Owner Operators - The Grapevine

Although there are many advantages, particularly for small employers, in joining a consortium, the advantages do entail costs. You should consider the implications of those costs prior to joining a consortium. Allowances must be made for:

  • Shared design
  • Reduced control
  • Financial considerations

Shared Design

As a consortium is essentially a committee and because compromise is inherent in the nature of all committees, it is possible that you will have to compromise on some of the non-regulated elements of your controlled substances use and alcohol misuse program design. For example, you may join a small clinic, which is running a consortium, that has a core of services that comply with some of the FMCSA and DOT regulations, but they may not offer other elements that are considered important to your program. That is why FMCSA and DOT encourage everyone to find an accredited program that covers all of your needs.

Reduced Control

If you operated your own program, the managers in charge of it would be your managers, and they would operate according to your own policies and procedures under your sole control. This will not be the case in a consortium. As a result, it will be more difficult to make changes in the program, and changes that you do make will take longer than if you operated your own program.

Conversely, the consortium may make changes in the program that you do not wish to have made, but may be powerless to avoid.

Your best protection against this reduced control is to join an accredited consortium. An accredited consortium has better control and is sometimes stricter than the regulations. An accredited consortium will at least offer you a sound contract. While you still may not be able to make unilateral changes, at a minimum you can ensure compliance with all applicable laws and regulations. You might also limit the ability of the consortium to make changes without your approval, and might provide for your timely withdrawal from the consortium if circumstances warrant.

Financial Considerations

Although the net financial results of a consortium should be to reduce your substance abuse program costs, financial risks exist. Failure of some consortium members to pay their costs may increase the financial burden on other members.

In addition, it is a common practice for consortiums to require a membership payment in addition to payments for services as they are delivered. This membership payment may support initial services such as policy development or education materials. Charging a membership fee is a reasonable and common practice. In virtually all cases, the membership fee will be less than the initial investment for an in-house program. Nonetheless, the membership fee may be several times the cost of a single controlled substances test, and small employers who anticipate joining a consortium should expect the fee and budget accordingly.

Types of Consortiums

Consortium arrangements can be made to provide collectively the same types of services as those available through separate or individual contract arrangements (e.g., education and training, specimen collection, laboratory analysis, MRO services). There are a number of models of consortiums, each with its own advantages and disadvantages. The following are examples of four such models:

  • Purchasing Cooperative
  • Separate entity
  • Managing partner
  • External management

Purchasing Cooperative

In a purchasing cooperative model, the consortium contracts for services at a volume price to take advantage of large-volume buying power and management efficiencies. Suppliers would deal directly with each employer. This model is similar to a cooperative formed by a group of small retailers to purchase merchandise at volume discounts. In this case, the cooperative or consortium negotiates terms and conditions with suppliers. The actual orders for delivery of goods and services, however, are conducted between the individual members and the suppliers.

Separate Entity

If the number of drivers represented by all consortium members is large enough, it may be cost effective to form a separate entity. The consortium manager hires a manager whose responsibility it is to provide services at the cost of purchasing the services, plus the costs incurred in operating the consortium. A similar example is a food cooperative. Consumers form cooperatives because they want the highest quality product at the lowest price.

Managing Partner

In this model, smaller employers contract for services with larger employers subject to DOT controlled substances use and alcohol misuse testing regulation (e.g., state DOT, a transit agency, an airline). A large employer that has the staff and resources to service its own controlled substances use and alcohol misuse testing program may also be able to sell surplus staff time to small employers, thereby providing an economic benefit to both. This model is similar to a limited partnership in which investors pool resources. Usually the investor with the greatest investment becomes the managing partner with the responsibility of managing and making decisions for the partnership.

External Management/Third-Party Administrators (TPAs)

Under this model, employer's contract with a company that provides the services desired. The management company should have demonstrated expertise in the transportation substance abuse field. This model is similar to a pension fund management service or an insurance health benefits manager. A given management company may operate more than one consortium. External management may be considered both by consortium and by individual employers.

A consortium of organizations with a full time controlled substances use and alcohol misuse program manager provides the members with specialized expertise without each member having to hire its own specialist to run a program. This can often prove cost-effective since it spreads administrative costs over a greater base, while providing greater expertise than any consortium member is likely to have on its staff without additional hiring.

Several nationally based third party organizations provide consortium services for employers. The largest in the United States is the NorthAmerican Transportation Association Inc.

Employers should consult the Drug & Alcohol Testing Industry Association (DATIA) for the accredited consortium that fits their needs (i.e. some consortiums specialize in only certain modes such as NorthAmerican Transportation Association, who specializes in FMCSA).