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Union Carbide's Lessons on Managed Care

April 1, 1995
Although health-care legislation faces an uncertain future, self-insured companies like Danbury, Connecticut-based Union Carbide, urgently needed to slow the rise of health-care costs while ensuring continued excellent care for employee and retiree families. At Union Carbide, health-care costs had been rising at double-digit rates since the late '80s, reaching $77 million in 1992. There was no way to continue at that level. We had to apply the brakes.

We turned to managed care to gain control of costs. And it's working. From the plan's inception in July 1993 through the end of last year, our costs were $18 million less than we projected they would have been without managed care, and we expect at least $10 million more in savings by the end of this year. Despite the administrative glitches that go with most new programs, most em-ployees like the change.

But that outcome is by no means certain. Whatever name you give a new health-care plan, it will sound like trouble to employees who've grown comfortable with another. Unless you pay close attention to their concerns, even the best plan can mean headaches instead of savings. Here are some of the lessons we've learned:

  • Never underestimate the emotional tie between employees and their doctors. Often, these relationships span years, even decades. A new plan might end these relationships if doctors don't join.
  • As with many managed-care plans, we require that employees choose a family doctor as their primary-care physician. This "gatekeeper" provides most health services and guides them in using other approved specialists or services. In return for using only ap-proved doctors and medical facilities, employees are reimbursed at higher rates with no annual deductible.

    But our new plan ripped away a "security blanket" for some 40% of our employees. They had to change to a primary-care physician in the plan or find one for the first time. Many em-ployees resented the restricted choice and others assumed that only second-rate doctors were willing to negotiate fees. Employees weren't shy about letting management know how they felt. Company officers received angry letters; employees had heated discussions at employee meetings; and irate callers vented their frustrations on our benefits administrators.

    We tackled their concerns head-on at meetings and through written communications. We didn't make cutting costs our only focus. Instead, we concentrated on listening to criticism and embracing good suggestions.

    We also advised employees about finding a new doctor, what questions to ask and even paid for "get-acquainted" visits to the primary-care physicians under consideration. We made it clear that plan members could change doctors at any time at no cost. Hundreds of employees took us up on this offer.

    In areas with new-physician networks, we encouraged employees to have their doctors apply for admission to the plan. We eventually certified a high percentage of those who did.

    We gave special attention to cases involving long-term or life-threatening illnesses, such as cancer. We approved continued treatment from doctors outside the network when there were good medical reasons for doing so. Otherwise, we worked with our administrator to find other qualified and plan-approved doctors for these patients.
  • Don't be afraid to over-communicate. Only a unified management effort will enable you to sell a new plan. First, we called on all line managers nearly a year before introducing the plan. We distributed special monthly reports designed to make managers aware of the new managed-care plan's features as they took shape and then trained them on plan fundamentals so they could answer questions.

    Then we rolled out the plan to Carbide's 10,000 employees with a six-month, multimedia effort that included written materials, employee meetings, a video explaining managed care, and our plan and its administration.

    Weekly bulletins kept employees informed about new physicians joining the networks. We used our toll-free benefits-action line and our plan administrator's member-service telephone networks to answer questions. But as good as we thought these efforts were, they weren't enough.
  • Anticipate unexpected administrative issues and problems. As the plan kicked in, more than 70,000 calls came in during the first three months alone—double the usual number. In the first full year, calls increased 68% to 220,000. Our plan administrator's member-services group needed new computer programs and more staff.

    All the effort paid off. Despite problems at the outset, employees have since embraced the new plan. A recent survey showed that 93% of our employees are satisfied with the quality of care received; another 92% are satisfied with their primary-care physicians; and 89% are happy with their specialists.

We still have work to do. Administrative problems persist, particularly with patient referrals. As before, we're listening to employees and working in teams with our administrator to smooth things out. Change is painful. But if you're sensitive to employees' worries and concerns, anxieties can be reduced. You'll come away with a program that saves your company and your employees money, and provides quality health care at lower cost.

Jean B. Case works for Union Carbide Corporation as corporate medical director.

Personnel Journal, April 1995, Vol. 74, No. 4, pp. 38-48.