Insuring a Family's Future: Elan Flowers

Summary

Podcast Summary: The Unshakeables – "Insuring a Family's Future: Elan Flowers"

Release Date: May 27, 2025
Hosts: Ben Walter (CEO of Chase for Business), Dan Mendelsohn (CEO of Morgan Health), Stacey Edgar (CEO & Co-founder of Ventur), Dr. Lori Santos (Psychology Professor & Host of the Happiness Lab)
Guest: Patrick Hall, Owner of Elan Flowers, New York

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Introduction

In this episode of The Unshakeables, Ben Walter delves into the challenging journey of Patrick Hall and his wife as they navigate personal and professional crises by acquiring and managing Elan Flowers, a luxury flower shop in downtown Manhattan. The discussion centers around the complexities of running a small business, particularly focusing on healthcare and insurance challenges.

Patrick Hall’s Journey: From Crisis to Business Ownership

[00:08] Ben Walter introduces Patrick Hall’s unique path to business ownership, highlighting his decision to purchase Elan Flowers out of necessity.

Patrick Hall shares, “It was out of desperation. We were basically facing medical bankruptcy. I started looking at florists for sale because it was the only thing that I thought I could do.” (00:15)

Patrick and his wife acquired Elan Flowers in 2015, a business with a 30-year legacy. Patrick attributes his decision to his father’s advice: “Buy an existing business that has a cash flow, and it'll pay for itself.” (00:39)

Having a passion for flowers, Patrick found comfort in the creative aspect of the business, though he struggled with the administrative burdens such as leases and regulations.

Navigating Business Challenges and Growth

Patrick recounts the initial challenges of running Elan Flowers, including securing a suitable lease and managing financial pressures.

[09:06] Patrick discusses securing an SBA loan and overcoming unexpected lease terms that required a 10-year commitment. He had to leverage personal savings and borrow from his mother's home equity line of credit to finalize the purchase, highlighting his all-in commitment: “I just had to put everything on the line.” (09:43)

Despite working full-time elsewhere, Patrick managed to grow the business steadily, necessitating a move to a larger space within two years. However, unforeseen legal challenges arose in 2018 concerning ADA compliance, which led to a distracting lawsuit settled for $17,000.

Impact of the COVID-19 Pandemic

The pandemic struck just as Patrick was establishing administrative systems like a 401(k) and health insurance for employees. Forced closures led to significant revenue drops and operational shifts:

Patrick Hall explains, “We were down 40% over the year before of my revenue from 2019 and 2020. It was just a fight to survive.” (18:31)

He emphasizes the resilience required to adapt by offering remote services and maintaining employee benefits despite financial strain.

Expert Insights on Risk and Resilience

Dr. Lori Santos provides psychological perspectives on Patrick’s risk-taking behavior, explaining how crisis situations can alter risk tolerance:

“We humans are built to be uncertainty averse... Interestingly, our brains get a little bit more risk-seeking when we're in a really desperate situation.” (12:14)

She highlights the importance of balancing security and innovation, and introduces coping mechanisms like distress tolerance to manage the inherent risks of running a business.

Healthcare Challenges for Small Businesses

Dan Mendelsohn addresses the difficulties small businesses face in providing affordable health insurance:

“Small businesses are passionate about their businesses and they don’t wake up in the morning thinking about healthcare... But it presents a really significant challenge.” (24:04)

Key challenges include higher costs for small businesses compared to larger ones and the variability in insurance offerings. Mendelsohn notes that premiums are expected to rise significantly, exacerbated by reduced federal support for programs like Medicare and Medicaid.

Innovations in Health Insurance: Ventur and ICHRAs

Stacey Edgar introduces Ventur’s approach to leveraging Individual Coverage Health Reimbursement Accounts (ICHRA) to provide customizable health insurance solutions for small businesses:

“Ventur is building personalized health insurance... Each employee gets to choose what’s best for themselves.” (27:31)

ICHRA allows businesses to offer fixed cash amounts for employees to purchase individual plans, enhancing flexibility and potentially reducing costs by up to 30%.

Patrick Hall adds, emphasizing the value of employee choice and aligning incentives: “Consumers like it because you get to decide what’s best for you.” (28:46)

Integrating Mental Health and Business Success

Both Dan Mendelsohn and Dr. Lori Santos discuss the critical role of mental health in business operations. Good healthcare supports not only physical well-being but also mental resilience, which is essential for business innovation and employee performance.

