How Healthcare Benefits Are Broken - and What Comes Next | Brandy Thompson, CEO of BenefitBay

Speaker A: Foreign. The sponsor of Liftoff with Keith is the one and Only Compass Strategic Advisors.com an experienced partner to help you navigate everything from cap tables to stock option and compensation plans, and all types of backroom and marketing services. There is no better friend to the startup CEO than Compass. Check them out at Compass Strategic Advisors. Today's guest is Brandy Thompson, founder and CEO of Benefit Bay, a company helping employers rethink healthcare benefits through the growing Ichra movement. Brandy has spent more than two decades in employee benefits and healthcare strategy and has built Benefit Bay international platform serving more than 40,000 employees while achieving exceptional customer sat. What's particularly remarkable is that she's done it from Kansas City, not Silicon Valley, while raising a family of six and competing heavily against funded players in the healthcare tech market. In this episode we'll explore what it takes to build a capital efficient company, the realities of fundraising as a female founder, advantages of building outside traditional tech hubs, and why Brandy believes giving employees more health care choice could fundamentally transform the industry. Brandy.

Speaker B: Yeah, Thompson.

Speaker A: Um, yes, here you are, Kansas City in the background.

Speaker B: Yes. Uh, it's a dark cloudy day in Kansas City, but yeah, that's the background.

Speaker A: Well, listen, we, we can pretend it's sunny and nice out there.

Speaker B: Yeah.

Speaker A: Thanks for joining the Liftoff.

Speaker B: Well, thanks for having me, Keith.

Speaker A: You know, I just interviewed a CTO and a CEO of a crazy startup and uh, you know, it's not often I get to talk with people about HR and employee benefits, but I felt like it's the time, you know, it's like let's continue to expand our conversation and provide insights so founders and startups can really understand what's at play here. Um, just for you personally, what's going on in the healthcare system? What is the approach that you've identified as the opportunity?

Speaker B: Yeah, the approach that we're really focused on in our mission is around starting to deliver consumer choice or competitive advantage. Right. Requiring the payers to actually compete for the individual's benefit dollars. That's where we think we can really make an impact and make a difference and how we do that is through Ichra. So the individual coverage health reimbursement arrangement allows employers to decouple that choice. They're not making the choice. The employees can make the choice for themselves and allows them to move to defined contribution. We think it's the first step in making a differ in healthcare and trying to move the needle to the impact where we want to. Where we want to be, which is the individuals get to demand something changes here.

Speaker A: Yeah, and look, when we talked a little bit, I mean, we understand that you're operating in Kansas City, you're not in Silicon Valley. How do you use that as a, as an advantage?

Speaker B: I think it's a strategic advantage because one, the ability to find a builder in this market there, there are fewer startups competing for those builders. Right. So in this market in the Midwest, there are a lot of people who are really intelligent and who are ready to make a difference and have an impact. They don't have as many startups to go and work at. Right. So the competition for us to, to find that building talent is, is less. But I also say, um, that Midwest feel of supporting each other, this community, whether it's been three references to another party, whether it is, how can we help, how can we make an introduction, this community has absolutely stood behind the startups in the ecosystem and Benefit Bay is one of those that has benefited from that. But we have an entire, you know, foundation that's been built to support startups in connecting that coastal capital to the Kansas City companies. So that's been a difference maker. I also think, you know, the cost of building here is less expensive. So that's a, uh, for the investor, that's an immediate return that you can build here on less capital invested and

Speaker A: we can build a.

Speaker B: Sooner. Yeah, yeah, yeah.

Speaker A: You know, health care is often criticized for lacking transparency and consumer choice. Um, why do you believe employees should have control over selecting their own health care coverage?

Speaker B: Yeah, I think it's twofold. I think the employers one have too much transparency about the individual employees health outcomes and health data. So that is a, that's an area that just drives a lot of passion in me that our uh, executives inside a company should not know what's going on in healthcare outcomes for their teammates. Right. Or for their direct reports or for their executives. I also think consumers making the decision the one size that the employer has to fit, has to find is driving up the cost because they have to buy a network large enough to cover all of their employees across the nation. And so some of those higher cost markets are driving up the cost for the lower cost markets. In addition to what's right for me at 50 is different than what's right for somebody at 26 and then somebody at 32 and somebody that's having children. Right. So being able to decide what's right for you in the stage of life you are and purchasing the coverage that you need for the outcome that you're in or for your ability to afford that outcome. Right so yeah, uh, just really delivering the right outcome for the individual at the right time. Right plan, right time, you know.

