When I wrote the title for this Blog, my first thought was that it might be too broad to grab anyone’s attention. As I thought more about it and reflected on the best cultures and practices I have seen at TPAs, the word “Communicate” is central to everything a TPA does or should do. Take the following 10 question quiz and at the end, count up the number of questions where, on behalf of your TPA, you were able to answer affirmatively.
Other than a system conversion, I can’t think of an effort within the TPA world which is as challenging as the implementation of a new client or implementation of changes for an existing client. There are a litany of causes for this, including:
Failure to set appropriate client expectations;
Poor communication between Plan Sponsor, broker and TPA;
Incomplete or delayed data and/or definition of client requirements;
It is likely easier to define unhealthy sales activity for a TPA than it is to define healthy sales activity. At the highest level, I like to use a “Sales Cost Ratio”, comparing total sales expense (salaries, incentives, sales support, travel and entertainment) with new revenue generated. If annual revenue from new sales does not exceed expenses by 250% and approaching 300%, there are likely unhealthy activities. That standard applies to the Departments...
One of the biggest challenges to operating a TPA with consistent, high-quality service and strong financial results is the constant “push and pull” which occurs for attention, resources and focus among members of the management team. While the TPA industry was built on an entrepreneurial spirit and creative, nimble solutions, the most successful organizations are those built around planning and a structure allowing for informed decisions.