Dr. Lori Santos states, “These healthcare systems aren't just an insurance policy... It’s about ensuring your workers feel supported in both their physical and mental health.” (32:08)

Conclusion and Key Takeaways

Patrick Hall emphasizes the importance of pursuing passions and integrating personal fulfillment into business endeavors:

“If you can do anything else other than acting and make a living and be happy, do that. The only other thing that made me happy was flowers.” (33:59)

Ben Walter summarizes the episode’s takeaway: “Find something in your life that you love and make sure that you do that thing. We're all better off doing something we love and adding some joy to our lives.”

Final Thoughts

This episode of The Unshakeables illustrates the intertwined nature of personal resilience, business acumen, and the critical role of healthcare in sustaining a small business. Patrick Hall’s story serves as an inspiring example of overcoming adversity through strategic risk-taking and a commitment to employee well-being.

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For more inspiring stories and expert insights, tune in to upcoming episodes of The Unshakeables.

Transcript

[Ben Walter]

When Patrick hall needed a steady income and solid health insurance, he did what few think to. He bought a business.

[Patrick Hall]

It was out of desperation. We were basically facing medical bankruptcy. I started looking at florists for sale because it was the only thing that I thought I could do.

[Ben Walter]

He found the perfect fit, a company called Elon Flowers. That's E L A N. No relation to the famous tech mogul. When Patrick and his wife bought it in 2015, the shop had already been in business for 30 years.

[Patrick Hall]

My father had always said, buy an existing business that has a cash flow and it'll pay for itself.

[Ben Walter]

While it took some time to get the business up and running under Patrick, it wasn't the core business that worried him.

[Patrick Hall]

I just loved flowers. I wasn't afraid of it. I'd grown up working in gardens and with my grandmothers and great grandmother, and it was something that was easy and fun for me to do. The hardest part was dealing with leases and landlords. All of the regulations.

[Ben Walter]

The not flowers part.

[Patrick Hall]

The not flowers part. Yeah.

[Ben Walter]

And this episode is a deep dive into the proverbial not flowers part of running a small business, especially healthcare and insurance. It's one you might want to listen to with a notebook because we have some tips for you. Welcome to the Unshakables from Chase for Business and Ruby Studio from iHeartMedia. I'm Ben Walter, CEO of Chase for Business. On the Unshakeables, we're sharing the daring moments of small business owners facing their crisis points and telling the stories of how they got through it. We hear from many of our clients that the administrative side of running a small business is often the biggest challenge for them. Now that makes sense to me. You start a business because you have a great idea or of a product or a specific service, but then you actually have to run the administrative side of the business. When you start scaling and bringing in employees, there are certain expectations that will come from those who want to accept a job with you.

[Dan Mendelsohn]

We live in a world where small businesses need to provide health insurance to their workers to compete.

[Ben Walter]

That's Dan Mendelsohn, CEO of Morgan Health and one of our guests today. I wanted to use this episode to specifically talk about health insurance and small businesses. We called in the experts to give you some advice firsthand because the marketplace is confusing and there's a lot of conflicting advice about how small businesses should actually handle benefits. According to the Business Leaders Outlook Survey results from January of this year, 65% of small and medium businesses surveyed offer health insurance. But that's down from 71% last May. A concerning trend. We'll hear more from Dan later. But I'd also like to introduce you to Stacey Edgar, who's CEO and co founder of the health insurance startup and tour. So we're thrilled to add Stacey to the mix.

[Stacey Edgar]

Thanks for having me.

[Ben Walter]

And psychology professor and host of the Happiness Lab, Dr. Lori Santos is back to join us. Lori, so nice to see you again. Great to have you back.

[Dr. Lori Santos]

Thanks so much for having me back.

[Ben Walter]

We have a full house today and that doesn't even include our guest on today's episode. Elan Flowers from New York, New York. Tell everybody just to start. What is Elan Flowers? How did you come to be part of it?

[Patrick Hall]

Elan Flowers is a luxury flower shop in downtown Manhattan. It's been around since 1983. My wife and I purchased the business back in 2015 and we just celebrated 10 years on April 9th.

[Ben Walter]

So it's over 40 years old and you've owned it for 10?

[Patrick Hall]

That's correct. Basically. We've always tried to stay true to the Elan aesthetic. The elevated design, the consistency, the quality of our designs and our curated palettes. That's how we're trying to stay in the luxury space, is working with discerning clients that are flower connoisseurs.

[Ben Walter]

Were you looking to buy a business? How did this all start?

