Recently, we spoke with Mike Wurtsmith about the larger role that nonprofit boards should be playing when it comes to choosing health benefits for their organization’s employees.
Mike has served on the board of Thunder Bay Community Health Services since 1992 and has been board chair since 1998. In addition, he has served on the executive board for the Michigan Primary Care Association (MPCA), as well as on the executive board of the National Association of Community Health Centers (NACHC). Mike is currently consulting with HRSA through a contract with MSCG in the governance administrative role for operational site visits. He is ambassador for Nonstop Administration and Insurance Services.
Q: Why do you think it’s critical for nonprofit board members to be involved in choosing employee healthcare programs for their organization?
A: According to the National Council of Nonprofits, “board members are the fiduciaries who steer the organization towards a sustainable future by adopting sound, ethical, and legal governance and financial management policies, as well as by making sure the nonprofit has adequate resources to advance its mission.”
With this in mind, I truly believe that board members have a fiduciary responsibility to be intimately involved in any process before signing off on budget approval. This is especially true for employee healthcare as its one of the largest spends for an organization. And considering the fiscal impact of productivity loss due to an employee’s illness or injury, or the cost to replace staff members who leave for better compensation packages, healthcare can play a significant role in the financial growth and sustainability of a nonprofit.
In addition, we are accountable to the organization for providing the best, most equitable compensation possible to our employees. It’s no secret that nonprofit staff often get the short end of the stick when it comes to compensation. As such, we also have an ethical responsibility to make sure they are being treated fairly when it comes to something as important as their health and wellbeing.
Q: What role do you believe innovation plays when it comes to employee healthcare purchasing?
A: Innovation and health insurance are not often mentioned in the same sentence, but that is slowly changing. Many nonprofits may not realize it, but there is a world beyond the increasing costs and stagnant benefits of traditional fully-funded health insurance.
Self-funding and partially self-funding are taking off among small-to-midsize organizations due to the cost savings opportunities. Companies like Collective Health, Zane Benefits, and Nonstop Administration and Insurance Services have created unique approaches to self-insurance – some designed specifically for nonprofits – allowing for premium savings and better support for employees.
But to get to the point where these types of plans are being considered, nonprofits must create a culture of innovation internally. Board members and leadership teams must be open to the idea of change and creativity. This includes a major shift in thinking for every person involved, moving away from “this is how healthcare is, I can’t change it” to “this is how it is now, but how can I make it better?”
Q: How do you recommend board members become more involved?
A: We must create a new way to explore this major budgetary item utilizing the strengths of everyone on the leadership team – board members, CEO, CFO, COO, and HR – as one collaborative unit. Board members need to be more proactive in understanding the ins-and-outs of employee healthcare and driving these critically important conversations. This should be one of our primary responsibilities each year.
In fact, the government’s health center program requirements mandate that FQHC boards be actively involved in benefits and salary decisions, and this should be no different for any other nonprofit. The initial conversation needs to happen among our group, in our meetings, with our CEO – all with an open dialogue that creates an opportunity for discussion and further exploration. And the first guiding question I highly recommend every board member ask themselves and each other is: How am I, as a steward of this organization, ensuring that our healthcare benefits are as equitable and valuable as they possibly can be for the money we spend?
Q: What other questions can help guide this “major shift in thinking” when it comes to healthcare?
A: The five questions I have been thinking about and encourage my colleagues and peers to consider include:
- As a board member, do I understand my role and authority with regard to making decisions about employee healthcare, and do I go beyond simply “rubber stamping” approval of this annual spend?
- What do I believe my financial and ethical responsibility is regarding employee healthcare purchasing?
- Are our employee benefits robust enough for what we are spending, or are we simply spending a large amount of money for lackluster services that don’t meet employee needs?
- What have we done to better understand employee needs when it comes to healthcare, and have we explored all possible insurance options that will meet these needs?
- How has our broker encouraged us to think “out of the box” when it comes to meeting our employee healthcare needs, and what options have they presented beyond the status quo?
Q: Is there anything you think board members should consider as they take a larger role in employee healthcare benefits?
A: Innovation and change won’t happen overnight, but without more involvement form leadership teams it might not happen at all. We can’t let employee healthcare live in a silo, placing all the responsibility on human resource departments, which are usually so busy that renewing plans year-after-year without exploration of alternatives often becomes the standard response. It’s not fair to HR managers to place this huge responsibility on their shoulders alone, and board members are in a unique position to use their community contacts and networks to support research and vetting of potential healthcare programs.
For more from Mike about the role of board members in the employee healthcare purchasing process, please read his blog on BoardSource. And for more information about partial self-insurance, specifically how your organization can reduce premium costs and eliminate employee out-of-pocket expenses, please download the The Nonprofit Executive's Guide to Partial Self-Insurance.
