It’s a cowboy movie staple: The two-gun kid eyes the villain and prepares to draw both six-shooters at the bad guy's first move. The results are always explosive—and heroic.

The stereotype is a little silly, but still applies to McQueary Henry Bowles Troy LLP (MHBT), a Dallas-based independent agency that has been outgunning the competition with a sophisticated approach to employee benefits management to match the firepower of its property/casualty insurance expertise.

Established in 1996 through a series of mergers, MHBT has branch offices in Austin and Fort Worth.  The agency originally operated as a property/casualty risk management specialist; but from the start, the agency leadership had its eyes on the burgeoning employee benefits market.

The new agency quickly began to acquire employee benefits expertise in its client services operations and started to retool its producer force, requiring that producers be licensed in both property/casualty insurance and employee benefits, explains Chief Operating Officer Carla Sans.

“It was clear that we had to be a diversified agency that could respond to the needs of our clients in whatever area was important to them,” she says. “By developing our employee benefits expertise, we were able to take a more holistic approach to their strategic plans and costs.”

The decision also supported MHBT’s property/casualty insurance operations, adds Dan Browning, senior executive vice president of property/casualty operations.

“By increasing the diversity of our expertise, we were able to approach our client engagements at a needs assessment level, without excluding any questions about employee benefits or human resource areas,” he explains.

Many agencies encourage cross-selling, Browning remarks, but the expansion of services at MHBT made cross-selling a natural component of each producer’s client engagement by creating a comprehensive platform to discuss the wide range of employer costs.

MHBT’s growth was rapid in both property/casualty and employee benefits, but the benefits segment exploded into revenue immediately, increasing to nearly 37% of total revenue this year. The employee benefits division is likely to top 40% by next year and could eventually be half of the firm’s total revenue, executives say.

Today the agency has about 200 employees in its Dallas, Fort Worth and Austin offices, with about 70 employees engaged exclusively in employee benefit operations. However, Sans notes, many employees work across product lines in account management, complementing the cross-trained producer force.

MHBT continues to build its expertise and its menu of value-added services as the employee benefits area—and its natural companion, human resources—evolves. The single biggest driver of that evolution is health care reform.

Keith Carmichael, president of the agency’s Austin region, joined the firm in 2005, opening the Austin office and bringing additional employee benefits expertise in large accounts. Before joining MHBT, Carmichael held senior positions at two of Austin’s largest employee benefits specialty firms.

Carmichael supports the agency’s approach to cross-selling and notes that the demand for technical expertise is accelerating, fueled by health care reform. “It is important to have producers who can communicate across product lines and who know when to bring in a technical expert,” he says. “Virtually everything we do is influenced by what is going on in Washington with health reform.

“There’s no way to know exactly how our business will be changed by health reform, despite the details in the legislation,” Carmichael continues, “but we have to be prepared to inform our clients and direct them in complying with the new requirements.”

In April 2010, MHBT added another experienced benefits executive, Brad Van Winkle, a former executive at United Healthcare and Aetna Health Plan in Austin. Van Winkle serves as senior vice president in the Austin office.

He agrees that legislative and regulatory compliance are the waves of the future in employee benefits and says that agencies and their clients need to be armed with the latest tools and information. “The regulations are right now being conceived by three agencies: the U.S. Department of Health and Human Services, the U.S. Department of Labor, and the Internal Revenue Service. Each of these agencies will present compliance challenges to our clients, and our clients are very conscious of how their business is going to change.”

MHBT specializes in financial management of large group employee benefits programs through iCAF, a proprietary software-driven process that examines group health plan utilization. The process can become the cornerstone of self-funded plan designs, wellness and health risk assessments, and other strategic interventions.

The acronym describes a disciplined analysis supported by proprietary software that guides the client and agency through four steps:

—Information gathering

—Cause and effect (identifying and determining)

—Assessment of change (projecting)

—Financial decision (recommending)

In 2009, the agency conducted an economic analysis of the impact of the iCAF approach and the results were encouraging, according to Carmichael. About 61% of the clients for which iCAF was used had a health care claims trend increase of less than 5%—less than half of the claims trend used by the local health plans in calculating standard rates for renewal.

The analysis also identified the positive impact of cost shifting, including incentives for participation in health savings accounts (HSAs), annual health screenings, and more efficient prescription drug usage.

While producers lead the conversation with clients and guide them through the development of strategy, the hard work continues with ongoing account management, says Stan Weron, vice president of client services.

“Our producers have a lot of responsibility for working with clients to identify their goals and help develop their strategy, cross-selling and rounding out the client relationship with property/casualty insurance and employee benefits,” he says. “And they continue to stay engaged with our clients on a regular basis.

“But on a day-to-day basis, the account management team has the responsibility for implementing the client programs and responding to their needs,” Weron continues. “The account manager is the key contact for most client administrative needs.”

An MHBT employee benefits client has at least three in-house contacts, including the account manager, account analyst and a benefits administrator, but depending on the level of service needs could have as many as seven support staffers, Weron says.

The agency operates two call centers for clients and supports wellness services available from an outside vendor.

Wellness strategies have become a staple of many MHBT clients, and the agency has partnered with Nuvita LLC, a wellness service provider in Albuquerque, New Mexico. The vendor provides programs ranging from regular newsletters and on-site seminars to formal health risk appraisals and personal wellness coaches.

The programs are developed by teams of preventive medicine physicians, exercise physiologists, and dietitians and can cost as much $500 per year per employee.

However, MHBT executives say the investment in wellness is worth the price, and the iCAF analysis supports the healthy return on investment, Carmichael notes.

The agency also provides ancillary benefits, including life insurance, dental insurance, disability insurance and voluntary benefits, but does not offer group retirement plan services. In addition, the agency provides human resource management services to support its clients’ HR functions.

“It is amazing that companies with more than 700 employees can have only a single human resource manager overseeing employee administration. It is part of our responsibility to help these clients as much as we can with additional support services,” Sans says.

Browning agrees. “We serve in a more consultative role than ever before, and the changing legal environment in employee benefits demands that we provide education and expertise to our clients, particularly in the human resources area where the need is so great.”

MHBT’s value-added services and consulting functions include:

Intellectual capital—A rapidly changing, highly inflationary marketplace and “a complex legislative environment” represent a major challenge to employers, requiring that each MHBT employee benefits specialist be knowledgeable about market solutions as well as compliance issues on state and federal employer mandates.

Health claim data analysis—Through a proprietary software system, Decision Master™ Warehouse from Zywave, MHBT analyzes claim datas independently of insurance companies. With this data, the agency is able to measure claims impact and recommend ways to reduce health claims and costs. For self-insured clients, the software can assist in evaluating the performance of third-party administrators.

Claims evaluation—In addition to Decision Master Warehouse, the staff at MHBT provides consultative expertise to offer an independent evaluation of claims data and make recommendations for benefit plan modifications and claims control strategies.

Vendor analysis—The employee benefits department performs both quarterly and annual evaluations of clients’ vendors to ensure that they are providing the level of service the clients need. If a vendor is performing at a substandard level, MHBT will search, evaluate and make a recommendation for a replacement vendor.

Information technology has become an important value-added service, agency executives say. The agency assists clients by evaluating and recommending technology support and Web-based self-service products for employees.

“Sometimes the service is as simple as redoing a client’s Web site to support employee benefits communication and self-service, but we can also help them develop a technology strategy that fits into their employee benefits and human resources strategy, wellness education and enrollment,” Sans says.