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Seligman: Navitus sees pharmacy business riding out recession

By Brian E. Clark
For WisBusiness.com

The economy may be struggling, but the Madison-based Navitus Health Solutions pharmacy benefit management (PBM) firm is continuing to grow by 20 percent a year, according to CEO Terry Seligman.

That’s because clients (companies and government agencies) like its “fully transparent” business model by which Navitus charges only a management fee, passing on any discounts it receives from drug companies, said Seligman, noting that some other PBMs pocket those discounts.  

“We have a very high degree of ... ethics about how we practice and how we do business,” he said. “Because of that, we have grown dramatically.”

Moreover, he said Navitus is able to cut pharmacy costs to employers – often by 10 to 20 percent.

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Seligman said Navitus was formed seven years ago by the Dean Health Plan and Touch Point. It now has 200 employees, mainly in Madison and Appleton. He joined Navitus as CEO two years ago, coming from Deloittte Consulting in the Twin Cities, where he was the national pharmacy practice leader.

Dean took it over entirely three years ago and the company now covers more than one million employees and their dependents. Most are in the Midwest.

“We don’t take any spreads or differentials on what the pharmacies pay us and what we charge the client,” he said.  “So the client gets a complete pass-through on what we contract for them. That is in all aspects and applies to rebates from pharmaceutical manufacturers as well. ...

“There are no hidden sources of revenue. We make our money on a flat administrative fee per member per month that covers all of our services.” 

Seligman, a pharmacist by training, said many PBMs “profess to have transparency, but still have areas where they are taking other sources of revenue.”

He said PBMs were started more than 20 years ago and grew rapidly as a way to help manage pharmacy benefits for various employers.  

He said rapid growth meant there were a lot of excesses built into the system that were based on a much different model than is seen today.

He said his company contracts with state agencies, hospitals, counties, utilities and private firms around the region. Clients include the city of Milwaukee, the state’s Employee Trust Fund, OshKosh Corp., Alliant Energy and Johnsonville Sausage.

“We do an intense analysis of claims with their current vendor, look at their historic costs and say: ‘Had you been with Navitus, this is what it would have cost you.’ We can go claim by claim. The savings can be 10 to 20 percent.”

Seligman said the downtown in the economy had not hurt his company to any great degree.

Some firms, such as OshKosh, have grown. Others are looking to save money on their health care costs and have turned to Navitus, he said.

Seligman said he is convinced Navitus will continue to grow in the years to come.

“We are focused on a high level of integrity and give high-touch service,” he said.   “Clients appreciate how quickly we solve problems.”

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