In 2025, U.S. employers are facing the steepest healthcare cost increases in over a decade. According to the Business Group on Health, projected health care spending is expected to rise nearly 8%, driven by inflation, specialty drug costs, and the growing burden of chronic conditions like cancer and cardiovascular disease.1 Brown & Brown’s analysis echoes this trend, estimating a 6.7% average increase even after plan design adjustments.2 For many organizations, these escalating costs are not just a budgetary concern—they’re a strategic threat to competitiveness, employee retention, and long-term financial health.
Against this backdrop, ZMC Hotels offers a compelling example of how bold leadership and innovative thinking can turn a cost crisis into a value-creation opportunity. Faced with unsustainable annual premium hikes of 12–15%, ZMC Hotels partnered with Personify Health to implement a Reference-Based Pricing (RBP) model. The result? $4.5 million in cumulative savings over three years, a $22 million boost in enterprise value, and a 99% employee acceptance rate—all while improving plan affordability and transparency.
This case study explores how ZMC Hotels, under the leadership of CFO Todd Torvinen, navigated the complexities of healthcare reform and emerged stronger. It’s a story of strategic transformation that offers actionable insights for any employer looking to rein in costs without compromising care.
“Switching to Personify Health’s reference-based pricing was one of the best decisions we’ve made. It wasn’t without challenges, but the financial impact has been undeniable—saving us millions and adding real value to our enterprise. More importantly, we’ve gained transparency, control, and the ability to reinvest in our people. It’s a solution that not only works, but empowers us to think differently about healthcare.”
Overview:
ZMC Hotels, a hospitality and commercial property management company with approximately 1,800 employees, is deeply committed to value creation, continuous improvement, and enhancing the member experience while lowering overall costs. Faced with unsustainable healthcare expenses under their previous insurance provider—marked by annual premium increases of 12–15%—ZMC sought a more viable and strategic solution. CFO Todd Torvinen led the transition to Personify Health’s reference-based pricing (RBP) solution, which aligned with ZMC’s mission to drive efficiency and deliver better outcomes. The result: significant cost savings and improved financial health, reinforcing ZMC’s dedication to innovation and member-centric care.
Challenges:
- Escalating healthcare premiums under previous insurance provider, reaching unsustainable levels
- Lack of transparency and access to claims data from the previous provider
- Concerns about provider access, especially in rural and multi-state locations
Strategic Decisions:
- Transitioned to Personify Health’s Reference-Based Pricing (RBP) model in 2022
- Implemented a 25–35% premium reduction in the first year
- Maintained or minimally increased premiums in subsequent years (0% in year two, 2.5% in year three, 3.5% in year four)
- Enhanced plan design with lower deductibles and out-of-pocket costs to improve employee value
- Adopted RX Benefits to capture prescription rebates, increasing transparency and savings
Implementation and Change Management Highlights:
- CFO-led strategy: Todd Torvinen modeled savings, built financial buffers, and framed the shift to reference-based pricing as a critical business decision.
- Employee-focused plan redesign: Improved cost-sharing from 70/30 to 80/20, lowered deductibles and out-of-pocket costs to boost employee value.
- Proactive communication: Addressed internal skepticism through education and transparent messaging, especially with HR leadership.
- Managed provider access: Resolved rural access issues and joined the Prime Plus network
- Emphasized data ownership: Overcame resistance from previous providers to access claims data, enabling better modeling and transparency.
- Advocated for broader adoption: Todd offered to speak with other employers and share ZMC’s experience to encourage industry-wide change.
Key Outcomes:
- Eliminated a $450,000 fund deficit, achieving a $700,000 surplus
- Cumulative savings of $4.5 million, with potential to reach $6.5 million
- Added $22 million in enterprise value based on EBITDA improvements
- Improved employee cost-sharing and plan affordability
- Increased transparency and control over healthcare data and spending, “We’ve saved millions. It’s not just cost containment—it’s strategic value creation.” – Todd
Employee Experience:
- Some access issues in rural areas were addressed through network enhancements
- Employees benefited from lower premiums and better plan design
- Communication and education were key in change management and roll out
“We made it advantageous for people to understand that this is going to be money in your pocket too.”
“I’m always happy to advocate for Personify Health because I’ve seen firsthand the difference it can make. The more employers who learn about this model, the more they’ll realize how transformative it can be for their organization. If someone’s on the fence, I’m more than willing to share our experience and help them understand the value.”
Conclusion:
ZMC Hotels’ journey with Personify Health’s reference-based pricing model showcases how bold leadership and strategic innovation can drive meaningful change. By tackling rising healthcare costs head-on, the organization not only achieved $4.5 million in savings and added $22 million in enterprise value but also improved plan affordability and employee experience. Through proactive decision-making, transparent data practices, and thoughtful plan design, CFO Todd Torvinen helped ZMC Hotels turn a financial challenge into a long-term advantage—proving that healthcare can be both sustainable and empowering.
Sources:
1 Business Group on Health Survey Reveals Almost 8% in Projected Health Care Trend for 2025