Corp. Prescribes Hotel Rate Remedies
Three years after adopting an initiative to centralize corporate meetings and streamline sourcing, the corporate marketing department of Medco Health Solutions Inc. is focusing on offering stakeholders an idea up front of meeting cost and the alternative sites that could provide better value.
Linda Levy, senior manager of meeting and event planning in the company's corporate marketing department, said the department this summer plans to analyze costs for events at various U.S. cities and begin providing projected budget reports.
"We're trying to build some modeling around this so that, as programs come to us, we can give them a good estimate up front, before any of the hotel or other vendor sourcing happens. We could give them an idea of what a meeting for 50 people might cost in New York versus Dallas," she said.
Franklin Lakes, N.J.-based Medco is a pharmaceutical benefits management firm that processes almost 600 million prescriptions per year for unions, corporations, HMOs, insurance companies and federal employees. Levy's department handled 19 events last year, ranging in size from 25 to 650 attendees. This year, 25 events already are on the calendar, and Levy estimated that the department handles 95 percent of meetings sponsored by the management committee. Aggregate meeting spend is roughly $3 million per year, she said.
The budget model also would compare costs of different types of events, the incorporation of different technology options and program length. Ideally, when a stakeholder submits a meeting request, Levy would be able to quickly estimate the cost and provide several alternate locations or meeting types for comparison.
"It's always been our goal to find technology out there that will do this. We haven't found it yet. Right now, we're doing it with Excel and spreadsheets," Levy said.
Most meetings technology tools have templates or canned solutions that aren't a perfect fit for the company, she said, and Medco needs a more customized, malleable solution.
Medco's greatest need for technology is in onsite attendee management, such as attendee polling tools, she said. Most of the focus is on ensuring attendees reach the goals of the meeting, and the department is looking for ways to quantify return on investment.
"Meetings and events are very difficult to measure through ROI, so we look at some qualitative figures as opposed to straight quantitative. We look at attendee feedback and we're also starting to look at some of our educational programs and how they might change internal or client behaviors six months or a year down the line," Levy said. "We're starting to do some benchmarking."
As a public company, Medco needed a meetings policy to ensure it was compliant with industry rules and regulations. "The policy covers a variety of areas including strategic sourcing and our triple-bidding process. We are a public company now, so we do have to comply with the Sarbanes-Oxley rules," Levy said.
Sarbanes-Oxley requires the company to have three bidders for vendor contracts, she said, so the meetings department often uses hotel brokerage companies to find compatible properties. The policy also states that the legal department must review contracts, and then contracts are sent back to the event host to be signed.
The meetings management team drafted the policy with Medco's procurement and legal departments, she said, which helped to increase compliance.
Medco last year also began to use dedicated American Express cards for meetings to solve a payment catch-22. Some vendors require a deposit with a signed contract, and checks could not be issued until there was a signed contract, Levy said. In addition, the department often would have to authorize the vendor through a procurement process as an approved supplier in order to issue checks, but a contract was required for that process as well.
With the card, vendors are paid more efficiently and the number of company checks and purchase orders has been reduced, she said. The card also makes it easier to capture last-minute, onsite purchases into the event budget.
This year, Levy said the department is putting together a list of preferred hotel partners. Medco already has preferred hotels for its transient business, but Levy said there is not always adequate meeting space at those hotels.
"Our attorneys and strategic sourcing department want to establish more national contracts. That's a charge for 2006 and 2007," she said.
Levy said she uses previous hotel contracts as a starting point when negotiating with other properties in the same chain.
"They tend to be very open to it. There might be a couple of terms or policies here and there, but for the most part we're reducing the amount of time spent on negotiation at least by half," Levy said.
Senior management became aware of the need for a centralized meetings management program in 2003, following the firm's spin-off from pharmaceutical giant Merck & Co. and a company initiative to reexamine business processes. Levy said she was tapped to help form the company's meetings policy and procedures following an initial leadership meeting she planned.
"When we spun off from our former parent company, there was a new series of meetings that needed to happen, such as shareholder meetings, analyst meetings as well this new leadership meeting that was hosted by our chairman. While we were in this function, we started identifying some other programs."
Levy said her department now handles events for the sales department and a client symposium. "We decided that to be strategic, make sure that it's branded effectively and compliant with all the strategic sourcing, contractual requirements and payment processes, it was great to have it all under one area," Levy said.
Though the meetings management team handles logistics, it also partners with a representative of the department hosting the event to handle content and communications, she said.
Levy said Medco senior management fully supports the policies and procedures, as the meetings department ensures that company cost-saving and process-efficiency goals are met and that they comply with the approved processes.
"They're looking at results: What's our audience generation? What type of representation do we have at the meeting? What's the feedback on the actual sessions, and the final costs for the program?" she said.