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Group Associates reformats after split, acquisition

For nearly 30 years, David Zick ran Bingham Farms-based Group Associates Inc. as an insurance brokerage, technology services and benefit consulting firm with his business partner Kent Grathwohl.

But a growing conflict of interest between brokerage and providing administrative services through information technology led Zick and Grathwohl to conclude they needed to change their business model and focus on one or the other. So, in an amicable split in September 2014, Grathwohl took his clients and left Group Associates and became area vice president with Gallagher Benefit Services Inc. in Bingham Farms.

"It wasn't easy because Kent and I worked together for 25 years," said Zick, president of the company. "It was a painful decision. Kent and I have a lot of respect for each other. It was almost like a divorce on very friendly terms. We continue to share accounts and work together."

Grathwohl said his brokerage work selling life and health policies at Gallagher is similar to his former job at Group Associates.

"We weren't able to deliver enough lives to (fuel) the administrative (technology) engine" at Group Associates because "(outside) brokers were not willing to put business with him," Grathwohl said.

Zick said Group Associates was one of the first benefit companies to take advantage of online information technology in the late 1980s.

"We worked with a lot of carriers, and over the years our services increased and added capability of enrolling employees online," he said. "As time went on, technology became more sophisticated, and we realized we could do far more."

But Zick said the conflict developed between brokerage services and administrative services because other insurance brokers didn't want to do business with Group Associates because they feared "we could replace them as broker" to their clients.

Last July, Zick sold Group Associates to Maestro Health and is the technology solutions subsidiary to the Chicago-based health and benefits administration manager.

Maestro now offers integrated benefit administration that includes a private exchange, enrollment services, self-funded insurance, health savings accounts and consolidated billing.

"I was not planning to sell the company," said Zick. "I just did not want to have the conflict between consulting and brokerage. We couldn't do both anymore."

To get advice, Zick went to Chicago-based Gruppo Marcucci, a consulting firm specializing in human resources and benefits administration technology. Maestro earlier had employed Gruppo to search for a benefit administrator to acquire.

Sometime afterward, Gruppo Marcucci executives suggested that Rob Butler, CEO of Maestro, talk with Zick.

"Rob called me (in March 2015), and we talked a few times and came (to Detroit) for dinner," Zick said. "I showed him our capabilities at the office, and the next day he gave me a letter of intent. It was an awesome synergistic relationship."

On July 1, Group Associates joined Maestro as a wholly owned subsidiary.

Zick said Maestro brought Group Associates what it needed: a national sales force with connections to major brokers that includes the Willis Group and Gallagher.

"We are doing what we do best, helping employers with benefit technology solutions," Zick said.

Grathwohl said Gallagher and Maestro do about half a million dollars in business together. "This has worked out fine for me," he said.

Butler said he formed Maestro two years ago to take advantage of opportunities presented by the Affordable Care Act to expand health benefit options for employers.

"We offer a one-stop shop that allows employers, brokers and carriers to offer one solution," said Butler, noting that the acquisition of Group Associates was important to that vision.

Maestro's four primary product lines are private health insurance exchange, benefit administration, human resources management and consumer accounts, which include health savings accounts and self-funded insurance programs.

Last November, Maestro signed a contract to become the exclusive private exchange provider with Blue Cross Blue Shield of Arizona.

"This is technology meets services, a nice connection to offer employers," Butler said.

Zick said Maestro has enabled Group Associates to invest in more technology, hire staff and expand its information technology services. Group Associates has about 60 employees in Michigan and expects to hire more this year.

"Since July, we have written 150 accounts with Affordable Care Act (employee health benefit) reporting," which includes 1095C form filings for all covered employees that proves coverage through the employer and the cost-sharing amounts, said Zick, noting his company was one of the first to be certified by the IRS.


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