In spite of the fact that SMEs make up the bulk of the Singapore economy and employ around 65% of the local workforce, they remain under-served when it comes to corporate health benefits. But with tech and the right data, Mednefits co-founder and CEO Chris Teo says the lack of big HR budgets should not inhibit SME employees’ access to comprehensive health care.
When it comes to the provision of employee benefits, cost control is a perennial issue and most small and medium enterprises (SMEs) face two options: ‘self-insurance through reimbursement’ or purchase corporate health insurance cover for employees. But neither of these methods is ideal.
For SMEs that self-insure, the lack of economies of scale means that most companies will not have the ability to work out a direct arrangement with healthcare providers and will thus have to pay a premium for services, said Mednefits co-founder and CEO Chris Teo.
On the flip-side, corporate health insurance products ‘typically only offer outpatient and inpatient insurance together as a costly bundle’ and so, for reasons of cost, the option of corporate health cover is ‘often not accessible or appealing to SME employers’.
“When companies purchase insurance for their employees, they will never find themselves in an advantageous position,” Mr. Teo said, adding that the total cost of cover for employees is paid upfront to the insurer, which if not used, goes to waste. “And when employees do claim on their insurance, this causes the company’s premium to be loaded the following year.”
Current corporate health benefits programmes, he said, are limited by older systems that were not designed to share data, work together or learn from one another. This makes the experience frustrating and user- unfriendly to the company’s benefits administrator and employees.
But advances in technology – such as real-time big data accessibility – have enabled employers to reduce healthcare costs, customise health plans to suit their staff and to make comprehensive healthcare more accessible. He said, ”The right data at the right time can empower. We didn’t have access to these fancy features in the past, but now with technology, employers have concrete means to change the entire health care experience for the better.”
‘Bulking’ for Affordability
Enter Mednefits, an InsurTech focused on making corporate health benefits affordable and accessible to SMEs.
“In Singapore, where 99% of firms are SMEs, it’s crucial these companies have the benefits provision to maintain their competitive edge. Healthcare is a massive investment that few SME employers have control over, particularly with increasing medical costs and inflation. SMEs tend to get hit the hardest,”
— Chris Teo, CEO at Mednefits
By grouping SMEs on a single platform, Mednefits is able to give SMEs the buying power equivalent to a large enterprise, while connecting them directly to health providers – digitally – without the need to go through existing intermediaries. He said, “SMEs get direct cost savings and efficiency with the aid of technology. The result is greater cost control with a better healthcare experience. Ultimately, it’s all about scale.”
But aside from affordability and accessibility to benefits, Mr. Teo said SMEs need to cultivate a wellness culture within organisations – that without doubt has proven outcomes such as productivity boosts, absenteeism reduction and talent attraction and retention.
New Paradigm of Benefits
The technopreneur also noted that the ‘game has changed’ in employee benefits – the new generation of employees entering the work force has a new definition of health, which is a ‘state of complete physical, mental and social well-being’. In view of this, he briefly touched on Mednefits’ current offering of an outpatient medical coverage plan – incorporated with a workforce management system – that includes a pilot customisable workplace health and wellness programme targeted at both physical and mental well-being.
Similar Space, Different Aims
That being said, Mr Teo was quick to outline the difference in propositions between Mednefits and fellow tech start-up CXA Group. “The CXA proposition is all about shifting spending from treatment to prevention and has been pretty successful in this. Mednefits’ value proposition is entirely different. For us, it is and always will be about SMEs, whose focus is first cost control and then efficiency.”
He added, “SMEs value a solution that is first affordable and cost predictable, simple, and ultimately human – that serves basic needs first, and that is primary healthcare. So while the preventive movement is up and coming, our view is that for SMEs, it starts with primary care. This is why we have collated an island-wide panel of primary healthcare providers to cover their basic needs.”
This article was originally published in Asia Insurance Review Magazine, Insurance - Life & Health September 2018.