A work of the heart: A Q&A with Luke Davis

Paul Wilson: How did you get your start in the benefits industry?

I graduated from college with two degrees, but the job offers I received didn’t really appeal to me. About two weeks after graduation, I called my dad and opened up about my situation. He owned an agency, so I asked him about what he does every day. He wasn’t hiring at the time, but he made an exception and brought me on board. So I got into the industry by taking on something I didn’t really know anything about.

PW: What was your initial role and how has that evolved over time?

At first, my role was to pound the phones: cold-calling and just learning. During the first year in our business, your primary job function is just to learn, because there’s so much to what we do.

As time went on, my dad and I would do appointments together. He would run them and I would listen to the questions he was asking and watch what he was doing. As our business has grown, we have continued to bring more people on board. My dad is the mayor of our town, so he’s gone a lot. He brought another employee, Jeanette, on board after I had been there for a year. We started working together and she would let me get my feet wet during meetings and then jump in to help if needed. Over time, they let the leash out.

Eventually, I began to think that there had to be more outside of our current way of doing things, so I started doing my own reading and research. We connected with the Q4i network and met brokers who are doing things to truly change the tide of health care. That’s what started us on the path we’re on now.

Initially, it was about which plans best fit the needs of the employees and are affordable for your clients’ businesses. Now it has become about using benefits to build on the success of a business and reach overarching financial goals. That’s one of the biggest shifts in our conversations with prospects and clients: looking at the bigger picture.

PW: What are the benefits and challenges of working in a family-owned business?

My dad started this business when I was six years old. I remember coming home from school and seeing him working in his little makeshift office in an upstairs bedroom. At that point, my dad wasn’t making any income and my mom was a teacher, so we were living on her salary.

When I was young, we had what my dad would call “packet nights” where we would work as a family to put together benefits packets for the employees he’d be meeting with the next day. It was one of the worst nights of the week for me, especially when we had to make 300 or 400 of them! But that’s a core memory for me.

One of the positives is that I’ve been able to watch the business grow and then eventually become a part of it. It’s also fun to work with my dad and see how that relationship has evolved.

Family is always first. Even when we’ve had disagreements about work, that has never affected our relationship. We just air things out and then move on.

I think the hardest thing for me is independence. I did not want to come home from college and work in my hometown. I work out of Waco, but we’re headquartered here and I’m in a few times a week. My dad was a councilman when I came on and now works as mayor, so he’s very well-known in town. Long-standing clients have known him forever and they’ve heard about me since I was a kid. So it has sometimes been a challenge to be Luke Davis instead of “Tim’s kid.”

During business hours, I call my dad “Tim.” Every now and then, “Dad” will slip out! It’s always funny when I accidentally call him Tim at family events; that sometimes gets weird looks from relatives.

PW: Can you talk about your day-to-day and the makeup of your team?

When I came on board, I was the fourth employee. Since then, our book of business has grown; so including Tim and Jeanette, we have three producers on board, as well as five service members on our team. Since I started six years ago, the number of people has doubled, which is pretty cool. And we’re currently on the precipice of adding a ninth person. It’s a blessing, because if you need more people, that means you’re growing.

PW: What are the challenges for the agency?

One of the biggest challenges for a smaller agency is employers underestimate you. There’s still this idea in the employer community that the bigger the brokerage firm I’m working with, the better service I’ll get and the more resources they’ll have. And frankly, that’s just not true. I just took a mid-sized group from one of the big national firms, and they told us they learned more in three calls with us than they had in 15 years with their previous broker.

The other thing that can be hard is that there are a lot of people in HR and the C-suite who believe all brokers are the same, because their experience has only been with larger brokerages. But there’s a significant difference between a broker and an advisor and you’ll know it when you see it.

PW: What are some innovative strategies or ideas that you are using right now with clients?

We’re starting to look more into self-funding. In our area, it’s fairly uncommon to run into an employer that is self-funded. There’s a lack of education and I’m sure that’s true elsewhere. But when it comes to bringing better care solutions, the number one option in our area is the big community hospital. They do a lot of great things, but they don’t do direct primary care, which would be a great option for people. Rather than a fee-for-service model where you have a 15-minute appointment, they’d benefit from 45-minute conversations where your doctor could truly become an asset.

We don’t have those options right now in our area, but they’re both ideas we want to learn more about. When it comes to self-funding, I think the most appealing part is the data to help determine whether a certain plan is a good fit for a prospect or client. If we can estimate where you’ll be financially depending on how you fund your plan, that has a significant impact when you’re spending hundreds of thousands of dollars a year. One of the things I think the ACA did that was detrimental is limit how employers view their health care to 12-month blocks of isolation. “This is how our plan did this year, so let’s choose this other plan and hope we’re better next year.” It becomes a yearly cycle. But if we’re able to forecast 3-5 years out, we can build a picture and then adjust strategies around that. It has a significant impact on the bottom line.

