June 28, 2007
Managing Law Firm Health Care Cost
The health care plans offered to law firm employees and principals have to be competitive. As a people business, this isn’t an area you can shortchange. Nevertheless, we are talking big bucks, and health care cost needs to be managed. The Juris Law Firm Economic Survey conducted in 2006 found that across the board, 40 percent of midrange law firms do not competitively bid health care plans. Without competitive bidding, costs are not likely to ever decline. Your costs are going in the other direction—up! You can just about guarantee two-digit increases year after year.
As for the 40 percent of law firms who do not get competitive bids, my guess is that it is a matter of “out of sight/out of mind”. They don’t competitively bid simply because they never consider the issue until its renewal time. When that happens, it is too late. No one is going to let their plan lapse while they look for a better deal. If your health care plan renews each January, you need to be shopping in June. Have your HR person or Administrator put health care shopping on their calendar at least six months in advance of the renewal date for your existing policy. From experience I can tell you that shopping your plan, especially if you have not been doing so on a regular basis, will produce more partner income.
Secondly, don’t ignore the opportunity for savings through making small changes that will not significantly impact participating individuals. Small reductions in co-pays and deductibles add up to big overall dollars. The predominance of two-income families today means that people place their family coverage with the employer offering the lowest employee cost to add family coverage. That makes it prudent for you to require some employee contribution for family care.
Adding health care savings accounts, on the other hand, can increase benefits for the firm’s people without increasing the law firm’s health care cost. Only about 25 percent of law firms surveyed have made the effort to add health care savings accounts. One of the benefits of outsourcing payroll to ADP or other equivalent payroll providers is that they make handling things like health care savings accounts easy.
Law firm surveys like the annual Juris Law Firm Economic Survey provide a blueprint for things you can do to improve financial performance and better control expenses like health care. They do that by shedding light on what others are doing. With that in mind, let me remind readers that Juris’ current survey will be put to bed after June 30. You still have a few days to participate. If you do, you will automatically receive a free copy of the survey when published. That is a $495 savings, but the ideas you will pick up to improve financial performance within your firm will be the big payoff. Ask your accounting person or administrator to complete the survey today by going to http://www.jurisinsight.com/2006survey.
Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income contact Juris National Sales Center:
877/377-3740, e-mail info@juris.com or go to www.Juris.com.
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Filed under Expense Control by Tom Collins
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