Larry Dust capitalized on a then-radical health insurance concept 25 years ago that thrust him to the forefront of the corporate movement to outsource employee benefits services.
Much has changed in the world of health care since, but Dust and Key Benefit Administrators Inc. continue to redefine the way employers approach insurance.
"The cheese has moved in this business," Dust said, "and if you don't believe it, you better get out."
The 57-year-old Knox native entered the insurance industry after earning a degree in business administration from Indiana University in 1972. After operating his own agency for four years, he launched Key Benefit in 1979, during the time many companies began insuring themselves.
The self-funded movement stemmed from the notion that corporations could save on health insurance costs by keeping the leftover premium amount from claims their insurance companies would otherwise pocket. Aggregate insurance arose to offer protection when claims exceed premiums.
But those opting to self-insure needed their claims processed, and Dust was one of the early pioneers to fill the void.
Located in the Castleton area, Key Benefit is the fourth-largest independently owned third-party administrator in the nation, when ranked by members served, Dust said. The company oversees benefits for more than 500,000 employees.
Ranked by employment, Key is the second-largest employee benefits services firm in the Indianapolis area, with 215 employees, trailing only Des Moines, Iowa-based Principal Financial Group, with 436 local employees.
Dust declined to divulge Key's annual revenue.
Business has been fueled by Dust's drive to make Key Benefit more than just a claims processor and to keep it relevant in the ever-changing health care industry.
"I've always felt Larry has a real good sense of where the market is going and has done a number of interesting and creative things over the years," said Keith Phelps, vice president of insurance broker Hylant Group of Indianapolis Inc. "Some of them have worked and some haven't, but he hasn't been afraid to get out front."
Due to the competitiveness of the industry, Dust likened a visionless benefits administrator to a dinosaur searching for a tar pit. Unwilling to be devoured by rivals, he created the American Health Data Institute eight years ago to help clients save on health care costs.
Located in Fort Mill, S.C., near a benefits administrator Dust acquired in Charlotte, the sister company tracks and manages data relating to 19 different chronic diseases. The aim is to promote healthier lifestyles for employees suffering from various conditions and, in the process, provide savings for clients.
The service includes several patentpending products and gleans information from claims to help employers cut the fat out of insurance costs. The institute profiles physicians and documents their patterns of practice, costs and how well they care for people with chronic illnesses.
Diabetics, for instance, can learn from medical personnel how to take better care of themselves and receive regular reminders to visit a doctor.
"Unfortunately, physicians don't do that," Dust said. "You get more follow-up from dentists and veterinarians than you do from your physicians. That's not a criticism; that's just a reality."
Corporations such as IBM, Kellogg Co., Michelin and J.B. Hunt Transport Inc. have signed on to the service, although Key Benefit does not process their insurance claims.
Former U.S. House of Representatives Speaker Newt Gingrich, who now leads the Center for Health Transformation in Washington, D.C., met with Dust and other Key Benefit representatives to review the offerings.
Gingrich, who founded the center as a public-private partnership, was so impressed with what he learned that he lauded Key Benefit for "breaking the code" to effective health care management, Dust said.
By taking an aggressive approach to managing health care, employers can save 10 percent on their costs, Dust said.
Key Benefit also has contracts with several national insurance companies-including Transamerica Corp., Fidelity Security Life Insurance Co. and ING North America Insurance Corp.-to provide claims administration for their supplemental benefits.
In 1985, six years after founding Key Benefit, Dust sold the company to Indiana Blue Cross/Blue Shield, before Blue Cross/Blue Shield became Anthem Inc. He spent the next six years in a dual role as a senior manager of the insurer and president of Key Benefit.
Although Dust said the experience proved valuable, the entrepreneurial itch returned, and he approached then-CEO Ben Lytle about buying the company back. Following nine months of discussions, the two came to an agreement, and Anthem returned Key Benefit to Dust in January 1992.
At the time, the company had 110 customers and 100 employees. Key Benefit now boasts 2,800 customers and 425 employees in Indianapolis, Evansville, Dallas and Las Vegas, as well as Little Rock, Ark., and Fort Mill, S.C.
The company has weathered sickly times, too. In 2000, Dust decided to convert its antiquated computer system to an open-architecture system that would allow for customized programs. During the conversion, claims became backlogged and clients lost. The year it took to work out the bugs is a time Dust would rather forget.
"Personally, we were never affected by that," said Jess Stump, president of the local insurance broker EBS Insurance Group. "In fact, I have gained clients with KBA."
Today, Dust said Key Benefit's average claims turnaround time is four days, compared with the industry average of 10 days. The few hundred customer-service representatives all work from home.
Because the health care industry is much more cumbersome today than it was when Dust started the company, challenges abound. But Dust said he remains up to the task. From that aspect, leading Key Benefit "is more fun than it's ever been," he said.
The company's performance reflects its willingness to take chances, said Karl Ahlrichs, senior human resources consultant for Professional Staff Management Consulting in Carmel.
"Key is really focused on delivering an area of service where everybody is grumpy these days, and that's a tough place to be," he said. "To grow a business and succeed shows that [it's] adaptable, because [it's] in a world that isn't very fun anymore."
Dust has one daughter and three sons. The three eldest work at the company, and the fourth, a college student, pitches in part time. Dust has no plans for retirement soon, but envisions someday handing operations to his children.