Private Equity – Pooled Insurance & Improved Process: A Case Study

Situation

A large private equity firm with 23 platform companies was closing on an average of 10 new companies each year. With thousands of employees, they needed a better way to manage health benefits.

Oswald dedicated a team to this client, as the service needs of the client and their portfolio companies were expansive and national. Within this team, Oswald encompassed employee benefits, 401K, defined benefit plans, human resources, commercial insurance, and key person life insurance. We provided data analytics, actuarial services, wellness, health management, clinical and pharmacy knowledge, compliance, education, and employee communications.

Solution

Because of the fast-paced nature of this client, we developed a repeatable process to assess target and existing companies. Additionally, we formed a pooled, aggregated health insurance plan through Blue Cross Blue Shield, leveraging their national network. We utilized a consumer-driven approach, implementing high-deductible plans, enhancing wellness incentives, introducing dependent cost-sharing, and educating the employees on how to best utilize the health plan. This, in turn, drove down and stabilized the employee benefits spend across the portfolio.

Our process included a post-closing checklist as a part of due diligence. This created clear guidelines for new add-on companies to follow upon closing and simplified the employee benefits implementation process.

Additionally, each company received a consistent service model.

Result

• Each platform company reduced its per-employee per-year premiums for benefits by $1,100.
• Enterprise value across the portfolio increased by an estimated $25 million.
• $1 million saved annually by outsourcing human resources support, using technology, and renegotiating payroll and HRIS.

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