F Case Study

Transparent vs. Traditional

The Challenge

When a mid-sized hospital system in central Louisiana was tasked with dramatically lowering pharmacy costs relative to national benchmarks for their industry we were engaged to find the best partner to meet the needs of this system struggling with rising health care costs.

The Approach

By switching to a PBM that fit their goals, this hospital system was able to shed $13.28 per employee per month from the employer portion of their pharmacy benefit plan costs from the previous year, and spent a total of $489,096 less on their pharmacy benefit plan costs than they had the year before.

This client valued transparency and stability in pricing. After receiving bids for service from three national leaders and two regional benefit management companies we were able to provide our client with two bids that achieved the highest overall value for their group. One national leader had provided pricing in the traditional model that relied heavily on high-dollar rebates to offset slightly higher costs at the point of sale. Within the traditional pricing model, there is no requirement to disclose how money is made on an account. The other bid was from a regional PBM that provided much weaker rebates, but offered far stronger discounts at the point of sale. This bidder also provided clear details on their pricing structure and how they made money.

The Results

While the larger, national benefits manager showed the best pricing on paper, the smaller, regional benefits manager showed better pricing at the point of sale which would lead to more stability in month-to-month costs. In addition, the smaller benefits manager was more transparent in their business model, which was highly valued by our client. So while the larger, national benefits manager looked better on paper, we were able to show that the smaller, regional benefits manager actually addressed the issues central to the client’s search for service.

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