After hearing appeals from two other insurance firms that pitched for the contract, Statesboro City Council on Tuesday rescinded its decision to make ShawHankins the city’s employee insurance broker.
However, the city will obtain the services on an independent evaluator to review the proposals made by ShawHankins, Capstone Benefits Consulting LLC and Glenn, Davis & Associates. Meanwhile, the city intends to continue until March 31 under the services of Glenn, Davis & Associates as its current broker, also keeping the same third-party administrator for the city’s partially self-insured health insurance coverage.
Mayor Jan Moore proposed a motion to “extend the current provider to March 31 and during that process council finds an independent party to review the three bids that were given and make a recommendation to council going forward as to who to go with April 1.”
She had asked Councilman Travis Chance and Councilman Jeff Yawn, who had been on opposing sides of the 3-2 vote to rescind the contract award, to serve as a committee having to agree on the choice of an independent evaluator. Chance then made the motion, seconded by Yawn, for the combination of independent advice and an extension.
That motion passed 5-0.
After the council’s 4-0 vote Sept. 19 to grant the contract to ShawHankins, both Ben Watkins, a principal staff member at Capstone Benefits Consulting, and Brian Glenn, president of Glenn, Davis & Associates, filed an appeal with City Manager Randy Wetmore. Under a provision of the city’s Code of Ordinances, a vendor can appeal the award of a contract within 10 days to the city manager. Wetmore denied the appeals, sending them back to City Council.
The contract decision never involved a simple bid for identical services. The city instead sent out a request for qualifications, asking firms for information about their credentials, various services they could provide and experience working with municipal governments.
ShawHankins had asked $5,376 a month to serve as the city’s health insurance broker and provide related services. Glenn, Davis & Associates, which has been broker for the city’s health coverage since 2008, asked for $1,024 a month. Capstone asked $6,000.
So, the fees to ShawHankins would have been $52,000 more a year than the lowest offer.
While none of the companies had been asked to estimate how much they could save the city on healthcare expenses, ShawHankins representatives said they could save the city $1 million a year on its $2.95 million budgeted medical claims for its around 260 covered employees and their families. The firm’s spokespersons suggested they would find larger discounts by working with a larger healthcare provider network instead of the Statesboro-based regional Industry Buying Group, or IBG.
Speaking to the council Tuesday, Glenn said the savings that Glenn, Davis & Associates has been able to obtain for the city through IBG were misrepresented by ShawHankins team members. They had said the local network offered only a 30 percent discount compared to discounts of 50 percent or better obtainable through major networks such as those of BlueCross.
But Glenn had quarterly reports showing discounts of over 49 percent the city received the past two years with his firm as broker. The discounts, he noted, are the difference between the original billed amounts for medical services and the actual expenditures, not the budgeted numbers.
“For the past 10 years we’ve gotten anywhere between a 48 and a 50 percent discount using the Industry Buying Group,” Glenn said.
Watkins, from Capstone, did not present numbers but instead noted that savings projections were not one of the eight criteria, stated in the information to the bidders, on which city staff was to base its choice of a broker.
“Nowhere in here will you find, ‘How much are you going to save us?’ It does ask what tools will you use to help us save money,” he said.
On that, Watkins said, his company spent a great deal of time in its presentation.
But ShawHankins President Scott Hankins said his company had taken the initiative to find the city’s budgeted costs on its website and base estimates on those for its previous presentation. After getting actual claims information last week, he remained “very comfortable with a number upwards of a million dollars” in savings, he said.
The city staff committee’s recommendation was based on the package of services ShawHankins offered, including things such as a paperless open enrollment and an online benefit resource center, Wetmore and Human Resources Director Jeffery Grant said at the Sept. 19 meeting.
‘Apples to apples’
Councilman Chance, who had expressed concerns about the recommendation at that meeting but then joined in the 4-0 vote, said he no longer felt he would have made the same decision.
“Is there an opportunity for us to go back to the drawing board and figure out what that fair process needs to be?” Chance asked.
Councilman Phil Boyum asked Chance to identify where he saw a flaw in the process.
“I think we didn’t get apples to apples,” Chance said. The savings projections based on budgeted numbers had been “pie in the sky” he said.
Chance made the motion to rescind the contract offer, Councilman Sam Lee Jones seconded, and Councilman John Riggs joined in voting for it. Yawn and Boyum voted against it.
Later, when Boyum insisted that Chance suggest a way forward, they got into a verbal exchange in which each accused the other of being “snarky.”
Meanwhile, staff members noted a year-end deadline on current coverage and a December enrollment period for employees.
“At the end of the day, we still need to health insurance by January 1,” Wetmore said.
The compromise vote came about a half hour later.
Herald reporter Al Hackle may be reached at (912) 489-9458.