A work in progress: with costs skyrocketing, Hyatt focuses on improving employee wellness.

At Hyatt Hotels, double-digit cost hikes for three years running prompted a health care revamp. "After bearing increases of 12, 16 and 17 percent, we finally concluded that the rising costs are not just going to go away," says Ed Rabin, president of the Chicago-based hotel company.

To address the issue, Hyatt has launched health programs to educate employees on wellness and is exploring ways to administer claims more efficiently. "In health care, as in any other business, better management and supervision can help drive down costs without losing any of the care being provided," says Rabin, who notes that compensation and benefits represent the hotel industry's single biggest cost component.

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Further complicating the issue is the fact that while all employees receive health care benefits, many workers value cash far more than the costly benefit component of their compensation. Since Hyatt extends benefits to every worker on its staff, the company is exploring new health care offerings geared toward employees lower on the pay scale who may place less value on health care benefits.

"Many employees--especially the younger ones--would much rather see 10 cents more an hour than be covered with some level of insurance," explains Rabin. "We're considering the opportunity for special coverage that will offer some safety net for them in the event of some catastrophic major event."

While Rabin is less than enthusiastic about the idea of legislative solutions to managing health care, he does see potential benefits from other forms of intervention. "The government's role initially can be to help curb malpractice insurance costs and consider the funding of better physical education about health care in schools, which has been the object of some budget cuts in recent years," he says. "We've been seeing insurance costs impacting doctors and hospitals, so capping awards or anything else that can be done to address abuses in the system will benefit all of us--employers, the health care industry and patients. That would be a good start."