[Patrick Hall]

I'm actually a reluctant business owner.

[Ben Walter]

Okay. I don't hear that very often.

[Patrick Hall]

I came from a small town and I grew up working in my dad's small businesses. He had a hardware store and a construction company and ran the cattle farm that was my grandfather's and he did a sod farm, a portable building business, a laundroma at a gas station. Like.

[Ben Walter]

So this is really in your blood?

[Dan Mendelsohn]

A little bit.

[Patrick Hall]

Well, it was enough in my blood that I never wanted to do it. I moved to New York in 1989 to go to graduate acting school at NYU and fell in love with New York. Met my wife while I was in grad school, got married right after. Raised two kids here in the city and have been living here since 1989 longer than I lived in my small town.

[Ben Walter]

And were you acting?

[Patrick Hall]

Oh yeah, I was acting for the first few years and that's actually how I got into flowers. I started as my survival job. I was working in flower shops. My first full time job in a florist was in a flower shop on Park Avenue and I needed a day job.

[Ben Walter]

That sounds familiar to me. My brother was a professional dancer in Manhattan for 10 years and he worked at a retail store for a very large consumer electronics company which shall not be named, but he still works for them 25 years later.

[Patrick Hall]

Wow.

[Ben Walter]

So you learned to work with flowers, but now you end up buying a flower shop. How did that all come about?

[Patrick Hall]

Again, it was reluctant because it came out of a crisis. I had been working for a destination management company slash event company for 10 years, and my wife was working for three different nonprofit companies. And she was going as a teaching artist to work with orphanages, teaching the caregivers how to do music in motion programs that she was developing.

[Ben Walter]

Patrick and his wife were on a trip to celebrate their 20th wedding anniversary when she started feeling ill. She'd just come back from a work trip to Haiti, so they assumed it was something she'd picked up there.

[Patrick Hall]

It was clear that we had to go back to the city to the doctor. We went to an infectious disease doctor to try to find out what was wrong. The doctor said, this is not my area of expertise, but it looks like you have ovarian cancer. So she sent us to a gynecological oncologist and he diagnosed her with. With ovarian cancer and said, I'll do the surgery myself tomorrow. You can get a second opinion, but I am sure, and I'm a teaching doctor in a hospital and I'll do this myself. It won't be one of my students. But there was a catch. He didn't take the insurance.

[Ben Walter]

So you had insurance, but he didn't accept it.

[Patrick Hall]

Right. But I had been working for this small business that was wonderful because they paid for the insurance for the employee, but we couldn't afford it for the whole family. And I had a family of four, two kids. So we went through her freelancers union to get insurance. And I wasn't able to get a hold of the insurance company or get them to approve anything. So he said, I'll just take whatever they give me. He sent us to the hospital, got us a room, did the surgery himself the next day, and saved my wife's life. It was only because of his empathy and benevolence that he just took whatever the insurance company would give him. We had to switch back to a different hospital to do her chemotherapy after the surgery. That took our insurance, but our insurance was actually a co insurance. It covered 70% after we met the deductible, and we ended up owing the 30% after we had met the deductible. It was more than I made in my salary in an entire year. So we had to sell the only Asset that we owned, and that was our apartment. Apartment in Harlem. We sold our apartment and paid off the medical bills, and I decided to buy a small business.

[Ben Walter]

I want to take a moment here. This isn't typical of small business owners, and it really speaks to Patrick's confidence in his own abilities and to his resilience. I'm impressed, because purchasing a small business for more stability is not something many would think to do. I asked him where that motivation came from.

[Patrick Hall]

My father had always said, buy an existing business that has a cash flow, and it'll pay for itself. And so I started looking at florists for sale, because flowers was always my favorite part of designing an event. It was the only thing that I thought I could do. So that was kind of like the impetus for buying. It was out of desperation.

[Ben Walter]

Patrick looked at a few florists in Manhattan until he found one nestled in the heart of the flower district.

[Patrick Hall]

And when I saw that it had been around since 1983, I knew that it was an enduring brand. And there was something about the flowers that was already elevated. They had customers that they had for years. So I really liked that about the brand. And I knew that we could add events and just do even more larger things. I knew how to make beautiful flowers and give great service, but I did not know how to own a business. I had to learn that on the job.

[Ben Walter]

This is full beauty coming out of tragedy. Yes, but now at this point, you're in financial trouble, and you go buy a business. How did that deal come together?

