In response to its members' concerns over rising health insurance costs, Affiliated Distributors (A-D), King of Prussia, Pa., has formed a health insurance company, A-D Services Group Inc.

The newly formed subsidiary offers both A-D affiliates and suppliers self-funded or partially self-funded health insurance, dental and vision insurance, life and accidental death and dismemberment, long- and short-term disability and flexible spending accounts.

According to Bill Weisberg, A-D chairman and chief executive officer, the growing health-care problem of the buying group's members has been a difficult one because it cuts into their operating costs and profitability. He said it took A-D a while to come up with what it hopes will be a winning strategy.

Looking to other enterprises that have been successful with group health care, A-D has mirrored its health-care package after those of franchises. “We were able to follow what companies like McDonald's franchises did to be successful at reducing their health-care costs,” said Weisberg. “We were able to develop a solution that mirrors it.”

Based on test quotes, A-D Services Group Inc. has the potential to deliver big savings. The insurance products and programs have been shown to save companies more than 20 percent in annual health-care costs, said Mark Wilson, A-D director of service provider relations.

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