As the benefits administration market has matured, the major players have collectively adopted and standardized a wide range of innovations and best practices. For example, responsive web design – once an important differentiator – is now fairly generic. In this environment, service providers find it increasingly challenging to stand out from the competition. Many buyers, meanwhile, focus on pricing as the key selection criteria, and assume that one provider’s overall offering will be pretty much identical to another’s.
That assumption is seriously flawed.
ISG analyses of benefits administration deals, service offerings and business models reveal a wide range of diversity in terms of pricing, service delivery models and quality. Understanding these differences and how they impact total cost, end-user experiences and client satisfaction is imperative for executives selecting providers and seeking to align benefits administration and corporate strategy.
Consider pricing: ISG reviews of competitive benefits administration pursuits generally find that bids generally fall within a range of 15 percent or so. Despite a perceived levelling of the playing field, ISG has observed as much as a 30 percent difference between the high and low bidders. Such gaps are often driven by the details of the service delivery model, service levels and frequency of certain processes. Sometimes the differences reflect assumptions made by the provider, which need to be closely reviewed to ensure accurate comparison and evaluation.
Moreover, pricing comparisons often don’t account for standard versus premium services. For example, some providers will include enhanced surviving spouse support as a basic offering, while others charge a significant premium. Change order rates and practices also can have a significant impact on total cost.
Providers also vary in how they manage client access to information. In some cases, clients have transparency and easy access to employee information maintained by the provider; in others, this is not the case. Insight into the service provider’s IT infrastructure – for example, understanding how easy or difficult it is make plan or process changes to the system – can make a world of difference in change order costs and timing .
Service delivery models are another key point of differentiation – offshoring versus domestic sourcing being the most obvious example. The structure of customer call centers must also be considered. Some providers use a single call center that serves all clients; each call is routed to a single queue. In other instances, service provider teams are assigned to work with a discrete number of clients. By enabling agents to learn about the client’s business and be more responsive, this model can have a significant impact on service quality and customer satisfaction.
Benefits administration executives considering health care exchanges, meanwhile, need to understand the nuances of exchange options as well as provider approaches to integrating exchanges in their offerings.
In short, while differentiation between service provider offerings may not always be apparent, differences in pricing, service models and philosophies exist, and they can be significant. Buyers who pursue a benefits administration outsourcing initiative without insight into these differences and their potential implications do so at their peril.