The Insurance Ranch with Ed Jacobson – Part III
The Insurance Ranch Part III - with Ed Jacobson
"A New Strategy For Selling Self-Funding To Employers In 2023."
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What is the TPA revenue from all sources? How much do providers get? And why is the system not built to cure? These and other questions were raised in our conversation with Ed Jacobson.
Get ready for the final - Part III - of "The Insurance Ranch."
Ed Jacobson:
"I was charging $5 an employee a month. I didn't know how to make money being a TPA. The 300-life group, with $5 an employee a month - and that was total compensation, fully disclosed - is $1,500 a month. Even in 1975, you couldn't hire a claims examiner, so I was not making money.
I didn't jump out of the gate at 100 miles an hour. Instead, I crawled, then started walking, and eventually ran. And I knew that if I could hit a certain target, I could break even.
As a matter of fact, being an entrepreneur as a third-party administrator, we debit our fees from the benefit plan account. Assuming there's money in the account.
So I met the payroll twice a month, and the first of the month was really easy. The middle of the month payroll got to be a little questionable. And truth to be told, I had to subsidize from these 2.5 years f my life as an agency operation. I had confidence that this was eventually going to be a business.
I remember going to my CFO - who was also my secretary and my assistant - and I said to her:
- Ester, how are we doing on the payroll on the 15th?
I was expecting her to say: "Oh, we're running short" - and then I'd figure something out. I did figure it out. And if you ask me how - I can't really tell you, but I didn't steal any money. I just figured it out.
About 2.5 years into it, I asked:
- How are we doing?
And she said:
- Fine.
I was shocked. I'd lie to you if I said I wasn't let down a little bit. I was so used to figuring out creative ways to make this thing work and going into my assets - and then all of a sudden, the business as on a different stage now. It didn't need me in the same way."
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In the final chapter of "The Ranch" we'll cover:
✔️What is the reasonable ROI for a TPA?
✔️ Uncovering every single fee behind a self-funded health insurance plan
✔️ Why is there no such thing as a "free market?"
More...
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