Private Equity Engagement Benefits Evaluation Case Study

This case study details an engagement by a private equity sponsor to evaluate the benefits landscape of a portfolio company, focusing on the analysis and enhancement of current programs and services. The study outlines the analysis of the existing benefits program, identifying transparency issues and limited validation of its optimality. It evaluates the Third-Party Administrator (TPA) model, optimizing claims costs through preferred contract language, and assesses the geographic footprint and network. Additionally, the study reviews programs and services acquired through a broker, emphasizing the evaluation of transparency and performance of a three-year 'pass-through' contract. It identifies optimal risk alignment and sourcing protocols for stop-loss insurance, including negotiating contract terms and strategy, and develops a renewal and sourcing strategy that aligns with organizational goals. The engagement resulted in estimated annual savings of $960K to $1.8M on medical, pharmacy, and stop-loss coverages, along with improved transparency and negotiation strategies.