[Patrick Hall]

I had an SBA loan to purchase the small business. We were getting ready to close on the purchase. It turned out that the underwriters insisted that the landlord give us a lease for the same term as the loan for 10 years.

[Ben Walter]

The space was 700 square feet. If Patrick successfully grew the business, he'd outgrow that space. Well before 10 years, the loan didn't.

[Patrick Hall]

Work out, so I had to take all of the equity that I had from selling the apartment, the rest after paying the medical bills, and we put it all in. I borrowed money from my mother's home equity line of credit.

[Ben Walter]

You really went all in on this thing?

[Patrick Hall]

Yeah. And I did a partial payment thing with the sellers, you know, to work off part of it over six months while the manager stayed on and worked with me. And it was just a lot. I just had to put everything on the line.

[Ben Walter]

And you were still working at this point, right?

[Patrick Hall]

I was still working full time.

[Ben Walter]

So you were working and running the business?

[Patrick Hall]

Yes. How did that work it was really hard.

[Ben Walter]

What an interesting business origin story. Dr. Laurie Santos is here. She's a Yale professor, psychologist, and host of the Happiness Lab. Laurie, I'd love to get your take on Patrick's journey. We often hear about the sort of, oh, moments of businesses that are running. We rarely hear of businesses that started out of that kind of, oh, crap, here we go. That was new. A business that was started out of that much crisis. And in particular, he talked about, Pete bought the business for security. And it's not really what we think of you buying a business. You're taking on risk. He sort of came at it the other way, which is, no, no, no, I'm buying a business because I can do this to. In some ways, which is a little bit inverse. But talk a little bit, please, to us about the psychology of risk and security and reward and how people think about this, because this is really deep psychological stuff.

[Dr. Lori Santos]

Yeah, yeah. I mean, really deep, evolutionarily deep. I think we're wired to seek out safety. If you look at what natural selection built into us, it's built in all these sorts of threat detectors. We're just going around looking for, like, what's the uncertainty out there? What's the risk? And most of what our brain is trying to get us to do is to find places of safety. I think that's the evolutionary mode. But if we think about how these things play out in our psychology, say in the business world, there's a lot of talk out there about things like psychological safety. You have your best ideas, you make your best decisions, you have your best interactions with coworkers at work. When everyone's feeling a little bit of psychological safety, a little bit of security, that kind of breath of fresh air, like, things are okay, we can think broadly and innovatively. I think when we think about these true risky situations, like the moment of a health crisis, a lot of financial uncertainty, these are ones that we see as times of incredible uncertainty. And there's just lots of evidence that we humans are built to be uncertainty averse. We don't like not knowing what's going on, and we really don't like it when things feel kind of scary, when outcomes feel like they could go really badly. And so I think that we are just kind of wired to seek out security. I think risk is a kind of special case. Right. Often nerdy social scientists define risk as these moments where the choices you have could have this big payoff, but could have a really bad payoff, and you just don't know. Interestingly, our brains Get a little bit more risk seeking when we're in a really desperate situation. Think of the gambler who's, like, really down on his luck, placing that final, incredibly risky bet. I think Patrick's story has a kind of element of this, in this really interesting way. His wife is going through this horrible healthcare crisis, like, financially, it just seems really desperate. And he's like, let me take on a new small business. That feels kind of risky.

[Ben Walter]

Yeah, it seems to me like, go work for a big company that has good health insurance is what my instinct says.

[Dr. Lori Santos]

Yeah, I think in an odd way, jumping into a new small business might be a way to kind of solve that risk problem. And if it worked out, or he could get some security, some healthcare and so on, that might be the thing his brain was telling him to do. I think, again, it was a little bit different than the normal move of, I'll just go get a job with relatively secure healthcare. But he was facing this risky decision, and it kind of worked out for him.

[Ben Walter]

What about the perceptions of upside versus downside? I mean, I remember seeing all these things about when you give people two choices, the way that you frame the upside and the downside of what could happen has material impacts, as I recall, on how people view the choice. Is that right?

[Dr. Lori Santos]

Yeah, that's right. And so when you frame things as a gain, the kind of things that you might get out of a situation, you wind up avoiding risk a lot. You kind of just want to go with the safe bet, the safe option. But when you're kind of in what's called a loss frame, you're just thinking of things going badly. You're just worried about what you might lose. That can actually push people more towards these risky decisions over time. And I think, again, that's what Patrick was doing. He was in a complete loss frame. He's losing his ability to continue his acting career. His wife is in an incredibly scary health situation. He was in that traditional loss frame. And I think that comes with taking on more risks than you might originally think.