We’re just getting started, but we’re very excited to continue building momentum.

PW: How are conversations about change and innovation going?

It’s been a mixed bag. Some people don’t even want to think about it. But we tell them, “You may have been self-funded 20 or 30 years ago, but the data that’s available and the way these plans are built has completely changed. I understand this is a very different way of doing things and there’s a mindshift that’s required. That’s something we can walk you through; we don’t expect you to do a 180 overnight. I think about it like getting into a swimming pool. I’m not one of those people who just dives in; I start at the shallow end and work my way in slowly so I can get used to the water. It’s the same thing here: We’ll get your feet wet, then move to your knees and your waist until you’re ready to fully dive in.”

I think planning for a possible recession, along with inflation rates over the last few years, has impacted employers’ thoughts on benefits. People are getting paid about the same, but it’s not going nearly as far. At some point, something has to give. So it’s all about looking at different options where you don’t have to sacrifice quality in order to cut costs. People are slowly coming around to some of these ideas. Technology has evolved, as has the way we use data. We can pinpoint things better than before and more accurately predict and estimate high claims and drug costs. We can make better and more educated decisions.

PW: I see you at a lot of conferences—what’s the benefit as a small shop with limited resources?

You don’t know what you don’t know. When you can find a group like Q4i with people who have the same ideals, it’s special. You can work in this industry for a long time and make a lot of money by simply perpetuating the current system. But when what you’re doing becomes a work of the heart and you meet other people who feel the same way, you want to know what they’re doing.

PW: How do you filter out all the noise and find the right partners and solutions?

It’s about keeping your nose down but your ears open. You can’t chase every single shiny object, but if you hear about something that is truly different, it’s worth looking into it. If you hear from someone who has had success with a partner or carrier and what they are doing aligns with your organization, then it’s worth exploring.

PW: How do you stay motivated and not get discouraged or intimidated while trying to help change the industry?

I think that’s something that everyone who’s in this industry for the right reasons wrestles with. We see the fraud, abuse and neglect that takes place in the industry every day. When I see a group get a 12% renewal increase and they have a 20% MLR, that’s really disheartening.

Health care is experienced locally, which downgrades the scale; I don’t have to fix it nationally or even in Texas. What I can do is work to fix it in the communities I touch. Every employer, no matter the size, is its own community. If we help employees save money, that essentially gives them a raise and breaks down some of the financial barriers to accessing care. That has a significant impact on their lives, but on the lives of their families, as well. It can stretch for generations.

What keeps me going is my faith—I lean on it for everything I do, from being a husband to a father to an advisor. When I took this role, it was because I thought I could be successful; there wasn’t necessarily any deeper “why.” But now, I feel like I’ve been called to this. So many people are broken by this system financially, mentally, spiritually and emotionally. I don’t expect employees to understand every nuance of their benefits or exactly how everything works; it’s my job to guide them. That’s the impetus for everything we do: to become better stewards of health care.

PW: Do you have any recent success stories?

I just brought on a group with 80 lives and I kept prodding and asking questions about how things were arranged in the company and how it was impacting their benefits. The executive VP said, “The other day, I said, ‘Every time I talk to Luke, I feel like I know less about the business I’m running.’”

I’ve never had anyone say something like that before and it was encouraging, because it means I’m asking the right questions.

I also had a group of over 100 lives this year where the employee contribution to the premium stayed the same, but they went from a $7,000 deductible to a $0 deductible. That’s a significant change for those employees and makes a big difference in the type of care that they’re able to access. They don’t have to put off that MRI that will cost them $2,100 because they can get it done for free.

PW: What would you say to someone considering joining the industry?

On the surface, insurance isn’t interesting. It gets a bad rap and it’s one of those things that nobody really wants to tackle; but every employer and employee you work with is directly impacted by the work you do. That gives you a responsibility that goes beyond clocking in and out. It’s something to take seriously, but it’s also something you can be very proud of. That’s worth the time, effort, licensing, and continuing education. It’s worth all of that.

Related: Benefits services are evolving: Ideas to ponder this ­summer

PW: What’s one thing you wish you’d known when you started your career?

One thing that I was flabbergasted by is how much the pricing trends in our industry don’t make sense. There’s no reason for a colonoscopy at the same hospital to have a 300% variance in cost, depending on which carrier you use. That’s ridiculous.

Also the level of fraud, abuse and neglect involved in a multi-trillion dollar industry. Our health care spend is greater than many countries’ GDP; that’s just ridiculous. And it’s completely avoidable.

PW: Finish this sentence: The key to success in this industry going forward is…

refusing to settle for the status quo.