How to Reinvest $4.3 Million in Pharmacy Savings Back Into Your Workforce
BY RYAN SPENCER
We recently discussed one of our biggest successes of 2019: We helped our clients source $4.3 million in medication without paying a single penny. By carefully re-evaluating how each company plan helped employees access medication, we slashed costs while maintaining or improving the quality of care these employees received from the pharmacies. With an average savings of $850 per employee in 2019, our clients had plenty of cash left over at the end of the year.
The savings prompted an important question: Should we reinvest these savings or should we save it in case our pharmacy prices suddenly skyrocket? Because of the risk measures we put in place, they were confident that their pharmaceutical prices wouldn’t suddenly rise in the future. With that in mind, many of our clients decided to reinvest in their most important asset: their workforce.
Methods for Reinvesting in Your Workforce
Many of our clients decided to share the wealth with their employees in a variety of ways. Here’s how three of them rewarded their workforce:
One nonprofit saved more than $1,000 per employee on their pharmaceutical costs in 2019. All told, these savings equated to more than $100,000 in excess health care budget for the year.
Confident that their savings would continue into the future, the nonprofit decided to share the wealth directly with its employees in the form of bonuses. Even the employees who weren’t on the plan received a bonus, delighting everyone in the office and generating excitement around their health care plan.
Wage Increases and Retirement Benefits
A school we worked with decided to reinvest their savings via multiple avenues. With the surplus cash, the school:
- Increased its match on employee 401(k) contributions
- Set up a wage increase plan for the coming years
- Invested in capital improvements to school facilities
Overall, the investments were a win-win-win. The employees raised their wages and retirement funds, the school increased the value of its real estate, and students benefited from the improved facilities.
One of our manufacturing clients has always maintained semi-transparent financials with employees so they can maintain a clearer view of the company’s success. Thanks to the company’s profit-sharing program, this window into the company’s financial health works as a motivator for employee productivity.
The manufacturer decided to announce the savings to the team, then diverted the funds into the profit-sharing program so that everyone benefits from the pharmaceutical plan.
Deciding Where to Spend
Not every company has such an easy time deciding where to spend their savings. When a company has competing priorities, the best course of action takes a thoughtful approach. In these cases, we can assist by helping clients evaluate their goals and reviewing the conversations we had when we first started working together. Once a company realizes what is most important to its future success, the investment decisions become much easier.