[Ben Walter]

How do we think about that in terms of whether you work for a business or own a business? That suggests that the more successful you are, the less risk tolerant you get. I'm assuming that that's part of why we constantly see disruption in business. You get secure, you get comfortable, and you fear the downside now more than you seek the potential upside.

[Dr. Lori Santos]

Yeah, I think that's exactly right. In general, all of us just become a little bit more complacent when things are going well, when there Is a sense of security. And that comfort zone can be good, but it also can be a little bit stagnant when it comes to ideas and innovation. And so I think what we really want to do is strike a healthy balance between security and risk seeking. We kind of want to find the balance between sticking in our comfort zone when it makes sense, maybe when times are rocky, but also trying out new things so that we can actually innovate.

[Ben Walter]

You have to take risk to run a business. I mean, you have to. So are there sort of psychological coping mechanisms to get more comfortable with risk?

[Dr. Lori Santos]

Yeah. One of the big ones that I talk a lot about on my podcast, the Happiness lab, is this idea of distress tolerance. We just have to get good at experiencing negative emotions that might not feel good in the moment. And this is true for experiencing a little bit of risk, like, oh, this feels uncomfortable, but, you know, it makes sense to jump out of my comfort zone a little bit. It can also be the kind of things that we have to do with dealing with our self criticism in our head, having hard conversations with employees. I think so much of a successful business involves embracing a little bit of distress, noticing that this is going to feel a little bit uncomfortable, but where I'm going to get to on the other side will be better. And I think embracing a little bit more risk can sometimes be the healthy attitude towards that balance.

[Ben Walter]

This is like the psychological equivalent of going for a walk and eating your veggies.

[Dr. Lori Santos]

Exactly, exactly. It's like the spoonful of sugar to take the tough medicine, as Mary Poppins would put it.

[Ben Walter]

Thanks so much, Laurie. Let's hear what Patrick did next. Even though starting or taking over a small business is risky, Patrick was right about Elon's ability to endure.

[Patrick Hall]

The business was wonderful. Community based people that had been buying flowers there for years. So it was wonderful to just meet the people and the clients.

[Ben Walter]

And do you still have some of the same clients?

[Patrick Hall]

Absolutely.

[Ben Walter]

And with Patrick and his wife at the helm, Elon grew quickly.

[Patrick Hall]

We grew year over year. We were only about two years in that small 700 square foot space and I had to find a place. And we moved to a lease of about 1,200 square feet on Grand street, still servicing all of downtown area.

[Ben Walter]

Patrick had found a perfect spot for Elan to continue to grow. Well, the space was almost perfect. There was a four inch step from the sidewalk to get up to the shop.

[Patrick Hall]

I received a summons just before Christmas 2018 from a federal lawsuit that was filed against me and the owner of the space. The LLC that owned the building that I paid my rent to. We were both named in the lawsuit.

[Ben Walter]

The lawsuit was over the store's ADA compliance, which came down to that 4 inch step.

[Patrick Hall]

Every place on the block was sued by the same complaint and the coffee shop got sued twice. They had never proved that they were trying to buy flowers for us and couldn't get in the four inches in the front door. Either way. I put up a ramp and a sign and a buzzer, but no one bothered to come look.

[Ben Walter]

Patrick's lawyers ended up settling for $17,000.

[Patrick Hall]

This was all so distracting from focusing on doing my business, being good at it and growing it. But this is all the kind of things that small businesses have to deal with.

[Ben Walter]

Obviously you knew a lot about what small business was like from growing up, but you'd been working as a professional for a while.

[Patrick Hall]

Yeah.

[Ben Walter]

What was the trial by fire? What did you learn about being CEO in the early days?

[Patrick Hall]

I learned that I don't know what.

[Ben Walter]

I don't know what about like payroll and HR and insurance and all that kind of stuff.

[Patrick Hall]

Oh my goodness. That was one of the hardest parts. I got a 401k before I got health insurance through the company because we were paying on a single payer plan over $3,500 a month for our family plan. And I wanted to get it through the business and I was able to get one employee to go on. And we did it in 2019. So we started it in January of 2020. Well then we were shut down for 40 days as a non essential business and all the employees were furloughed. I ended up paying the premium for my own family and for my employee. I held their job for them. I didn't want them to be without health insurance during a pandemic. And we weren't able to open up until just before Mother's Day of 2020.

[Ben Walter]

The Empire State Development Commission allowed the small businesses who could fulfill online and phone orders to operate.

