CFO Greg Hartjes and the AASD team’s ongoing efforts to provide affordable health care
From 2016-2020, employee out-of-pocket costs went up 53%; salary increases went up 5%.
~Greg Hartjes
Chief Financial Officers should include numbers in most of their sentences.
Appleton Area School District’s Greg Hartjes did not disappoint.
“We insure over 1,800 employees, and when we add in their families, that’s 5,200 covered lives,” Hartjes said. “And like any other entity, whether you’re for profit or not-for-profit, we’re struggling to afford health insurance. We just simply are.”
Hartjes is laser focused on the cost of health care to his district, the second biggest budget outlay after salaries.
Up until this year, Appleton had a very broad network plan, something Hartjes described as generous. But with a revenue limit dictated by the state and a zero increase for two straight years, he also termed it unsustainable.
From 2016 to 2020, AASD’s health insurance increased by 8%.
“To put that in dollar amounts,” said Hartjes, “in 2016, we spent $20 million on health care costs. Four years later, we spent 29 million. And it’s because we got 8% increases. Had we gotten 4% increases over those four years, we’d have spent $4 million less last year.”
Directing that money to something other than health care has become an overriding goal for Hartjes, who was quick to point out what the district could have done with $4 million in health care savings.
“We could have put an extra social worker and guidance counselor in every one of our 27 schools for $4 million,” said Hartjes. “Or we could have provided a laptop device for every student in grades four through 12.”
This year AASD health care costs are going to go up close to $2 million, and because of the zero-revenue increase that $2 million has to come from somewhere. The CFO who has made it a district priority to manage these costs doesn’t sugar coat the answer.
“That’s going to come from pretty much every program in our district,” said Hartjes. “When revenue doesn’t increase and the cost of health care and operations does, those dollars are coming from the education of our students.”
It affects the staff significantly as well. In that same four-year period, employee out-of-pocket costs went up 53%; salary increases went up 5%.
In the summer of 2019, Hartjes said, the district was reading the tea leaves and started to work with other local districts to try to ameliorate the problems they were all facing.
Then the pandemic hit, just in time to make a challenging time even more so. But it was during those initial meetings that idea of consumerism in health care really took hold.
“We were doing a lot of education to staff then,” said Hartjes, “letting them know we are always trying to find the best health care at the best price, but that it might look different, perhaps be a little less convenient, maybe not include as many choices. We asked them to be better consumers of health care, to do their homework, and consider all the options.”
Hartjes noted that same mindset applies equally to administration, so AASD looked at and eventually added options that included telemedicine, a near-site clinic, and employee health risk assessments to hold the line on cost increases, knowing that any dollar saved was a dollar that could go back into the education of kids.
In 2021, AASD found an insurance carrier that offered employees and their families two plan options, via WEA Trust and Health Traditions Health Plan. Hartjes considers finding the right insurance carrier a vital component in addressing the health care cost challenges faced by the district, as important as creating and maintaining an enlightened consumer base.
Both of these, said Hartjes, make perfect sense. A third component, and just as critical, still gives him pause to scratch his head: finding community partners in health care.
While longstanding partnerships with local organizations, vendors and contractors have been the norm for many district initiatives, similar relationships with health care providers had not been developed. Many districts will admit those conversations haven’t even started.
“All of our partners – transportation, food service, YMCA, Boys & Girls Club, etc. – understand our mission and know if they manage their budgets and work efficiently with us, every dollar they save us goes right back into educating kids,” said Hartjes. “Yet, we spent $29 million in 2020 without having any partnerships in health care.”
And partner has a very specific meaning to Hartjes, whose expectation is they are willing to share strategies in terms of what they and the district together can do differently to achieve desired results.
One health care example Hartjes cited is the importance of independent primary care providers and the part they play in delivering the best care at the best price.
“We’ve found some primary care providers that we’re really excited to be working with, who believe in saving us money so we can put more into the education of our students,” said Hartjes.
Data from the first three quarters of 2021 seems positive. Hartjes used the pandemic to become proficient at Loom, a video messaging tool that makes it easy for him to share data with staff. During the recent open enrollment, the CFO presented a Loom with seven scenarios of care for a family – what is offered and how much care costs in each – in his efforts to keep the staff educated and sustain the momentum.
Hartjes also envisions AASD moving from a fully insured model to self-funding its health care.
“We definitely want that to be an end goal, simply because 12% of our costs are still tied up in the health insurance carrier, and so it’s a savings if we can cut that out. But the challenge is that our data for the last half dozen years shows our claims higher than our premiums, and we need to flip that,” said Hartjes.
He continues discussions with colleagues from both fully insured and self-funded districts, studying the different scenarios and – of course – the numbers.
“I’m a data guy,” said Hartjes, “thirty years in the district and a math teacher for 12. We’ll keep looking at all the data, doing our homework, to find the best care at the best cost, so the money we save can be put in other places in our district.”
Our health care costs are going to go up close to $2 MILLION this year and revenue didn’t increase. So that’s going to come from pretty much every program in our district.
~Greg Hartjes
