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3 minute read
The e123 Insurance Innovation podcast is proud to host insightful conversations with industry experts. Our latest podcast features Michael Hilf, the co-Founder and CEO of Healthcare Funding Partners. As a former agent and licensed investment banker, Michael has deep expertise in all aspects of the industry and has owned companies that sold over 2 million policies. This wide-ranging experience gives him a unique perspective on market trends.
An Ever-Evolving Industry
Michael started in the insurance agency when insurance was sold door-to-door wearing a suit and tie and going “belly to belly” to friends and families. About six months into his agent career, Michael saw how call centers were increasing insurance distribution by selling policies over the phone nationally. Realizing the call center model was much more scalable, he jumped on an opportunity to purchase a book of business with commission receivables, taking his book of business from $1,500 to $90K a month.
Seeing the vision for rapid agency growth, he raised capital and ultimately started his own call center. Michael’s deep door-to-door and call center experience greatly influenced his career, sharing that “Understanding how the sausage is made at the call center level is really important background that I think is relevant to where Healthcare Funding Partners is today as a company.”
The Power of Commission Management Data
When Healthcare Funding invests capital, it needs accurate data and reporting. They often contractually require TPAs to use the e123 platform as they trust the sustainability and transparency of the data.
In the Medicare Advantage and ACA markets, Michael says, “The way that these carriers report and pay and the discrepancies that exist are apparent. IMOs report they are missing up to 8% of commissions from carriers. That’s a lot of money and it’s amazing there can be that much discrepancy.”
Michael acknowledges that e123 has done a great job narrowing the gap, but it’s still hard to get accurate reporting in the Medicare Advantage and ACA businesses. Healthcare Funding has invested significantly in developing proprietary systems to validate and report the data but “it’s a very big issue in the industry, where e123 could bring a lot of value if they focus on those markets.” They also know accurate reporting is critical for downline optimization and agency growth.
ACA and Medicare Advantage Insurance Trends
In addition to advance commission funding, Healthcare Funding has an insurance agency that sells ACA products through licensed agencies that they refer to as enrollment centers. He sees investment dollars rapidly entering the ACA market, especially as the government seeks to extend ACA subsidies.
Healthcare Funding has built a sustainable ACA model based on good reporting and strong internal proprietary systems. e123 has played an important role in validating the data because according to Michael “there’s so much value to be gained in this marketplace by getting it right.”
Ancillary products are also helping to fuel ACA growth. Michael has seen the attachment rate vary from as low as 3% to as high as 20%, depending on the marketing effort and the consumer targeted. He believes that to be successful, companies need to focus on the right market. “The higher quality lead that you generate from the market, that's a consumer who can afford more, so you're going to have a higher attachment rate.”
With a strong ACA business, Healthcare Funding is carefully watching the Medicare Advantage market as a potential opportunity for growth. Michael believes “that the big question now is what is CMS going to do about the capitation of the commissions being $650 to an agency that sells Medicare Advantage?”
He believes carriers are going to find other ways to compensate agents through bonuses or marketing dollars so that they don’t lose business. As it is, the current model is not sustainable for large portions of the business. If commission computations change, Healthcare Funding’s investment in accurate reporting and commission calculations will provide them with a great advantage in entering the market, understanding lifetime value, and gaining distribution.
Unit Economics at the Core of Insurance Sales
When asked what advice he would give new agents, Michael discussed understanding the economics and math of being an agent. He explains, “I've seen a lot of guys get in the space and not understand the math. They start to take advances, but they don't find out for six or ten months that they're spending more than they’re making.” Agents must understand the margin on each policy, including the financing, the total value of a customer, and the payback timeline on the acquisition cost.
Commission Management can be Simple
To access the full podcast and hear more of Michael’s insights on insurance distribution and agency growth, click here.
If you would like to know more about how e123 helps Healthcare Funding Partners simplify their distribution and commission management systems, schedule a free consultation.