[Patrick Hall]

My wife was taking the calls herself from home. I would come into the front of the shop and package the stuff. I had one designer in the back of the shop in a separate room that was actually making the flowers for the year as a whole. I was down 40% over the year before of my revenue from 2019 and 2020. It was just a fight to survive and to keep taking everything that I could get. We were doing zoom weddings in the park, in people's homes, delivering stuff, trying to do anything we could. Just trying to figure all the stuff out that we had to do on top of trying to get the business back. So I don't think I took a breath until 2022.

[Ben Walter]

By 2022, most of the immediate struggle was over. By 2023, Elon was growing again and Patrick needed a larger space. He started looking for a new spot, but this time he wanted to buy, not rent.

[Patrick Hall]

I Applied for an SBA504 loan to purchase the place that we're in now, wanting to be my own landlord.

[Ben Walter]

For those of our listeners who are not aware, 504 is an SBA loan program that banks typically administer, which are for small businesses who are looking to acquire fixed assets. That's typically a building or equipment or machinery, typically large dollar purchases. And it's a way to keep the costs down for small businesses. In Patrick's case, it was the building.

[Patrick Hall]

I bought a historically industrial place that was built in 1896 as a butter and egg dispensary. And then for the last 30 years since, it's been a co op. It's been owned by a rental company that stored lighting and electrical equipment. So it was more like a warehouse. So I took this industrial space and made an industrial flower, design studio and retail storefront. The history of Tribeca is this mercantile kind of spaces.

[Ben Walter]

And despite everything he's encountered, all the risk he's taken on, Patrick is still offering health care and benefits for all of Elon's employees.

[Patrick Hall]

It's one of the things I'm proudest of because as I shared, my incentive for buying a business came out of my lack of benefits. It was really important to me. Even though we were paying a very high premium individual payer plan for me and my family. After we bought the business and were making enough money to buy our own individual policy, I wanted to get health insurance for the company, for my employees, to make that available for them and for myself. And we started a safe harbor 401 and I was like so excited and rolled it out to all the team members. My hope is that I can create something through my 401k for sharing the profits as the company grows with the people. I would love to figure out how to help the people that are helping me grow the business. Benefit from that growth.

[N/A]

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[Ben Walter]

In the opening, a huge part of successfully running a small business is to be able to take care of the physical and mental health of your employees. Business owners care deeply about offering affordable, quality healthcare. It's considered to be a core business value at this point. At JPMorgan Chase, we try to support our clients with all their needs, and especially this one. To help our listeners understand more about how these markets work, we've brought in some experts. Dan Mendelsohn, CEO of Morgan Health, is here to discuss how small businesses can navigate these challenges. We also have Stacy Edgar, who's CEO and co founder of Ventur, which uses AI to help small business owners find the perfect plans for their employees, no matter their size. Dan, welcome to the Unshakables.

[Dan Mendelsohn]

Really appreciate being here. Ben. Thanks for having me.

[Ben Walter]

I want to talk about healthcare and small business. I mean, it's not just at the center of Patrick's decision to buy his business. It's clearly something that's constantly a check for him, for his employees, and for the kind of culture and business that he wants to build. We've talked a little bit about it on the podcast, but Dan, you're an expert in health economics and in healthcare businesses. We serve around 7 million small businesses in the US here at JPMorgan, and I hear many of them discuss how challenging this is for small business owners. Why is this so hard for them?

[Dan Mendelsohn]

I would say that small business owners are passionate about their businesses and they don't wake up in the morning thinking about healthcare and how to provide it for their employees. It's something that they know they need to do and in fact they want to do it because they want to care for their employees, but it's not their expertise, it's not why they went into business. And so it presents a really significant challenge for really all small business owners.

[Ben Walter]

And so what about the market specifically is challenging? I mean, I hear large businesses complain about their premiums going up, but not the way I do small businesses. It's not nearly as impactful.

[Dan Mendelsohn]

Yeah, well, there are a couple of things. First is that the products that are being offered to small businesses are more expensive than the ones that larger businesses can afford. Large businesses self insure and so they take that risk on for themselves and they do just fine. They pay less markup to insurance companies. And so small businesses, the products are always going to be more expensive. And then in addition it's a lot more variable. We live in a world where small businesses need to provide health insurance to their workers to compete. Businesses are really being challenged right now by cost. And this year costs are going to go up by more than 10% for most small businesses. Next year probably the same thing is going to happen. And this tends to get exacerbated when the federal government pulls back on spending for public programs like Medicare and Medicaid, which they're doing right now. So I would say that it's going to be a time when a lot of small businesses are really going to be challenged to provide this kind of coverage for their workers.

