The partnership prescription.
Nobody can deny that healthcare costs are rising at an alarming rate. Medical care now swallows some 14 percent of the country's gross domestic product. And, according to the U.S. Health Care Financing Administration, American businesses spent $204.5 billion on health-related expenses for their employees and dependents in 1991, an amount equal to 97.5 percent of all after-tax corporate profits for the year.
It's no wonder the crisis finally has captured the attention of our elected officials. But as the reform debate on Capitol Hill reaches a new pitch, businesses are faced with the same recurring headache: how to juggle their budgets to offset disproportionately high increases in their health insurance premiums. Short of continually chipping away at employee benefits-an approach that erodes the security and well-being of our work force and our economy--many individual businesses are at a loss for solutions.
However, new opportunities to stabilize health-care costs are emerging, especially for companies willing to share responsibility for reducing their employees' consumption of health-care services. In an era when all players--from the consumer to the employer to the insurer--will have new incentives to use medical resources more wisely, businesses should be able to find willing partners in their health plans. Such partnerships can be built upon one simple, specific, common goal: to improve the health status of an employee population, thereby stabilizing health-care costs.
Components of this collaborative relationship are described in an essay by Stanford University Professor James F. Fries, M.D., which appeared in a recent issue of The New England Journal of Medicine. Fries calls for "expanding the definitions of 'health promotion' and 'preventive care,' paying selective attention to strategies that have been found to result in net cost savings." Dubbing his concept "demand reduction," Fries says businesses and health-care organizations should work together to minimize the need for expensive medical attention. Here at Group Health Cooperative, we call this approach "The Partnership Program."
Launched in February 1993, The Partnership Program aims to address the full spectrum of a company's health-related expenses, going beyond the cost of medical care for employees and their dependents. We want to help companies save on workmen's compensation, reduce absenteeism, and increase productivity. The Partnership Program is currently available to a limited number of large and mid-size companies where all or most employees are enrolled with Group Health or its subsidiary point-of-service plan. Partnership services range from counseling workers who seek to quit smoking to advising companies about the design of industrial health programs. Prevention, self-care, and behavior-change courses are integral to the program. Other elements are on-site medical care, employee assistance programs, and health information lines. Less than a year out of the gate, The Partnership Program is too new to produce meaningful data on its cost-effectiveness. We predict, however, that fully participating companies will see their health-care costs stabilize over time as their work forces become healthier, more productive, and more efficient at using medical services. Our optimism is based on a wealth of evidence from many separate health-promotion/cost-reduction programs conducted in corporate settings around the nation over the past 10 years. The Partnership Program expands on the success of these programs by incorporating the principles of total quality management. We work with customers to create unique, comprehensive programs that are fully integrated into their health plans. Most important, the programs are designed to identify and address the specific risks (financial and physical) present within each company's population. Group Health Cooperative's Partnership Program is based on the knowledge that the majority of illnesses and injuries can be avoided; studies show preventable causes account for eight of the nation's nine leading categories of death each year. We also rely on solid evidence that medical costs are linked to health habits. Research reveals, for example, that the lifetime health-care costs for smokers--despite their shorter lives--are about one-third higher than those for nonsmokers.
And finally, we know that such risks can be reduced by well-formulated, employer-sponsored programs. An article in the American Journal of Health Promotion recently reviewed 28 work-site health-promotion and disease-prevention programs and found that savings are generally three or more times greater than program costs. One stellar example was a mandatory, comprehensive program for blue-collar workers employed by the city of Birmingham, AL. A 1992 evaluation conducted by the National Institutes of Health showed the program provided the city with a 10-to-1 return on its investment, while holding employee medical costs flat during a five-year period of rapid medical cost inflation. Similarly successful programs have been implemented by corporations nationwide, including Northern Telecom, AT&T, General Mills, DuPont, Southwestern Bell, Johnson & Johnson, Tenneco, and Adolph Coors Co. While some programs focus on encouraging employees to develop healthier habits, others seek to control costs by providing immunizations and screenings, or by teaching staff to use medical resources more wisely.