Speaker A: Right.

Speaker B: Right choice.

Speaker A: Capital efficiency.

Speaker B: We can't do that at the employer side. I am an employer. Right. It's capital efficiency because we're buying up, we're inflating health care on purpose in our current model.

Speaker A: Right.

Speaker B: Because we have to do it this way. And then if you're in a Kaiser area, you can't access Kaiser because you've now, your, your company's now purchased uh, a different product, you know, to cover a different market.

Speaker A: Right. Or you had a company under one coverage, then they get acquired and now it's another coverage and you have the other one and.

Speaker B: Yeah. Or, or you underwrite a deal and, and now suddenly you have a uh, a poor outcome for your employees because you've purchased these employees into your self insurance product. Right. So there are so many areas that this, this really moves the needle forward to where we need to go to capital efficiency but also just to drive change from all sides of health care. Right.

Speaker A: Brandy, you talked to a lot of founders, right? Startups, early stage companies, 10 employees growing. Maybe they've got a nice investment, maybe they're still bootstrapping to a certain degree I would imagine. Or have a small check, friends and families kind of investment. What do those guys need to know that, that early stage company, what are some of the misconceptions or the mistakes that you kind of see them um, stepping into, um, as they're building their business and don't really apply the right process to, to figuring this out.

Speaker B: Yeah, I think um, a lot of startups are pushed into the PO model or they think that's the quickest. You know, I'll just get a backend HR and I'll, I'll get my benefits and I'll be doing my payroll. It's quickly becomes a really expensive way to operate in the PEO model. Like how um, as in you're also sharing risk with other parties and you're jumping into a shared risk pool but you are also limited to the products that, that PEO has. And so you're going to limit choice for your employees. You're also going to drive up per headcount. Right. So, so that balloons on you. It's really cost effective. Sub 10 now you're at 50. It's not as cost effective. You have to unwind everything you built for, for scale. That becomes your HRS system, that becomes everything that your employees are doing. So now to build those, those items and to unwind what you did, you now have to build it to bring it internal. Right. So sometimes that easy button when you're starting becomes much more difficult to unwind. So I'd say that's something to consider. And I really think if you, if you're planning for growth in rapid growth, because you are a startup and you believe in your idea and you've gone and raised some capital, you should build for that scale so you can take it a harder route now so that it's, it equals ah, a better outcome later. I also think when it comes to Ichra, they are often just going with the direct to consumer tool that can only fit them in the micro stage that doesn't have compliance later. So then that's something to unwind. They're often putting people on exchange and on exchange policies so that's inadvertently driving up the cost in some of the markets. So they're making some of those mistakes, uh, just out of trying to build fast and doing the quickest tool.

Speaker A: So is this something between trying to use a simple software tool that automates more and does more with AI perhaps versus the human touch kind of higher level of concierge service that we see actually reflected in the healthcare system now into the services side of the business?

Speaker B: Yeah, I think you need both. So Binfo Bay really believes, and it's the intersection of the two, you have to have the technology, but you also have to have the humans. Because there are all different types of people inside our workforce. Right. And some are tech efficient, some are not. But also some are more risk bearing and some are lower risk tolerance. So they want to talk to somebody to confirm they understood what they saw and what they selected to feel comfortable. We want our employees, who are our employees of a startup to feel really well stewarded and that they're in the game with us and that they're well taken care of because back to transparency. But if they've gone through this great technology flow, but they're feeling uncertain, right, because they're just not sure it's the first time they've gotten to do it. Let's just give them the option to talk to somebody, right? And we're seeing 25% of people want to talk to somebody that first time they get to make decision in healthcare themselves because they're just unsure on coinsurance or a tier of drug or, you know, this is complicated. Health insurance is complicated on purpose I think. So that mistake that they may make may charge, that may cost them a lot of money. Right. So that's A financial outcome for their family. So there again there's a little bit of nervousness about just relying on AI or just relying on the tech. Of course the technology can steward 75% of the people through the decision. 25% of the people, which is what we're seeing with real cases, are needing to talk to somebody. Then when they renew, only 8% of the people need to talk to somebody. And a lot of times those 8% are because their plan pulled maybe a hospital out of network or their um, plan changed their tiers on their drugs. And so they're maybe wanting to look at a different carrier and they're just wanting to confirm they're going to get what they used to have. But it definitely comes down they become better consumers of health care after a year or two.

