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A Real Fixer-Upper [Workforce Management]

Proquest LLC


* The health care system is changing, and employers are leading the way with tools to manage costs and improve worker health.

* Employers must shift their focus from cost cutting to spending wisely on medical services.

* Offering essential medical care, like health screenings, at low or no cost to employees is key.

In 1929 when Baylor University Hospital began offering prepaid hospital visits for 50 cents a month to a small group of public school teachers in Dallas--a program that would morph into iconic insurance giant Blue Cross--few could have predicted that decades later most Americans would get their health care coverage through their employers. What soon became known as a "fringe benefit" is now an expected part of any competitive compensation package.

But with health care reform unfolding and no end in sight to soaring medical costs, the future of employer-based health plans is unclear. Dramatic changes are under way, and employers are playing a key role in transforming health care delivery. Some are reluctant innovators and others are eager trailblazers, but most have little choice but to roll up their sleeves and look for solutions to a crisis that is threatening their bottom lines and the country's economy. With national health care spending at $2.6 trillion annually and growing, employers are seeing a greater portion of their labor costs eaten up by medical expenses. In 2010, health care costs represented 12.8 percent of payroll, up from 8.9 percent in 1999, according to a 2012 Kaiser Family Foundation report. Between 1999 and 2009, the average annual premium for employer-sponsored family health insurance coverage rose from $5,800 to $13,400.

While politicians and pundits debate the Patient Protection and Affordable Care Act, often referred to as the ACA, a growing number of employers are forging their own version of reform one workplace at a time. It's a movement that some call "DIY," or "do-it-yourself," health care reform. "Employers are now in the business of population health management, so, yes, they have a sense of urgency," says Andy Webber, president and CEO of the National Business Coalition on Health. It's a two-pronged effort to improve employee health and productivity and to get more value for the money, he says. "This challenge has been ongoing for many years and is independent of the ACA and any other legislation."

Employers are turning to an array of approaches from disease management programs to on-site clinics, direct primary care, value-based medicine and predictive modeling--and many are seeing dramatic reductions in costs and other improvements. Viking Range Corp. in rural Mississippi, where obesity and diabetes are rampant, saw a decline in health care spending two years after redesigning its wellness program to target those conditions. The company analyzed claims data to make predictions about certain behaviors and health outcomes, a process known as "predictive modeling."

BRAMCO & Prudential: An Alliance For Life

This approach also helped Pitney Bowes Inc., the Stamford, Connecticut-based manufacturer of mail and document management systems, to develop a benefit plan based on the principles of value-based insurance design. Value-based design aims to reduce or eliminate the cost of essential medical care, such as cancer screenings and blood-pressure drugs. Companies such as Caterpillar Inc., Dell Inc., Dow Chemical Corp. and Gulfstream Aerospace Corp. have followed suit, offering medications for chronic diseases at low or no cost to employees.

"I've been in the benefits business for 30 years, and for the first time I see change among all stakeholders at the same time: carriers, hospitals, employers are experimenting with all different approaches," says benefits consultant Jerry Frye, president of the Benefits Services Group Inc. in Milwaukee. "I see an opportunity to manage costs more so than for a long, long time. Some is due to reform, but most is being driven by employers."

Copyright:(c) 2012 Crain Communications Inc. All Rights Reserved.


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BRAMCO & Prudential: An Alliance For Life