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Employer coalitions are defining themselves as one of the latest forces to be reckoned with in the health care marketplace. According to a report released April 2 by the health care marketing research organization SMG Marketing Group, there are currently 138 local employer coalitions representing more than 78,200 employer locations.
These employers represent over 22 million employees, or more than 10% of the total insured population, according to SMG. The health care research organization cites a study conducted by Smith Barney and Associates projecting that such purchasing cooperatives will represent 30% of the insured population by the year 2000.
Employer coalitions consist of private or public employers who get together to buy or influence health care in their local areas. Such groups have become increasingly visible during the past five years, as managed care has made ever-deeper inroads into the health care marketplace.
Some specific ways in which employer coalitions are affecting the health care market, according to SMG, are by using their market leverage and critical mass to negotiate contract rates and streamline the design of health plans, resulting in lower costs; forming better relationships with managed care plans and thereby benefiting from enhanced customer service; and sharing the costs of collecting and analyzing performance data such as that of the National Commission for Quality Assurance's Health Plan Employer Data Information Set (HEDIS).
Employer coalitions are also developing common drug formularies and are pooling their resources to use pharmacy benefit management services. To date, according to SMG, almost 30% of employer coalitions involved in health care purchasing follow a common drug formulary, and 47% use a pharmacy benefit manager; the SMG report projects that these figures will increase to 34% and 70%, respectively, by next year.
The recent finalization of Express Scripts, Inc.'s acquisition of ValueRx from Columbia/HCA Healthcare Corporation has made Express Scripts the nation's largest pharmacy benefit manager not controlled by a drug manufacturer. Completion of the acquisition was announced in April.
According to Express Script President and Chief Executive Officer Barrett Toan, the acquisition will result in an increase of approximately 75% in the number of pharmacy network claims processed, and mail service prescriptions processed annually will double. Combined revenues for the two companies in 1997 totaled more than $2.7 billion.
Nursing facility consolidation continues apace, and the numbers of small independent facilities continue to shrink in the face of mounting pressures within the industry to gain major player status in health care by virtue of size. Signs of the times in the market this year include the following:
In addition to gaining the ability to provide a greater range of services and more sophisticated care, multi-facility chains gain the advantages of economies of scale because of better pricing.