White Paper

INTRODUCTION

When Optimatum reviewed a broad sample of employer survey findings, a missed opportunity stood out.

Today’s employers are throwing everything they can at the intractable problem of year-over-year cost increases in their employee health plans. Beyond cost management, employers are challenged to provide a workplace benefits offering that attracts and retains employees in an uncertain hiring environment.

At Optimatum, we wondered about the role of vendors in supporting employers in these challenges. Employers outsource health plan administration to external vendors, and spend a great deal of time hiring trusted advisors, issuing requests for proposals (RFPs), and managing these relationships.

So we wondered: Are companies getting enough support from their vendors? Are they fully optimizing these relationships?

We “surveyed the surveys.”

For answers, Optimatum reviewed more than thirty employer surveys conducted by leading consulting firms over a three-year period to help us identify the role of vendors in addressing em-ployer sponsored health plan challenges. These annual healthcare surveys provide insightful guidance to workplace plan decision-makers, who rely on the results when making future plan and program decisions.

Vendor management: A missed opportunity for business outsourcing.

While we understand that the tactics employers use to address their HR issues will vary based on individual company dynamics, we reasoned that what ALL the employers had in common was a multitude of external vendor relationships. These relationships include insurance companies, managed care and mental health provider networks, point solution providers, and a plethora of HR supply chain vendors that are often siloed and complex, making vendor accountability an even bigger challenge.

Based on our review, we discovered that employers did NOT report a focus on an approach that could potentially assist them with their challenges: Vendor management. Indeed, there was zero focus on optimizing these relationships, even as one assumes their importance as a key business process outsourcing (BPO) partners.

KEY TAKEAWAYS

• Optimatum reviewed a large sample of survey findings to help us identify key opportunities for human resources (HR) and employee benefits leaders to pursue.
• Based on our analysis, vendor management across the HR supply chain, is an untapped area with great potential and merits further consideration.
• Ensuring that vendors are aligned with an organization’s business goals and taking measures to enforce greater accountability from these relationships may help mitigate cost and improve outcomes for today’s employers.

Our review of the survey responses from nearly 10,000 organizations reveals this lack of focus. We think this is a strategic miss.

Why? Because we believe that greater scrutiny and tighter management of an organization’s chosen vendors could potentially help organizations improve their outcomes. A focused vendor management strategy can hold your vendors accountable for pursuing and achieving your business objectives, not their own, consistent with SLA’s and performance guarantees seen with other vendors.

Vendor management can include a process of harmonization, where, for example, all the vendors in an HR supply chain are evaluated for potential consolidation, maximum effectiveness and cost savings. Such an evaluation may lead to the pursuit of new contract terms with chosen vendors to enable more meaningful and measurable outcomes. (See Parts 3 and 4 where we discuss this topic in more detail.)

This appraisal explores the implications of the vendor management “gap” for today’s decision-makers.