About Scott Lydon, Senior Vice President, Sales
Scott Lydon is an accomplished executive with a proven track record in strategic relationship development and management. With over 25 years of experience in the employee benefits sector, Scott has a deep understanding of the competitive insurance marketplace, delivering innovative strategies to lower healthcare costs while improving employee health outcomes.
Scott’s passion lies in forging enduring partnerships built on mutual trust and implementing meaningful solutions for cost stability, transparency, program flexibility, health risk management, and employee engagement. This dedication empowers stakeholders to have complete control over their health benefits. Throughout his career, Scott has been praised for his keen attention to detail and his ability to drive key organizational initiatives to success.
At Blackwell Captive Solutions, Scott brings exceptional full-cycle business development expertise and plays a dynamic role in defining and executing long-term strategic goals. His leadership ensures the delivery of best-in-class solutions and service to clients, cementing Blackwell Captive Solutions’ reputation as an industry leader.
Previously, Scott held pivotal roles in renowned organizations where he consistently exceeded performance metrics and drove substantial business growth. His forward-thinking approach and ability to adapt to changing market dynamics have earned him recognition as a thought leader in the industry. Scott is also an active contributor to industry conferences and publications, sharing his insights on the latest trends and best practices in employee benefits management.
About Blackwell Captive Solutions
Blackwell Captive Solutions is a leading provider of group medical stop loss captive solutions, committed to bending the healthcare cost curve through innovative strategies that help employers manage healthcare costs, improve employee health, and achieve financial predictability. Headquartered in Chicago, Illinois, Blackwell Captive Solutions serves a diverse portfolio of clients across various industries, offering comprehensive services in captive formation, management, and consulting. Learn more at BlackwellCaptive.com.
Medical Travel & Digital Health News (MTDHN): Please tell our readers about your background and new role at Blackwell Captive.
Scott Lydon (SL): I have been in the health insurance industry for 25 years. I have worked at a major health insurance carrier, a third-party administrator, and a value-based health plan. This experience has given me insight into employers’ challenges in managing healthcare costs and how to create more sustainable solutions.
At Blackwell Captive Solutions, I lead sales and account management, helping employers take control of their healthcare costs with a smarter, more flexible stop loss captive solution.
Blackwell is differentiated by our focus on flexibility and choice. Instead of a one-size-fits-all model, our cost-containment approach lets employers pick the best solution for controlling the costs of their population. We give businesses the tools to manage costs effectively while staying adaptable to whatever comes next.
MTDHN: What is the role of Blackwell in healthcare cost containment and what size/scope of employers do you serve?
SL: Cost containment solutions are key to running a solid medical stop loss captive—they help manage healthcare expenses, dial back the number and size of claims, and keep the finances stable.
Tools like a transparent PBM or employee wellness initiatives work to hold claims under the stop loss deductible, protecting reserves and keeping premiums affordable. Blackwell is a guiding light in helping employers and brokers pick and apply these strategies effectively. This keeps the captive performing well, boosts savings for employers, and supports employees’ well-being.
We serve employers that have self-funded medical plans, including companies that have as few as fifty employees and as many as three thousand. Our focus is on middle-market employer groups.
MTDHN: Is there any region of the country that you focus on – East, Southeast West?
SL: As part of my new role, I am leading a national expansion initiative. We are hiring account managers and VPs in regionalmarkets around the country to accelerate growth.
Adoption of self-funding varies by geography. It is important that we speak with employer groups that choose to approach their employee benefits programs a little differently. I like to say that our customers manage their employee benefit program as if it were a business within a business.
Even among large employers, captives are increasingly becoming part of their renewal discussions. Employers are exploring whether there is a more effective way to address costs, not just for stop loss, but also for their overall claims, helping them to bend the cost curve.
MTDHN: Tell us a little more about your role in arranging stop loss.
SL: Blackwell is a captive program manager. Arranging stop loss is just one aspect of what we do. We are experts in assessing an employer’s risk, securing the stop loss proposal, negotiating terms, and most importantly collaborating with employers and brokers to optimize programs for controlling overall cost.
