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Make Employee Benefits Your Next Stop in Margin Improvement

It can be a challenge for employers to save with employee benefits while offering an attractive compensation package. Read on for options to consider. 
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In today’s healthcare environment, it’s as critical as ever to have a competitive compensation package to help attract and retain talent. It’s perhaps equally challenging to provide those packages while maintaining healthy margins.

How an organization designs and administers its employee benefits program can be a competitive advantage. Designing an approach that maintains high satisfaction while reducing costs has delivered average annual savings of $1.9 million for our clients, without employee takeaways. While the savings opportunity for your organization may vary depending on your specific circumstances, the size and complexity of employee benefits often justify exploring new strategies to help further reduce costs.

Pharmacy Benefits Management (PBM)

Many brokers are not incentivized to surface all the hidden margins in the PBM contract. It’s not uncommon to see PBM rebates double with a skilled approach. Examples of successful efforts include:

  • Reducing rebate exclusions
  • Resetting minimum rebate guarantees annually
  • Clarifying definitions of specialty pharmaceuticals and fees paid and received under the PBM agreement

Ancillary Benefits

Life, accidental death and dismemberment, and long-term disability coverages are largely commodity products, yet broker and carrier turnover in this category is low. Fears of lower service levels with non-incumbent vendors are carefully re-enforced by incumbents. We’ve seen that challenging current outcomes and strategies results in consistent and high returns on those efforts, including:

  • Benchmarking rates
  • Evaluating pooling options
  • Splitting the market to evaluate broker productivity

Stop Loss

Stop-loss insurance for self-funded employee benefit plans is a common frustration of financial executives. Typically expensive, it also is subject to volatile increases that often result in trading money over time with carriers, at a significant cost. Reframing cost management in this category by analyzing and affecting drivers of risk can help produce elusive savings in this category. Approaches include:

  • Reviewing domestic coverage structure
  • Pursuing alternatives for catastrophic claims coverage
  • Collaborating with vendors to enhance risk management policies and case management efforts

Case Example

A 339-bed health system faced increased competition post pandemic and reached out to Forvis Mazars for cost reduction implementation assistance. Nine months later, implemented savings exceeded $9 million overall, with more than $3 million generated from the benefits category. Changes included:

  • PBM rebates increased approximately 200% with market-leading carrier
  • Ancillary benefits average annual savings of 42%
  • Stop-loss exposure reduced by $1 million in averted high-cost claimants, with additional premium savings exceeding 30%


  • Brokers play a critical role in service and securing coverage, but variability in skills, resources, and incentives requires oversight.
  • Broker and carrier relationships must be challenged competitively on a regular basis with a multidisciplinary team of finance and human resources professionals to help gain balance with employee advocacy, service, relationships, and sound financial stewardship.
  • Given the complexity of the financial products involved, investment to pursue savings can yield significant results, but also can be challenging to navigate. Your pathway to success must include an evaluation of organizational readiness, skills assessment, expected barriers, and a plan to help overcome the challenges that stand in your way.

Need help getting started? Please reach out to a cost reduction professional at Forvis Mazars or submit the Contact Us form below.


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