If you view executives as stereotypes, you probably believe chief financial officers (CFOs) are from Mars while chief human resources officers (CHROs) are from Venus. One obsesses about profit. The other cares about people. When it comes to health benefits strategies, one sweats medical and pharmacy claims as an out-of-control expense. The other advocates for robust benefits as a must-have investment.

The tricky thing about stereotypes? They almost never match reality. In today’s marketplace, HR leaders play a critical stewardship role in the financial impact of benefits decisions, and savvy CFOs embrace the importance of investing in a healthy, productive workforce.

Still, with all the healthcare-related decisions and challenges employers face — especially those that self-insure — what are the secrets to finance and HR partnering effectively on health benefits strategies? What best practices can leaders adopt to align on controlling costs and improving results, while still investing in benefits to a level that both employees and job candidates will find attractive?

Navigation Insider asked three Quantum Health leaders for their keys to collaboration. Between them — Chief People Officer Veronica Knuth, CFO Scott Doolittle and VP of Total Rewards and Wellbeing Monica Foster — is nearly 80 years of experience in corporate finance and HR.

From three wide-ranging interviews, seven themes emerged that could be useful as your organization’s leaders pursue alignment on health benefits strategies:

Outperform the stereotypes

Knuth majored in accounting and spent her early career in finance. Since becoming a benefits manager, and now an HR executive, she’s found it relatively easy to defy any stereotype that assumes she’s soft on financials.

To partner well with finance, however, she’s focused on ensuring her HR team develops and demonstrates analytical acumen. It simply has to show up in how they track competition for talent, investigate population health risks and claims spikes, grasp the organization’s financial dynamics, and build a business case for benefits investments.

Foster is one of Knuth’s senior team members. She recalls, early in her career, being quizzed by a CFO for a highly specific health benefits metric. She replied she couldn’t recall the number but definitely had it at her desk. The CFO replied: “Go get it. I’ll wait.” Since then, Foster hasn’t attended a meeting, especially with finance, without her trusty “cheat sheet” of claims metrics and benefits performance indicators.

From the CFO perspective, Doolittle encourages HR pros to view finance colleagues not as bean counters or number crunchers, but as partners with the same objective: measuring the success of benefits strategies. “That word ‘measure’ really comes into play for us to work effectively together,” he said. “If we’re doing our jobs, we can help look at dollars being spent and see if they are lining up against HR’s strategy.”

Divide duties, share strengths

All three leaders said it’s essential for finance and HR to clarify responsibilities related to benefits strategies and claims cost management. If a clear “who does what” is lacking, now would be a good time to develop it, whether by collaborating on a Venn diagram, working through a RACI matrix (i.e., responsible, accountable, consulted, informed), or engaging in some other strategic alignment exercise.

For example, inside most employers, it’s typical for HR to work with a consultant to diagnose population health risks and priorities, vet vendor solutions and recommend benefits investments. Meanwhile, at least at Quantum Health, finance works closely with the same consultant to regularly review claims trend and adjust funding of reserve accounts based on claims variances from the projected budget.

Potentially in the fuzzy middle falls something such as contracting. Once HR brings a new vendor to the table, they might find it helpful for finance’s procurement experts to lean in on such things as contract terms, ROI commitments and even fees negotiation. But that sort of collaboration only happens if responsibilities, and opportunities to share expertise, get discussed and defined.

“Build strong professional relationships. Help them do their job. Show them you can do your job.” Veronica Knuth, Chief People Officer

Get granular on financial fundamentals

The main reason CFOs are getting more involved in health benefits is the “magnitude of the expense being driven by medical and pharmacy claims,” Doolittle said. Given this reality, he considers it essential that finance and HR align on the fact that “healthcare costs” aren’t a single, mostly unmanageable expense item. There are claims costs, point solution fees, stop-loss premiums and more. Breaking total costs into parts is a first step toward focusing on those that need to be controlled (e.g., rising claims costs) and those that are potential control levers (e.g., specialized condition management solutions).

Another important detail is what finance pros call “materiality.” Practical examples: The dollar amount or percentage at which a variance from projected claims trend merits escalation to HR and finance leadership. Also, the threshold of spending on a benefits solution that requires review and approval by higher-level leadership.