MTDHN: What has been your most enjoyable or learning opportunity in the industry? How do you see this industry moving forward?
SL: I think data transparency is going to be key to employer decision-making going forward.
Ten years ago, there was more availability of data from the big four carriers. As time has passed, they have adopted a more defensive strategy to protect their businesses.
Today, the largest health insurers have become opaque in providing data necessary to underwrite and price stop loss, and to enable clients to make relevant decisions about how to manage costs and medical trend for specific populations. This lack of data availability is one of the biggest hurdles in the industry and it needs to change. Some states have started to address this by legislating basic reporting requirements.
MTDHN: Is this because they’re not forthcoming with the data or they don’t have the data?
SL: Based on my experience at a carrier, I would say that it’s more of a defense strategy to protect the business that they have.
The more data they provide to external constituents, brokers, and clients, the greater the opportunity for those constituents to look at other options in the marketplace and have the marketplace appropriately price them.
If the data is opaque or generic, it becomes really difficult to assess the risk of an employer group.
MTDHN: In your vision for the future, is it a better option to work directly with the captive, the large PBM or these alternative PBMs that are now coming on the market?
SL: Probably the lower hanging fruit is to address costs for any employer.
There are studies about the margins carrier-owned PBMs are making in terms of discount spread-pricing, which is the term used to describe the reluctance to pass the full discount from the drug manufacturers back to employers. This impacts the employees and the end-users — especially those enrolled in high-deductible health programs.
We find it is more advantageous to work with some of the more boutique, transparent pharmacy benefit managers (PBMs) — we have a preferred partner. However, there are many similar options in the marketplace that a broker might prefer. We want to be flexible enough to allow a broker to implement a pharmacy benefit solution that they believe could provide the best outcome for their client.
When it comes to rebatable drugs (typically brand-name drugs and specialty drugs that are higher-cost), carrier-owned PBMs have been known to create formularies to maximize rebate returns. Transparent PBMs design their formularies to maximize the lowest net cost rather than maximizing rebates.
MTDHN: Do you think there should be more specificity regarding cell and gene therapies or the GLP-1 drugs? How deep do you look for this kind of capability?
SL: There may beadditional concerns regarding cost escalation specifically around GLP-1s and gene therapy. Looking at any group’s utilization, if you are able to get it from a carrier, you’ll see the escalation in costs and the volume of costs for GLP-1, although it does have a beneficial effect on the member.
Important questions to ask are: Is the drug being appropriately used and does the PBM have the capability to monitor and ensure that the GLP-1s are being prescribed for the right individuals that have a diagnosis tied to diabetes?
PBMs that put in utilization reviews for GLP-1s take on an important role in managing that cost. We look to PBMs that have those capabilities and the mindset to review and control costs with appropriate utilization.
MTDHN: Tell us how the captive model works. Do you make a recommendation on a specific PBM for your constituents?
SL: We have an opinion on PBM recommendations. Earlier, we discussed the importance of cost containment in the drug spend and the financial benefits for the employer. But this also impacts the captives. We have PBM partners within our preferred partner ecosystem and can offer prospective captive participants a savings analysis and cost-containment opportunities. These savings analyses are often eye-opening and center the employer on a path to addressing rising pharmacy cost trends.
If we were to recommend a PBM solution, it would be the transparent PBMs because we believe those outshine the traditional ones that are owned by the major carriers. They share all discounts, return 100% rebates, and design drug formularies to drive the lowest net cost, which can significantly lower costs for employers. They focus on what is best for the plan—not their parent company—and provide clear spending details for managing expenses. It is a simpler, more cost-effective approach that can even reduce employee prescription costs. Many offer additional cost savings mechanisms, such as international sourcing of medications and patient assistance programs.
Our analyses usually show that there’s significant money left on the table if an employer group remains with one of the big-box PBMs.
MTDHN: This is a great segue to our international focus. Are you familiar with pharmacy medical travel?
SL: Yes. It has been a conversation point for many employers that are interested in reducing costs. But very few have actually implemented a formal strategy within their medical plan offerings.
