Pharmacy drivers: Caremark CEO Mac Crawford addresses the question of aligned incentives

November 1, 2006

Every organization is accountable to its stakeholders, and Caremark, the Nashville-based pharmacy benefit manager, is no exception. Caremark, however, is also accountable to its customers for clinical execution, so performance metrics are both wide and deep.

In the past year, the healthcare industry has come under scrutiny to be more accountable so those who pay for care can see what they're getting for their dollar-much the same way shareholders expect updates from the companies in which they own stock. Those who foot the bill are increasingly calling for reform, proven value, reduced waste, increased quality, aligned incentives and transparent models that justify prices.

Mac Crawford, CEO of Caremark, says the concept of transparency means different things to different people, but it's a question being raised about alignment of incentives between those who deliver healthcare and those who pay for it. He sees it as an evolution of the healthcare business-one he's been watching closely.

Employers, health plans and other payers have evolved their roles to become more price-conscious, Crawford says. Now, they've gone beyond just asking about out-of-pocket costs to ask for an understanding of cost drivers.

As for Caremark-recognized as the nation's second-largest PBM-it has to communicate to its customers how the incentives align, according to Crawford, lest it lose business. Customers want to know more, and Crawford says he has no problem sharing that.

"I've not had anybody tell me that they think we shouldn't make a reasonable return on investment and the assets it takes to run our business," he says. "I have had people say, 'help me understand where you make your money.'"