HR.com: Welcome Doug. How do you see your role in the company?
DK:
It’s a long-term strategic planning responsibility with short-term consumer understanding and positioning responsibilities.When you think about health care a big component of what we do is to think long and hard about how this is going to be used by consumers. It’s important that we have, within the organization, a function that really does focus on the employee’s experience.
HR.com: Can you tell us a bit about Lumenos and the 3 different components you offer?
DK:
Lumenos was founded in September of 1999. The company has focused on the concept of health care. That concept really hasn’t changed in the last five years, but the products certainly have. I think the recent introduction into the new HSA program, the approval of that program, and now the sale of that is a good example of how the product is evolving in the marketplace. But again it’s all based on creating a program that gets the consumer engaged for the first time in the purchase of health care services. That was why we originally started the company. We started the company five years ago, and we have built an infrastructure around consumer-driven health care. This includes the technology, the client services, and the customer service support that help the consumer take advantage of the accounts. We built a health infrastructure, and we’ve built a health support system, and to a larger extent, we’ve built and defined the accounts that go with the product designs. We now have 75-80 clients of large-sized health vendors that are using the program. We have several hundred clients on the small group and individual size that are using it. The business is growing…doubling and tripling every year.HR.com: Can you tell us who some of those clients are?
DK:
There are a number of well-respected, large companies that have given thought to this concept and have implemented the Lumenos consumer-driven health care plan like Frank’s Nursery, Novartis, Fujitsu, and Quest Diagnostics. We have hi-technology companies like Nokia, but we also have companies like Novartis that have a large group of employees not just the younger hi-tech companies that some people predicted would be the only ones attracted to the product. So, it’s a very diverse group of employers and employees.HR.com: And do your clients come back year after year?
DK:
Yes. We have 100% client retention. Satisfaction levels of the program are in the mid-90s. I think the latest figure was 94% satisfaction. 95% of the employees are asking for renewal at the end of the year when we are reviewing options. We have high customer satisfaction, and we have high consumer interest.HR.com: Do you think the interest in the program remains because you are changing along with health care?
DK:
The research shows me that people enjoy having control over the day-to-day spending of health care. They don’t need a lot of interference to know that they need to go to the doctor’s office, and they like the idea of being able to understand what that is going to cost and how to manage their dollars appropriately. There is a high level of satisfaction with the elements of this program on the day-to-day spending. There is also a high level of satisfaction around the information that is provided that enables them to manage those dollars. And there is a high level of satisfaction with the support system that we have for those people that need it. We also have the Health Coach program. It’s an extensive program that we have in place to encourage people to take a health care assessment and to enrol in a personal health care program. There is a whole combination here of health support tools and financial mechanisms that are very effective for people.HR.com: Do you think the uniqueness of your company is changing the industry?
DK:
If you take a look at what has happened over the last two years or so, I’d even say that is an understatement. When you look at what has happened in the industry in the last five years it is very gratifying for us. The account-based consumer-driven health care system didn’t exist five years ago. We invented it. As a result of inventing that, going to the marketplace and proving that it will work and be effective for employees, we have created the path for health care in the future. The predictions are broad, but they are consistent in terms of what it is they say will happen from an employer-employee perspective. 30-50% of the Fortune 500 companies are going to have these programs offered over the next couple of years. And when you think that they didn’t even exist five years ago, that has a pretty big impact on a $1.4 billion industry.HR.com: What about now? Do you have a lot of competition?
DK:
Five years ago we were the only company doing this and now, in most markets, we have competition.HR.com: When you started you had some financial backing. Are you profitable now, or are you receiving funds from elsewhere?
DK:
We have raised about $113 million in investment capital. We will be profitable by the end of the year. We have a very supportive group of investors that have been with us from the beginning who recognized that it would take a considerable amount of money and time to build a national competitive system and company. In addition, we have a new investor, Galen Partners who is also excited to invest given the significant growth of Lumenos and CDHC.The health care system is far too complicated for the consumer to understand. We can create an environment that helps the consumer understand the financial and health tools that are provided in this industry just like they do in all other industries. The challenge for us as an industry is to provide helpful financial and supportive information to help consumers make the right purchasing decisions with their physicians. And that is exactly what we are seeing in the first generation of users -- they are becoming more comfortable with the tools and the control available in a CDHC environment.
The goal here is not just to save money. The goal is to engage the consumer so at the end of the day we are only successful if we create a major change that will ultimately lead to better health care. We firmly believe in all of the evidence presented to us that when we do get the consumer engaged the employer and the employee will both save money and have better health outcomes.
HR.com: Does Lumenos take care of all of the administrative work? Is it safe and secure? Can employees access the site from home?
DK:
Yes, we administer the entire program and consumers have access to both health and financial information from their phone or through our Lumenos Web site. Consumers have access to claims, account balance information, and doctor and prescription directories and pricing that helps them make valuable comparisons.HR.com: How fast can the program be implemented?
DK:
Probably the quickest that we can run it is about a month. It usually takes about three months.HR.com: What size are the companies that you do this for?
DK:
Some of the companies have about 85,000 employees, and others have fewer than 1000.HR.com: How many people does Lumenos employ?
DK:
We employ approximately 225 employees and outsource some aspects but certainly not our call centers-we insist on keeping that in house.HR.com: What about the costs? How much does this cost the employer, and how much does it cost the employee?
DK:
The administrative costs are comparable to what employers would be paying today. The total costs when you factor in claims and administration are considerably lower than what employers have been experiencing over the past two to three years. The total book of business is running well below the existing trends and we are seeing a 94% customer satisfaction rate. The employers are saving money and the employees are extremely satisfied.HR.com: Where does Lumenos see itself next year and in five years?
DK:
We are definitely the pioneer in health care and we expect by next year to have half a million lives. In the next five years, we expect to continue growth at the levels we experienced in the first five years of the company.