There needs to be a better mechanism or guiding source that helps an employer confidently say to their employees, “We’ll offer a better benefit in the form of lower cost share by accessing care internationally.” Employers must have confidence that international providers or facilities are accredited and provide similar or better outcomes than providers in the U.S.
Once that mechanism is available, I believe that you will see more employers adopting medical tourism as a way to address costs.
MTDHN: Now let us turn our attention to the criteria that employers should use for selecting and joining a captive. There are obviously a lot of captive solutions out there. How do you hope to differentiate your offering from others?
SL: I like to use the phrase, “If you’ve seen one captive, then you’ve seen one captive.”
Every captive is a little bit different in its construct. We believe that cost containment is a critical part of a solid-running medical stop loss captive. As groups approach us to seek a quote, some of the questions we ask are, “What level of cost containment do you have today? Do you have the appetite for implementing more?”
As we look for employer groups to join our captive and become participants, it is important that they understand they are joining a collective of like-minded employers. We want to believe that the participants in our captive are like-minded in the fact that as a collective, they are really stacking their hands together to address cost as a group, so all the captive members will benefit.
What we do not do, is provide a one-size-fits-all captive arrangement.
We do know that brokers and consultants have some preferences about which cost containment solutions to implement. We’re flexible enough to allow advisors to implement the cost containment solutions they believe will benefit their clients the most.
MTDHN: When you say like-minded employers, do they necessarily have to be in the same industry? Is that an advantage?
SL: No, they are not necessarily in the same industry. What we sell is a heterogeneous captive.
This means that our captive is comprised of all types of employer groups. We talked about size, but it is not specific to any one industry.
We have the capability of creating homogeneous captive cells. But what we’re actively promoting in the market as our go-to market strategy is more of our heterogeneous approach — a collective of groups of any industry with alignment on cost containment.
MTDHN: We know the advantages of joining the captive. Are there any advantages to not joining? What if a company decides they don’t want to be part of a captive? What do they stand to lose?
SL: I think that market dynamics are changing and medical trend is not slowing down.
There’s been an increased prevalence of catastrophic claims in the market. And we have also talked about some of the rise in costs in the PBM space, the pharmacy space for GLP-1s, and gene therapy.
There have been several very public statements from traditional stop loss carriers about how they need to repair their books from a loss ratio perspective. This opens a window of opportunity for captives as an alternative solution to traditional stop loss markets and those groups that are also currently in fully insured arrangements.
MTDHN: So where do we go from here? We see escalating costs but is the captive arrangement really designed to just halt all of this and help the employers for a long term? Or is it just going to be wait-and-see?
SL: No, I think that captives have been proven to control costs.
We take an alternative approach from a financing mechanism. I do not know if it is right for every employer group, but what we’ve seen is a long-term solution. It takes some activation from the employer to assist in deploying strategies themselves to manage rising medical trends.
Then, as a collective, we can take an approach that “lifts all boats.” If all groups in the captive are engaged in implementing cost containment, then there will be a potential surplus. When you consider surplus as netting out future increases, this model will show better performance over the long-term versus traditional stop loss.
MTDHN: What are your lessons learned from experience and predictions for the future?
SL: I spent many years in the health insurance and employee benefits space, including a long stretch at one of the major insurance carriers. But it was my experience working for a third-party administrator and a value-based health plan that turned me into a self-funding devotee. By deploying an alternative network these organizations provided employees with a richer benefit to address things like medical debt and care avoidance. These experiences gave me insight into employer challenges and the importance of managing not only the health and wellbeing of their employees but also building a sustainable employee benefit program over the long term.
Now, in my current role at Blackwell, I get to deliver a sustainable solution. I talk daily about the flexibility we provide as a captive and the solutions we offer that can help mitigate an employer’s cost without sacrificing benefits. These conversations keep me engaged and excited about work. Every day, I am presented with an employer with a new challenge that they need to solve.
Looking toward the future, I predict we will achieve our long-term vision of becoming turn-key solution as a medical stop loss captive, and we will build our Blackwell platform to prioritize data transparency and decision enablement. Our commitment is to create solutions that make healthcare cost effective not just in the short term for our clients but sustainably, year-over-year.