Thursday, September 21, 2006

Who Get's Hurt?

Many consultants hired by businesses to find the best deals on health insurance or prescription drug plans receive "significant" bonuses, commissions or consulting fees from the companies they are hired to consider, the Wall Street Journal reports. These financial arrangements are often disclosed "only partially or not at all" to employers, the Journal reports.


The Journal profiles a case involving the Ohio-based Columbus Public Schools District, which starting in 2001 paid a consultant $35,000 per year to find the best insurance deal. The consultant recommended UnitedHealth Group and ultimately received $517,138 from UnitedHealth, allegedly without disclosing the financial relationship to the district

Seems to be an ethical issue here, but it begs the question. Did the school district feel they were being overcharged before or after they learned of the compensation deal?

The Journal looks at a deal that consultant Pharmaceutical Strategies Group brokered between the United Brotherhood of Carpenters and Joiners of America and Medco Health Solutions. PSG does not charge UBCJA a consulting fee and instead receives 25 cents from Medco for each UBCJA prescription. The three-year deal could be worth more than $1 million for PSG.

What is the issue here? Was the deal inked with the UBCJA a good one or not?

UBCJA officials said they are "extremely satisfied" with their contract with Medco and expect to save more than $30 million over the three-year deal.

The client was happy.

The consultant was happy.

Who got hurt?
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