Speaker A: Brandy, that's really interesting. So uh, not to go too deep into a rat hole there, but a quick follow up. So are you suggesting that you could possibly do both? You could work with an AI tool and AI platform that's the coolest software, but they should still have a representative on the services side helping them navigate that stuff for a select amount, um, of their employees that, that just have special requirements or just, you know, not as, as comfortable with the automated approach.

Speaker B: Absolutely. It has to be because we also play in the larger space and a lot of these employers are coming off of self insurance. Some of these employees may have cancer outcomes.

Speaker A: Right.

Speaker B: They're in the middle of services. So we can take that human steward for those complex cases and we can do it in advance of the program going live technology. Right. It just meet employees where they're at, help them feel supported. That uh, you absolutely have to do that. So yes, we have to be able to afford to run a business. So it can't be all people, it has to be tech. But there has to be an intersection of those two. And that's why we've been really conscious about how we've built. Once we saw that need 21 to 23, we thought it could be true SaaS and true tech and everybody could do this themselves. We quickly found there was a gap in the humans that can't do this themselves. And so we stood up the services based arm. So the combination at that vertical is really what's helped us move the needle to the larger enterprise groups. Ah, tech companies are going to be more tech savvy. Right. You've got to start up. Everyone's able to code, so obviously they're able to research and even maybe run a prompt to decide which Plan is best for them with their specific questions they care about. But that needle, and you've got a population that has 500 corporate and 3600 non corporate. Then you're navigating all different socioeconomic statuses, education levels, tax stability. Some people don't have a computer. They're doing this on their phone. You're selecting and, you know, comparing plans on a phone. Right.

Speaker A: So they're like my dad. They still don't have a mobile phone.

Speaker B: I mean, there's a medicare eligible population that are sitting inside these employer groups. Right. And they need to be stewarded.

Speaker A: They're still trying to adjust the ears on their television, get the signal.

Speaker B: Right. We have, I believe, 10 million boomers still working in the workforce that are at the Medicare eligible age, but are on our group insurance policies when we give them choice. They've been. They've been getting told they have this one plan. That's the only choice. Or there was one carrier which is the same network, but you have three options, three flavors of the same ice cream. So this is a big change. Right. Change management.

Speaker A: Hey, speaking of big change, Brandy, you are, I think I'm getting this correct. The CEO?

Speaker B: Yes.

Speaker A: You're also in Kansas City.

Speaker B: Yes.

Speaker A: And you're a mother of. Not three, not four, not five. Six kids.

Speaker B: Yeah, six. Six. Yeah.

Speaker A: Okay. That's. That's the basketball team plus one ready to come in and sub, which I like. Yeah, you always need that sub ready to come in. But how's that been different for you than, say, you know, the traditional journey of somebody. You're a CEO. I mean, you're running a big company there.

Speaker B: Yeah. I mean, I think 1. The journey has been different for me. As in, the pedigree of the resume has been different. And so when you have six kids. My. My six kids span 19 years. So I was in that having a baby raising toddlers stage a lot of times in my career. So I may have chosen the. The lesser travel role. I may have chosen the role that wasn't with the, you know, Fortune 500 publicly traded company. And so that's a different route. Right. Uh, in a lot of those scenarios, I was working for lifestyle companies or companies that were doing M and A to be able to exit eventually. Right. And so learning multiple skills. Learning multiple skills because I was in smaller companies, that allowed you to stretch and be curious and jump in and dive in. I think that prepared me. I think being a mom of six and having to juggle at all stages of my career made me a massive you know, I'm an organizational genius of getting my work done, but also running and showing up for my family or prioritizing the integration of life and work, and that allowed me to prepare to be a CEO. But I also think raising six different children with six different personalities. They're all girls, but they are all different. Different taught me a lot. EQ for, uh, you know, really leading team that comes from all different personality types or shows up to work differently. And I think the different industries prepared me for benefit. Bay. I've been in construction. I've been in specialty insurance. I've been in pork manufacturing. Right. Being able to see where these employers are really playing, how their structures are, knowing how their employees are going to show up to an enrollment experience or not. Right.

