By Bryce Heinbaugh of IEN Risk Management Consultants

Auto dealers would be remiss if they didn’t acknowledge that this was a close call. Even though early signs show the worst is over, COVID-19 could have had an exceedingly devastating impact on dealers’ businesses.

That’s why, as tempting as it may be, auto dealers can’t just go back to business as usual. Rather, they should treat COVID-19 as a reminder to leave room in their budgets for a rainy day.

As a health benefits advisor, I know that’s easier said than done. Business owners often struggle to accommodate the 10%-20% premium increases their broker usually brings them each year, scraping together as much as they can and then, unfortunately, forcing some of their employees to share a portion of the expenses.

There are a few ways that dealers can spend less on their health plans while simultaneously improving them. Broadly, it boils down to doing five things, as outlined by the co-founder of Health Rosetta, an organization that aims to accelerate the adoption of simple, practical, nonpartisan fixes to the U.S. health care system:

1. Get liberated from the status quo: Look at the cost of traditional, carrier-controlled insurance plans and compare it to the cost of directly paying for your employees’ healthcare costs.

2. Optimize health plan infrastructure: Find a benefits professional that isn’t afraid to disclose commissions and is knowledgeable about the tools you’ll need, like stop-loss insurance and a carrier-independent third-party administrator.

3. Carve out PBM: In working with a pharmacy benefits manager (PBM), make sure your contract says that you own your pharmacy claims data, that way you can leverage it to make the most cost-friendly prescription decisions for your beneficiaries.

4. Add value-based primary care: Ensure your health plan foundation is strong – and simultaneously reduce downstream costs – by partnering with physicians who aren’t beholden to the high-cost, low-quality fee-for-service system.

5. Leave behind value-extracting PPO networks: Utilize reference-based pricing and direct contracting to make sure you’re not paying providers an excessive amount more than Medicare.

Joey Huang, co-owner of Ohio-based Great Lakes Auto Network, is a testament to the success of this approach. Walking through each of these steps – and notably instituting a Concierge Nurse Navigator Program that helped his employees and their family members make appointments at the highest-quality care centers – he ¬initially reduced his annual healthcare spend by 38%, saving him $138,000. Where before it cost his employees – many of whom make less than $50,000 per year – between $1,300-$1,400 per month for family coverage, after implementing some of the above changes, that cost went down to $980.

But Huang didn’t stop there. With his newfound healthcare savings, Huang added a new employee benefit, referred to as “healthcare holiday months,” in which employees didn’t have to pay premiums. And even after that, Huang had enough money left over to double his workforce, going from having three dealerships to seven.

For many auto dealers right now, opening a new dealership probably isn’t an immediate goal; (although Huang just broke ground on a new KIA dealership in Columbus, Ohio in Q2 of 2020 as he presses forward knowing expenses are where they need to be.) The immediate goal is probably to continue to weather the current storm by cutting costs enough to make up for the financial losses the industry saw earlier this year.

In doing that, however, auto dealers need to see they have an immense opportunity. By taking a serious look at their annual healthcare costs and following the above-mentioned steps, they can not only save enough to get through the present, but they can also save for the future. Should that future hold a second wave of COVID-19 and another economic downturn, or maybe an opportunity to grow the business, auto dealers that save today will be well prepared.