Administrative Costs Per Month for Selected TPAs were $18.72 per Employee and $8.08 per Member in 2010

PHILADELPHIA--(BUSINESS WIRE)-- Administrative expenses for core services of selected TPAs were 98% of fees in 2010. This was $18.72 per employee per month (PEPM) or $8.08 per member per month (PMPM). Core Medical product costs were $22.15 PEPM and $10.56 PMPM.

Core administrative expenses exclude such elective services as medical management, provider services and mental health.

Results are excerpted from the 2011 TPA edition of the Sherlock Expense Evaluation Report (SEER), a benchmarking study of seven TPAs, collectively serving 1.4 million Americans.

The surveyed TPAs may be elite performers. Function-by-function, these TPAs had lower costs than are typically found in competitive products of Blue Cross Blue Shield and Independent/Provider-Sponsored plans. In general, they are among the largest 20% of TPAs. Finally, they have accounting systems sufficiently robust to report with the granularity of the Sherlock survey. This may be an indicator of strong management as “you manage what you measure.”

Economic softness, the difficult credit environment and the effects of health care reform make this research unusually timely. Many health benefit organizations are optimizing their administrative expenses, and those serving 60% insured Americans use SEER to guide that optimization.

The TPA universe is one of several surveyed by Sherlock Company. Other universes include Blue Cross Blue Shield, Independent/Provider-Sponsored, Larger plans, Medicare and Medicaid plans. Collectively, the 59 surveyed organizations serve approximately 50 million insured Americans.

Additional information was published yesterday in Plan Management Navigator, available upon request, or see our website, The complete analysis is available in SEER. Please call for additional information or see the attached link,

We will discuss the summary results during a web conference on Thursday, September 8, 2011 2:00 PM - 3:00 PM EDT. Doug Sherlock will offer a brief presentation, followed by questions and answers. To participate, please register at:

Once registered, dial-in information and a link to connect to the web will be provided in a confirmation email.

Sherlock Company (, based in Gwynedd, Pennsylvania, provides informed solutions for health plan financial management. Since its founding in 1987, Sherlock Company has been known for its impartiality and technical competence in service to its clients.


Sherlock Company
Douglas B. Sherlock, CFA
[email protected]

KEYWORDS:   United States  North America  Pennsylvania

INDUSTRY KEYWORDS:   Health  Professional Services  Consulting  Insurance  General Health  Managed Care