Unlocking the Power of Benefit Expense Management: Pittsburgh Pipe's Transformative Journey

In the ever-evolving landscape of business, one challenge that continues to weigh heavily on companies of all sizes is the rising cost of healthcare. For Pittsburgh Pipe, a thriving industrial business with over 70 employees, this issue was no exception. Faced with healthcare costs that ranked among their top three expenses, the leadership team knew they needed to take a strategic, long-term approach to gain control of this critical aspect of their operations.

The solution, as it turned out, lay in partnering with the right experts – a decision that would ultimately transform Pittsburgh Pipe's approach to benefit expense management and position the company for sustainable success. In this in-depth blog post, we'll unpack the customer journey of Pittsburgh Pipe, exploring the key steps they took to turn healthcare from an overwhelming expense into a strategic asset.

The Buying Committee: Driving Change from Within

At the heart of Pittsburgh Pipe's transformation was a dedicated team of leaders who recognized the need for change. Dominic Bergfeld, the HR Manager, Kay Wasmuth, the CFO, and Kevin Coan, the President, formed the buying committee that would spearhead the company's journey towards a more sustainable and cost-effective healthcare strategy.

As Dominic Bergfeld, the HR Manager, explained, "Leaving our longtime broker wasn't easy, but BeneSmart guided us every step of the way. Their focus on our goals unlocked better options tailored to our business."

Year 1: Transitioning to a Level-Funded Plan

In their first year of working with BeneSmart, Pittsburgh Pipe made a bold move – they transitioned from a fully insured plan to a carrier-level funded plan. This strategic decision immediately paid dividends, as the company achieved a remarkable 27% savings over their renewal increase.

The driving force behind this transition was the desire to gain access to claims data, which would allow the company to better understand how their premium dollars were being spent by the carrier. As Dominic Bergfeld explained, "Now that we had access to claims data, we began to identify opportunities to lower the company's spend, specifically in the area of pharmacy spend."

With this newfound visibility into their healthcare expenditures, Pittsburgh Pipe embarked on a journey to evaluate plan partners that could help them better manage their pharmacy spend and mitigate their exposure to high-cost specialty drugs. Additionally, they began to explore opportunities to lower their exposure to catastrophic claims through captive pools, although they decided to wait another year to fully implement this strategy as they wanted to see how their plan performed over a two-year period.

“BeneSmart has brought a level of sophistication to our health insurance programs, which has enabled us to plan longer-term, analyze our cost structure to maximize containment and mitigate risks at a level right-set for our Company.” - Kay Wasmuth, Chief  Financial Officer

Year 2: Taking Control and Enhancing Transparency

In the second year of their partnership with BeneSmart, Pittsburgh Pipe's focus shifted to taking control and improving transparency. The company moved to a fully managed, non-carrier level-funded plan, carving out their third-party administrator (TPA) and pharmacy benefit manager (PBM) services with independent vendors.

This strategic move unlocked even greater savings and transparency for their new plan. By hiring an independent TPA, Pittsburgh Pipe was able to implement bilateral audits on all claims over a specific dollar threshold, ensuring that every expense was thoroughly reviewed and validated. Additionally, the TPA provided a medical management program that helped employees navigate complex healthcare scenarios, enhancing employee satisfaction while maintaining cost stability and improving overall employee engagement.

The PBM carve-out was another game-changer for Pittsburgh Pipe. This allowed the company to retain 100% of their pharmacy rebates and gain complete transparency into their prescription drug costs. The PBM carve-out also enabled the implementation of specialty drug sourcing strategies, such as pharmacy assistance programs and international sourcing, to help mitigate the high costs associated with specialty medications.

The results of these strategic moves were immediate and impactful. In the second year, Pittsburgh Pipe received a flat renewal, allowing the company to focus on investing in other departments and business priorities without the burden of a budget increase.

Year 3: Exploring Advanced Cost Containment Strategies

As Pittsburgh Pipe enters the third year of their partnership with BeneSmart, the focus shifts to exploring advanced cost containment strategies for future plan years. The company's goal was to either achieve a flat renewal or, ideally, a decrease in premiums for the upcoming plan year.

One of the key strategies being explored is the implementation of a dual-option network, which would allow Pittsburgh Pipe's employees to elect a plan with much richer coverage at a lower cost, while simultaneously driving down the overall cost of care. By providing employees with more choice and flexibility, the company aims to strike a balance between maintaining exceptional benefits and controlling healthcare expenses.

BeneSmart's innovative solutions, combined with Pittsburgh Pipe's dedication to valuing their people, have positioned the company for sustainable long-term success, both financially and operationally.

The Three-Year Transformation: A Recap

Let's take a closer look at the key milestones in Pittsburgh Pipe's three-year transformation:

- Year 1: 27% savings from renewal, moved to a carrier-level funded plan. This stability and savings allowed Pittsburgh Pipe to reinvest in other employee benefits and gain access to invaluable claims data to inform future decisions.
- Year 2: Received a flat renewal, decided to carve out the PBM and hire an independent TPA. This move allowed the company to focus on investing in other departments and business priorities without a budget increase.
- Year 3: Striving for either a flat renewal or a decrease in premiums, the company is now focused on implementing advanced cost-saving strategies to lower the cost of medical claims for the upcoming plan year.

As Dominic Bergfeld, the HR Manager, eloquently stated, "Pittsburgh Pipe's story is proof that a thoughtful strategy turns healthcare from an overwhelming expense into a strategic asset. Over three years, we've transformed our purchasing strategies and saved significantly while maintaining employee satisfaction and improving employee benefits."

The Power of Partnership: Why BeneSmart?

The key to Pittsburgh Pipe's success lies in their partnership with BeneSmart, a leading expert in benefit expense management. As Dominic Bergfeld explained, "What attracted us to BeneSmart was their ability to help us develop a long-term strategy. Having a roadmap of our next five moves is irreplaceable."

Bene Smart's dedication and expertise have been invaluable to Pittsburgh Pipe's organization, guiding them every step of the way and unlocking better options tailored to their specific business needs. The company's focus on long-term strategy and their commitment to helping clients achieve sustainable success have been instrumental in Pittsburgh Pipe's transformation.

Overcoming the Healthcare Cost Challenge: A Roadmap for Success

Pittsburgh Pipe's journey serves as a powerful example of how businesses can take control of their healthcare expenses and transform this challenge into a strategic asset. By partnering with the right experts, implementing a thoughtful, long-term strategy, and embracing innovative solutions, companies can achieve significant cost savings while maintaining exceptional employee benefits.

If your business is grappling with the high cost of healthcare, don't wait for the problem to worsen. Take a page from Pittsburgh Pipe's playbook and start your own transformation today. Contact BeneSmart to begin building your five-year roadmap and unlock the power of benefit expense management for your organization.

To learn more about BeneSmart's innovative solutions and how they can help your business, check out our YouTube channel, https://www.youtube.com/@BeneSmart and explore our other informative videos.(https://youtu.be/2A6PuItElUs, https://youtu.be/VOa3c8SNJz8, https://youtu.be/UOjbo9Dprhw?si=6ZXK_iUY4Yf_EhSc).

Don't forget to subscribe @ https://www.youtube.com/@BeneSmart to stay up-to-date on the latest trends and strategies in the world of benefit expense management.

Ready to take the first step? Reach out to Rich Westermayer https://www.linkedin.com/in/richardwestermayer/ at rich@benesmartservices.com to get started on your own transformative journey.