[Ben Walter]

Interesting. What advice do you have, Dan, for small businesses who are grappling with this? Who are the right advisors? How should they learn more? Where should they go?

[Dan Mendelsohn]

There are a variety of advisors that help small businesses with these issues. So the reality is there's no single solution. Every situation is different. And a lot of small businesses do spend a considerable amount of time thinking about and researching their options. And that's certainly a problem and shows the need for the healthcare system to step up and give information in a factual way. You know, it's also promising because we're seeing a lot of different types of insurance designs coming in that give flexibility to small employers to control their costs and also have a higher quality system. You know, I'd say that some of the newer options like these ichras are really excellent alternatives and small business owners are going to need to seek them out because the brokers that have traditionally sold the insurance into this space might not be economically incented to provide that kind of product to small business owners.

[Ben Walter]

So now we've got a set of mix matched incentives that the ecosystem is going to have to overcome. And a note here, Dan just mentioned Ichras or ichras as they're called, Individual coverage Health reimbursement account. That's a specific program that allows employers to give money directly to their employees for healthcare. It's a relatively new path for employer sponsored healthcare. This type of innovation from insurance carriers is essential. Carriers have to bring more innovative, affordable plan designs into the system that are customizable to the needs of smaller businesses. This was corps to Morgan Health's most recent investment in Ventura. Stacy is an expert on Ichras, so when Dan mentioned them, I knew we had to have her on. Stacy, welcome to the Unshakeables.

[Stacey Edgar]

Thanks so much for having me.

[Ben Walter]

For our listeners who don't know what.

[Stacey Edgar]

Is Ventur, Ventur is building personalized health insurance. And specifically we leverage legislation that took place five years ago called an ichra that allows businesses to give cash instead of a group health plan. Each employee gets to take that cash, buy an individual plan and decide how to use this money, whether to keep some more as cash, more as insurance. And it gives this huge amount of flexibility in that each employee goes from having maybe one option to having literally hundreds of options to choose from. That's where the personalization comes in for the small business owner. What this also means, you know, picking health insurance is such a hard and personal decision. Instead of you picking for your employees, each employee gets to choose what's best for themselves. And on top of that, the business usually gets to save, save anywhere from up to 30% on costs.

[Ben Walter]

This is why we wanted to have Stacey on the show because not only does she run her own startup and small business, but she is largely serving small businesses who run into this pain point all the time. So we thought it was the most meta situation we could have. I'm going to ask a cynical question which is I can see why employers like it because they're giving a fixed dollar amount and that's great and that means they're not exposed to the wild swings of health insurance pricing. Why do consumers like it?

[Patrick Hall]

It?

[Stacey Edgar]

Consumers like it because you get to decide what's best for you and you can really hyper personalize. So for example, one of my favorite moments in being an Ichra, we use our own product for our employee benefits was firing a health insurer who wronged me. And in the past in a group model, maybe if something went wrong, it may or may not have made sense for that company to change. But in this case, if for you in that interaction, if something happens or it doesn't work, then you can make that decision for yourself.

[Ben Walter]

That's really interesting to me because today if your individual claim gets denied, your employer might not even know that. Right. And so the person who's buying and choosing the carrier is not the person who necessarily is living with the consequences of that decision.

[Stacey Edgar]

That's correct. It realigns incentives of the person who is using the plan, has the power to give that market feedback and have that corrective action.

[Ben Walter]

That's really interesting. You and I have talked about this before, but as it exists today, health insurance isn't really health insurance. Right. At least employer based health insurance. It's really just the cost by which you and your employers split the cost of care.

[Stacey Edgar]

It's basically questioning how we pay for healthcare altogether. And there's insurance component. But one of the things that's unique about Ichra is you don't have to spend all the money on insurance. So maybe you decide to get that catastrophic coverage where if something really serious happens, the insurance is there to protect you. But maybe you decide to keep more of the money in a wallet that's also pre tax and that you use for wellness or for things that keep you well. So that's where this is like a really different model and really will disrupt healthcare as we know it in multiple ways. Whether it's just putting the consumer in that center of the value chain or changing how the money, the $1.6 trillion spent by employers every year is allocated. $1.6 trillion. That's a huge number on premiums. Just on premiums. We're not even talking on other expenses.