Reviewing the literature, it becomes obvious that the range of cost-reduction programs is quite broad. That's why we help companies choose the approach that's best for them. If a large employer has a high proportion of female employees over age 40, for example, it may make sense to promote breast-cancer screening and to conduct classes on breast self-examination.
Typically, The Partnership Program begins with a review of a company's demographics, absenteeism, turnover rate, workmen's compensation trends, and time lost because of on-the-job injuries.
A systematic analysis of the company's medical claims can determine which costs are associated with lifestyle issues and what percentage of those claims can be mitigated through health promotion and preventive-care programs. The partnership also may gather information through employee focus groups and structured interviews with key decision-makers.
Additionally, all employees can complete a computerized health-risk appraisal, which provides an analysis of personal health, lifestyle, and family health history. We keep individual results confidential, but the partnership uses the collective data to target high-risk areas. In addition, we can conduct an evaluation of safety and industrial hygiene procedures to reveal opportunities for savings.
Once the research process is complete, The Partnership Program provides companies with a summary of its findings, along with a "Corporate Health Prescription."
At the Red Dot Corp. in Tukwila, WA, for example, we found nearly half of its 400 workers were smokers. The partnership's "Free & Clear" smoking cessation program turned out to be a good match. Production demand is up at Red Dot, which manufactures truck air-conditioner and heating units, and, at least for now, the company can't afford to have its employees sitting in a series of classes. Fortunately, "Free & Clear" is self-administered, providing quitters with support through workbooks and phone calls from professional counselors. Timing for the program was also good. Recently, a minor cigarette-related fire had prompted a facility-wide smoking ban. When health educators arrived to enroll workers in "Free & Clear," an unusually high percentage of smokers--some 25 percent--signed up.
Smoking is not a big problem among the 120 employees of the Greater Seattle Chamber of Commerce. But the staff does have a high percentage of young working mothers. In focus groups, they talked about stress related to balancing the demands of work and family. The chamber now is considering the partnership's recommendations to conduct an ongoing stress management program and to develop an EAP.
Targeting programs to match an employer's risks makes financial sense. If you have young, active workers who typically belong to fitness clubs, providing free, on-site aerobics classes is not a good investment. If, on the other hand, a review of medical claims reveals that this same active, busy group is using expensive hospital emergency rooms for treatment for self-limiting conditions such as colds and flu, strategies to encourage self-care may be in order. It makes sense for employers to use the tools and expertise available through their health plans to ferret out this kind of information and find solutions that will stabilize costs.
It also makes sense to design incentives for everybody involved in the partnership--the employer, the employees, and the health plan. For a prepaid plan like Group Health, the incentive is lower costs due to fewer hospital and clinic visits. This incentive encourages us to offer the programs to companies at or below cost. In some cases, Group Health may even offer premium rate guarantees to companies that promise high participation among their employees. Employers may then pass an incentive along to their workers.
Such partnerships require a high degree of trust. Employers need to know the health plan is going to work with them year-round to find cost-reduction strategies. The health plan needs to know the employer will provide leadership and encouragement for its workers to actively participate. And both parties must be willing to bear the ups and downs of the creative process, coming together often to refine their joint product.
In addition, these partnerships demand commitment to a shared vision. Reducing health risks takes time. Companies may see some limited returns immediately, such as lower absenteeism or fewer visits to the doctor. But the bigger payoffs will come over the long term as a company's population begins to experience fewer cancers, fewer heart attacks, fewer illnesses and injuries overall. That's when we can all reap the true benefits of partnership in terms of lower costs, increased productivity, and healthier employees.
Phillip M. Nudelman is president and CEO of the nation's largest consumer-governed health-care organization, Group Health Cooperative of Puget Sound, in Seattle. He is also chair-elect of the American Hospital Association's Governing Council on Healthcare Systems.
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|Title Annotation:||CE Roundtable; controlling health care costs|
|Author:||Nudelman, Phillip M.|
|Publication:||Chief Executive (U.S.)|
|Article Type:||Panel Discussion|
|Date:||Jan 1, 1994|
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