Audit for value

When it comes to getting the most value from investments in health benefits solutions, and ultimately leveraging them to control claims costs, status quo can be the enemy of both finance and HR. That’s why, Foster said, one of the ways HR earns credibility and trust among finance colleagues is by being the first to recognize, and recommend discontinuing, a benefits investment that is not delivering value.

Similarly, Doolittle recommends HR and finance leaders regularly challenge each other to answer value-driven questions about the entire benefits offering: What’s the universe of things we’re doing? What did we expect to happen? If a benefit isn’t providing the value we expected, do we need a different solution? “Veronica [Knuth] and I have that value conversation all the time,” he said. “We’re both committed to not letting inertia get into the system.”

“Ultimately, it’s a partnership. No one partner has all the information and expertise, so both need to consider it part of their roles to lend value.” Scott Doolittle, CFO

Align on values

Are your leaders continually debating “people versus profit” when it comes to benefits strategies? It might be because they’re not aligned on values that define the organization’s employer brand and culture. Those values can be useful guidelines for benefits decisions.

One example: Cost sharing. The sooner leadership agrees on a principle or philosophy for splitting healthcare costs with employees, the less contentious future decisions will be.

Foster says benchmarking is very helpful to arrive at a cost-sharing norm. Her team tracks several different groups of employers for benefits benchmarking, including the Fortune “Best Companies” list (Quantum Health is on Fortune’s Best Workplaces in Health Care list), employers of similar size nationally, companies in the same service category, plus a group of leading regional employers that regularly compete for talent. Quantum Health’s leadership has decided it’s consistent with company values to stay highly competitive on compensation and benefits within the geographic region. The value of comparing benefits with the other employer groups? Among other things it can provide inspiration for considering future benefits enhancements. This approach gives HR and finance an overall framework for informing and making benefits decisions, including any cost-sharing adjustments.

Another values-based consideration is benefits ROI. Doolittle and Knuth said CFOs and CHROs would be wise to simply agree on which benefits don’t really deliver a hard-dollar ROI, even while necessary to support employees and compete for talent. That alignment will leave both leaders and their teams more time and energy to focus on other benefits — disease-management solutions, healthcare navigation, telehealth services — that are designed to have measurable, positive financial and health impacts.

Agree to disagree

No matter how harmonious their relationship, finance and HR leaders will eventually disagree on an important decision. Knuth said they simply need to agree on who they’ll involve to “break ties.”

What won’t work, she said, is leaving a contentious meeting or conversation and running across the hall to lobby, or vent to, the COO or CEO. “Sometimes your perspectives on what’s best for the organization will be different,” Knuth said. “What’s essential is to agree on a course of action to break the tie, and then be totally transparent when seeking input from others. That’s just good, healthy relationship dynamics.”

Keep insights flowing

Knuth and Foster see providing finance with insights as central to the HR function. To that end, they’ve set a purposeful cadence of meetings that keeps finance and HR informed and in sync:

  • Weekly touch bases between Knuth and Doolittle. “This is all about regular face time,” Knuth said. “It’s a constant back-and-forth about what’s going on in the business, top priorities for Scott, and what’s top priority in my mind in terms of intersecting with the business and its performance. These have been essential to us forming a strong professional relationship.”
  • Monthly Total Rewards and Wellbeing strategy meetings. Attendees include the COO, CFO, chief people officer, and both the VP and director of Total Rewards. “We’re talking about anything going on in the macroeconomic environment, or in our organization, they need to know,” Knuth said. “We put timely issues into context and offer suggestions and solutions. It’s one of the ways we demonstrate financial stewardship over our company’s two biggest budget line items — salaries and healthcare costs.”
  • Quarterly huddles between Foster — representing benefits strategy — and the finance leads responsible for funding claims. This meeting is one of the many ways a well-aligned HR and finance teams can create strategic advantage for the organization.

For example, whenever the claims trend starts to run significantly above budget, finance will analyze in detail the materiality of the cost spike, put it in historical context, and project the impact on both reserve funds and the yearly business plan. Meanwhile, Foster will dig into claims data to provide insights into what caused the spike, explain how persistent it is likely to be, and suggest short- and longer-term cost mitigation and plan design strategies leadership might want to consider.

Combined, their collaboration builds a cohesive “story” to share with Doolittle and Knuth, and from there with the full executive team. The result: Leadership gets fully informed, in a strategic and timely way, of possible solutions to emerging, health-related cost challenges.

Relevant, actionable health benefits insights

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