[Ben Walter]

Wow. So it's growing at 300%. Are you seeing both small and large employers take this on?

[Stacey Edgar]

We are.

[Ben Walter]

And is it more small? More large? Kind of a mix. What are you seeing?

[Stacey Edgar]

It's more small than large, but the large businesses are coming across the finish line as well. The use case is different. For the small business owner, it's all about employee choice. It's about getting out of the business of health insurance. They get to spend more time building their robot hand instead of worrying about benefits. That's what it means for them. For the large business, this can mean tens of millions of dollars of cost savings. It can mean jobs saved, it can mean margin improvement. It's huge.

[Ben Walter]

Stacy, it's great having you. Thank you for being here and I look forward to more conversations in the future.

[Stacey Edgar]

Thanks for having me.

[Ben Walter]

I have another question for Laurie and Dan, which is, as I've been listening to both of you speak, on the one hand, the mindset around risk taking and health insurance for small businesses Sound like two completely orthogonal concepts. On the other hand, they both tie pretty closely into mental health, the quality of someone's mental state, both business owner and employee. Can you talk a little bit, each of you? How do you think about the importance of healthcare and health in the construct of running, operating, leading a business? Because they do actually come together in sort of an interesting way.

[Dan Mendelsohn]

So I'll say, for my part, you want your employees to have excellent healthcare. You really feel a burden and a passion to take care of your workers. They're the ones who are making it happen for you. And small business owners really feel that passion. But then you also have to square out the technical aspect of it. So I think that small business owners are motivated to provide provide this kind of coverage for their people, but they need help in figuring out ways to do it, cost effectively and in a way that fits into the construct of their business.

[Dr. Lori Santos]

Lori, I think I'll just follow up on Dan's point. Saying you want your employees to have good healthcare, but you also want them to have good health. And that involves having good physical health. And a part of that, an important part of that, is not being stressed out all the time. Then I think providing psychological safety, giving someone security, knowing that if something bad happens to them or a family member they love a lot, that they just have the security of knowing they'll be okay. And I think that this idea of psychological safety, building insecurity by giving these kinds of resources to your employees only winds up helping you. I think more and more, we're starting to realize the importance of good mental health for allowing our employees and team members to achieve better performance, better innovation on the job. And so I think these healthcare systems aren't just an insurance policy to make sure your employees can pay for something if something comes up. It's an insurance policy on making sure you have your workers feeling like they're supported in both their physical and their mental health.

[Ben Walter]

I suppose safety from harm, whether physical or mental, is at the bottom of Maslow's hierarchy of needs. I learned that a long time ago. It is the base of the whole thing.

[Dr. Lori Santos]

Look at that. Your intro psych knowledge coming.

[Ben Walter]

I remember. It's been a long time, but I remember. All right, thank you for being on the podcast. This has been tremendous. We really appreciate your insights.

[Dr. Lori Santos]

Thanks so much for having us.

[Ben Walter]

And usually we end with our guests sharing a piece of advice that was instrumental to building their business. But Patrick already did this.

[Patrick Hall]

Well, if I had to give just one, it would be the one that my dad gave me, which was buy an existing business that has cash flow.

[Ben Walter]

So I wanted to ask him about another piece of advice he'd gotten.

[Patrick Hall]

I had a director mentor in college in Alabama who had always said to me, patrick, if you can do anything else other than acting and make a living and be happy, do that. The only other thing thing that made me happy was flowers. It's joyous. It's just the joy of working around beauty and creativity with like minded creatives and people that appreciate flowers. And it's just such a kind thing and it's such an inflection point of people's lives. It's celebration, it's condolences. It's all the times that you need to convey emotion and kindness. People go to flowers.

[Ben Walter]

My takeaway Find something in your life that you love and make sure that you do that thing. It doesn't have to be your business, your side hustle, or the thing that you make your money on. You can have another job, but we're all better off doing something we love and adding some joy to our lives. Thanks for joining us today, Patrick.

[Patrick Hall]

Thank you.

[Ben Walter]

Thanks so much for listening to this episode of the Union Unshakeables. If you liked this episode, please rate and review it next week. We're heading down south to a man whose global disaster response organization was born out of an obsession with the underwhelming meals served to folks in New Orleans after Hurricane Katrina. He spent months scribbling his business plan and ideas on legal paths until finally he just had to get up and cook. I'm Ben Walter and this is the Unshakeables from Chase for Business Business and Ruby Studio from iHeartMedia. We'll see you back here soon.