims

At this time, start thinking about key performance indicators (KPIs) relevant to the company and establishing them as part of your plan. Set up key AI platforms to automate data collection, identify patterns across large datasets, and spot discrepancies, outliers, or gaps. 

2) Analyse your data

Given the goals for your report and the comparison companies chosen, what is your company lacking? Are your premiums higher per employee (or more than you can afford as a company?). Is your coverage missing certain areas? Will employee demographics start changing, or make your vision harder to scale? 

Today, artificial intelligence tools are especially good at spotting patterns, cues, outliers, and trends in your data, setting up a benchmark you can use to analyse your competition. No matter whether you use AI, Excel, or PowerBI to do the actual data reporting, this benchmark will be your baseline. 

3) Comparison with competitors or target organizations

AI can simplify the comparison and summarize the language, so you can see each plan’s features in minutes. Natural language processing models are able to pull key features from each plan and measure them against your own performance. For example, different group benefits or insurance policies may have services like massage, mental health, or physiotherapy labelled as “professional services” “paramedical services” “supplementary services” or “extended health.” AI tools can quickly standardize them – which is the goal when finding a benchmark. 

Once you’ve assessed where you stand versus your targets, rank and order the benchmarking changes necessary based on competition and need; not every company needs a massive utilization rate, for example, but might prioritize money saved. Closing the most critical gaps can help to see results more quickly.

4) Take action

Implement changes with your brokers, insurance companies, or providers, adding new editions (like a health savings account) or tiered plan offerings. Structure these changes based on the needs of the company – not everything needs to happen at once!

5) Review outcomes periodically

How do you know if the plan is working? Revisit KPIS quarterly or annually, depending on plan terms and broker recommendations – or compare older reports to newer results for a fuller picture of what you’ve changed and what you’ll be offering. 

Benchmarking isn’t just about quantitative insights: employee feedback or leadership support can also be important. Benchmarking is a continuous process for a company, and with a service as highly important (and ever changing) as health insurance coverage for a team, benchmarking should be a consistent commitment.