What to do with a union-recommended HMO
Our employees’ union strongly recommends a specific Health Maintenance Organization (HMO). The union cites its stellar reputation, extensive hospital network, and quick claims processing. While open bidding remains an option, we are worried that the union may not accept the result. What can we do? — White Lotus.
Stop worrying. Give the union the chance to justify its recommendation within the framework of an open bidding process. Respect its recommendation without airing any suspicions that it may have been “captured” by the HMO.
But first things first. Review the specific provisions of your Collective Bargaining Agreement (CBA) and be guided by them. Does the CBA specify employee coverage to be any amount or percentage? Whatever the case, I’m sure it will contains certain budgetary limitations.
The union plays an important role in advocating for employee needs, but you must also be aware that, at times, they exceed their boundaries while defeating the letter and spirit of the CBA, wreaking havoc on the company’s financial strategy.
It could be that the HMO the union is pushing for does, in fact, have an excellent reputation, extensive hospital network, and a reputation for quick claims processing. This is true for other HMOs. To find the truth, your organization must answer the following questions:
Should it give in to union pressure? How do you ensure fairness while safeguarding the company’s bottom line?
TRANSPARENCY
The solution lies in building a transparent and competitive bidding process. It’s the best you can do under the circumstances. It eliminates the suspicion of favoritism or backroom deals, not only with the union but also with management. An open bidding is the objective, and all HMOs must be evaluated by the same criteria.
One, publication of objective criteria. The bidding standards must include cost, hospital network, customer service, and average turnaround for claims, as attested by reputable hospitals. The requirements may be drawn up by a joint committee composed of union and management representatives.
Two, competitive pricing. This can be achieved by detailed terms of reference. When HMOs know they are competing openly, they’re more inclined to put in their best bid by offering not just lower premiums, but also improved coverage or providing additional perks.
Three, public announcement of bidding invitation. The platforms for making such an announcement could include the company’s website, industry bulletin boards, employee word-of-mouth, social media, and traditional media, assuming there is a budget for it. The notice must include the project name, deadline for submission, budget range, and other qualifications that bidders must meet.
Four, ensure participation of qualified providers. In addition to making a public announcement, invite all reputable HMO providers in your region. A broad invitation ensures you have a healthy range of offers to compare. When everyone sees the process firsthand, it fosters trust and makes them part of the solution.
Five, strengthen your negotiating position. If the union’s preferred HMO turns out to be more expensive, you now have objective evidence to select another winner. More importantly, do not give the union-backed HMO the option to match competitors’ rates. This defeats the purpose of having an open bidding.
Six, value-for-money coverage. Ensure that the evaluation criteria assign appropriate weight to wide coverage and service quality, and not just price. Sometimes the cheapest HMO might fall short on key hospital tie-ups, while the most expensive one offers features that employees don’t need.
Seven, document and communicate the results. Once a winner is selected, prepare a summary report of all bids, showing why the chosen provider offers the best balance of coverage and cost. Share this with both management and the union to ensure full transparency.
HYBRID SOLUTIONS
Even after an open bidding, there’s a possibility that the union and some employees may still prefer a more expensive HMO. If that happens, consider certain hybrid solutions like the following:
One, a two-tier HMO plan. This means awarding the bid to the winning HMO for all covered employees with the company covering the winning HMO’s premium. At the same time, allow certain employees who prefer the union’s HMO to pay the premium difference via salary deduction.
Two, voluntary top-up plans. Employees contribute a portion to get the additional benefits they want, without burdening the company with the full cost. This way, employees have a choice without the company overspending.
Communication is key. Aim for turning perceptions around from rejecting the union’s choice to a collaborative process to find a best-for-all solution.
Employees want to feel cared for. When you conduct a transparent, competitive process, you’re not just saving the company money — you’re building trust. By involving the union, documenting every step, and offering flexible options, you turn what could be a contentious process into a win-win scenario.
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