Speaker A: Yeah.

Speaker B: Plan here. Yeah.

Speaker A: Brandy, you've been. That's been super comprehensive. This has been a really great conversation. Share with me and my audience here some of that leadership lesson or two that you've learned that you can pass along that will really help, uh, this next generation of founders.

Speaker B: I think the number one is you can lead without a title or influence. So the position that I think really prepared me for this job was my job, Right. Prior to this, it was Limelight Health. I was taking a step back in my career to a senior HRPP title to be remote. I was being a business partner for the entire org to help them get the right outcomes. But I did not have any direct reports, and I had a title that was very ambiguous, uh, that no one really respected. Prior to that, I'd always been a VP of Finance or cfo. You have immediate respect because of the title, because you control some purse strings, because you have an immediate seat to the CEO. That senior HRBP I had to navigate building influence in cultural impact, but also business outcome without any direct authority. If you can master that skill, you can really master any conversation because you're trying to build that trust and influence with the value that you add at the table, and you quickly are invited to more tables. Right. And, uh, I think that was the most impactful experience in my career. I think early in our career, we're thinking about, uh, for me, I was an accountant. Gonna be a staff accountant, senior staff accountant. I'm gonna be a controller. Then I'm gonna be a, you know, VP of Finance, and I'm gonna be a cfo. That keeping that really narrow mentality keeps you away from other opportunities. Right. And just staying focused in the finance lane is not going to teach you how to run a business. Right. You need Those operational skill sets you need, the HR skill sets you need to be able to lead team. And all of those things have to come together. So that's my number one, my number two. And we have an intern class, and I was just sharing this yesterday. You never know when you're going to have to pull in a favor to survive in business, especially if you're trying to run your own business. So being able to show up for others when there's nothing in return early in your career is really important. Never burning a bridge is really important. Keeping those relationships and feeding them and fueling them is really important. Right. Somebody asks you to show up for their fundraiser and they've never asked you for anything, show up for the fundraiser. Then when you're in a different situation and you need to make that call, you're not just calling somebody for something. You've been delivering value before, you need to make that call and people will pick up the phone. Right. And I think that that's lost on the younger generation right now. Yeah, you have to be a little more selfless to be able to continue to evolve in, you know, technology is not going to get us everywhere. Relationships are really how business is built, and being able to master those relationships and actually deliver value is how you continue to move the needle, especially in a startup. Yeah, you're going to need to call in. We raised a lot of the friends and family money, Keith.

Speaker A: And so, uh, I, I do a lot of that advisory work too. And that's one I don't have in my playbook, but I'm stealing it.

Speaker B: Okay. All right.

Speaker A: No, it's great Council, Great Council. Thanks so much for sharing all of this great insight for me. If, if our listeners want to learn more about Benefit Bay, um, and possibly connect with you and, and, and your work, um, where can we find you?

Speaker B: Yeah, I mean, I'm on LinkedIn, Brandy Thompson or Benefitbay at sales. Benefitbay.com. ah, you can get to me at brandy.thompsonnefitbay.com and really learn more about us at our website.

Speaker A: Yeah.

Speaker B: Dot com a little bit more.

Speaker A: And do you do something for initial, uh, consultation? Do you have some kind of, uh, walkthrough, or do you do something like that?

Speaker B: Yeah, absolutely. So we can do a demo, we can do an initial quote. All of that is free. There's no, there's no cost to look at your employer benefits program. See if Joyce would really move the needle from a cost perspective and give better outcomes to your team.

Speaker A: Absolutely, Randy, really, thanks so much for your time. I feel guilty taking the time of a mother of six and a full time CEO job with, uh, you know, the number of employees and everything. Have a great day. Thanks for sharing with us.

Speaker B: Thank you.

Speaker A: My best to Kansas City and, uh, we'll see you on the road.

Speaker B: Okay.