A Blueprint for Savings
To cut costs, an Alabama company reevaluated its entire healthcare strategy.
In 2016, Alabama screening and fabric manufacturer Phifer insured its employees through a Blue Cross carrier and a traditional pharmacy benefit manager (PBM).
Each year, the company absorbed rising healthcare outlays by giving fewer raises and spending less on product research and development.
That was until Russell DuBose, vice president of human resources, found The CEO’s Guide to Restoring the American Dream. The 2017 book, which details how some employers cut costs while delivering quality healthcare to beneficiaries, became a blueprint for how Phifer would alter its health spending trajectory.
The first major change was hiring a new benefits broker. DuBose required the broker to become an advisor certified by the nonprofit organization Health Rosetta, whose co-founder and CEO, Dave Chase, wrote The CEO’s Guide.
Advisors certified through Health Rosetta agree to be paid solely by employers, instead of through commissions by insurance companies. They agree to work through a transparent, fiduciary-based model.
A good broker, according to Health Rosetta, will develop three- to five-year healthcare spending plans instead of working in the annual renewal cycle. They disclose their compensation sources, those of vendors, and conflicts of interest. They also provide cost containment strategies—i.e., direct contracting, bundling healthcare services for a better price, and reduced or eliminated copays to encourage plan members to use preferred providers.
DuBose also analyzed the company’s healthcare spend and tackled a number of different cost areas, including building an on-site healthcare clinic and setting up direct contracts with multiple different providers. Phifer has also tackled its pharmacy spend.
“The ability to get the right medication at the right time for the right patient was absent from our plan design,” DuBose says. “We could see in our prescribing patterns that patients were getting medications from the second level [specialty doctors] for conditions that could have been treated in primary care in a lot of cases.”
Phifer stopped using the big three PBMs and conducted an RFP for a replacement. In 2023, it moved to a transparent PBM model where the plan sponsor pays an administrative fee in lieu of collecting revenue through spread pricing and other fees.
With its new PBM and a custom formulary, Phifer reduced its costs on specialty drugs, including by adding proven biosimilars to the formulary. There is no copay for beneficiaries who choose biosimilars. By using a custom formulary instead of a standard offering, DuBose said Phifer saved $720,000 in spending via the use of biosimilars over biologics from 2024 to 2025.
After Phifer completed a seven-year program to revise its approach to employee healthcare, the company’s net healthcare plan costs—about $15 million a year—were flat through 2024. In 2025, net costs decreased by 2.4%. The actual dollar savings might be modest for larger plans but are significant for a midsize health plan, DuBose says.
There has also been a major drop in employees investing in their 125 pretax health plans because the on-site resources are free.
“A nice secondary benefit from this model is that employee retirement readiness is now over 95% because they aren’t spending money on healthcare and can invest toward retirement,” DuBose says.
