CASE STUDY #1

BeechTree Partners Finds Senior Vice President for Growing PBM Business

Opportunity
Executives within the $5 billion pharmacy benefit management (PBM) business of, a $45 billion Blue Cross Company were feeling the impact of having been acquired by another multi-billion dollar Blue Cross and Blue Shield player. Committed to replacing an incumbent senior vice-president who had a successful 12-year tenure, the client retained BeechTree Partners to secure fresh leadership to move the PBM forward in the midst of a very competitive and consolidating market. The new senior vice-president would need the talent, skill and experience to meet rising expectations related to revenue, utilization, profit, claims and customer service.

BeechTree Partners launched the search, knowing they had to overcome a scarcity of candidates—many of whom had been asked to sign binding non-compete agreements to protect trade secrets within competing companies. Realizing that they could no longer approach many senior executives with 10-15 years of healthcare experience and profit-and- loss accountability in the PBM sector, BeechTree steered clear of many companies where they already had contacts and found fresh sources of candidates.

Implementation

Following are just some of the steps that were followed in executing the search:

• Craft a broad search strategy involving first and second tier competitors closely aligned to the PBM space.
• Identify “best athlete” executive leadership outside the health care industry who possess similar service industry experience.
• Hands on networking with key C level industry insiders and board leadership.
• Lengthy conversations with referral sources in major managed care companies, including health plans, PBMs, drug manufacturers, and companies that manage specialty drugs.
• Identify executives bound by non-compete agreements.
• Share findings related to candidates’ non-compete status with BeechTree legal counsel as well as the client’s legal department.
• Pinpoint candidates who could realistically wait-out non-compete agreements.
• Narrow the candidate field to those not bound by non-compete agreements.
• Develop a plan B search strategy involving second-tier health care companies with “up and coming” executive leadership should the initial search extend beyond 90 days.
• Personally Interview and assess the top five qualified candidates and identify three for in-depth presentation to the client.
• Advised the client in choosing a candidate based on: personality and leadership attributes, cultural fit, ability to manage change, proven experience growing a similar sized company, industry reputation, personal drive and motivation.
• Negotiated special candidate needs related to life-work balance, telecommuting and travel.

Results

BeechTree Partners secured an executive who had three months remaining on his one year non-compete agreement and who fit within the client’s compensation range. BeechTree also worked with the client and candidate to negotiate special accommodations, which included the candidate’s need to spend time at home, in another state, with a teenage son, while traveling extensively and telecommuting from a home-based office. The candidate spent his first year and a half in the position commuting between his home and the corporate office as well as other sites.

Since the candidate came on board, he has worked across many of the company’s operating units to create new business synergies. On one occasion, he made a successful sales call in Hawaii accompanied by a sales executive from another division. The result of such cross-selling has been greater revenue and profit for the company at large.

Lessons Learned

• Be aware of and thoroughly understand the complexity of non-compete agreements. Ask candidates and clients questions early on to avoid surprises and disappointments.
• Practice flexibility. If you find a top candidate in a tough field, you may have to bend on issues such as telecommuting, work-family balance and travel. A candidate with a strong track record should be able to pull off such special arrangements.
• Stick to your expectations related to skills and experience in a comparable environment. Qualified candidates are available. However, you may need to contact a wide variety of people and organizations to find these professionals. BeechTree estimates that they made hundreds of calls to identify the person who would ultimately become the new senior vice-president.
• Probe a candidate on personal and family needs. While some candidates are more than qualified to do a job, they are reluctant to take on heavy travel, long hours, relocation or high-stress work situations.
• Think in terms of a complete compensation package, including pension, stock options, bonus, salary and other perks such as executive telecommuting.