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When the Best Health Care Turns Out to Be a Bargain

December 30, 2004
Related Topics: Health and Wellness, Featured Article, Compensation
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In rural wyoming, a small experiment in corralling stampeding health care costs may dispel a lot of the prevailing wisdom about quality health care.

    It’s a natural assumption that top-flight care costs the most money. But David Crowder, a doctor who trained at the Mayo Clinic, has compelling evidence that in many cases, the best costs less--in both the long and short run.

    Crowder hired on as a consultant to two self-insured Wyoming coal mines after folding his surgical practice several years ago because of skyrocketing malpractice insurance. He has made it his mission to find ways to lower costs for very expensive health problems, including heart disease and cancer.

    His prescription, however, differed from the usual approach of tightening benefits and raising premiums.

    Instead, he believed that the solution was getting patients to the best doctors and specialists right off the bat. To that end, he set out to identify regional medical "centers of excellence" in three care areas: cardiology, cancer and orthopedics (a particular concern in mining, which can be a physically taxing job).

    In a practice that parallels the work of the Leapfrog Group and some health plans, the mining companies offered financial incentives for hospitals and doctors to release information about their performance, allowing the employers to identify the best care for the selected illnesses.

    "What we found out is that among choices of providers, the best usually turned out to be the cheapest, on top of everything else," says Crowder, who uses Blue Cross Blue Shield of Wyoming as a third-party administrator. "Just because you’re expensive doesn’t mean you’re good. So we’re actually saving money upfront and by the fact that if people have lower complications, it’s got to cost less. ‘Rework’ is a concept executives understand, but they don’t always understand ‘complications.’ "

    Crowder’s answer was employer education, starting with human resources directors, then moving on to employees. They are offered incentives in the form of lower copays (90 percent of the cost being company-paid, versus the usual 80 percent). Patients may also travel as far as the M.D. Anderson Center for Cancer in Houston for treatment, with airfare paid by the company.

    "We need everyone to become players in their own health care, kind of like you would with a 401(k) plan," Crowder says. "We had to educate our executives because if they don’t understand this stuff, they’ll subvert the program without even knowing they’re doing it."

    Crowder is in no way penny-wise and pound-foolish, and he’s committed to looking beyond the initial price tag. "We don’t really care what the cost is," he says. "You’re always going to save money by getting it right the first time and avoiding costly complications."

    The program is barely a year old and is of limited scope, covering 1,700 miners who work for Foundation Coal West Inc. and Powder River Coal, along with 4,600 family members and about 600 retirees. The centers-of-excellence approach currently focuses on the three areas, but pediatrics may be added soon.

    The concept of centers of excellence isn’t new, but until recently they’ve been mainly confined to organ transplants, says Helen Darling, president of the National Business Group on Health, an organization with a membership of 220 Fortune 500 companies. "What’s new is the use of centers for things like cardiac disease and, more recently, for orthopedic and weight-loss surgery."

    Darling says nearly all of the group’s members use centers for organ transplants, but for other purposes, "it’s really just the beginning." The big sticking point is a lack of transparency, or a dearth of data available to employers so they can choose their own centers of excellence, she says.

    Given that tight focus on a small group of conditions that the Wyoming companies are monitoring, precise savings are hard to quantify. Powder River Coal Co. officials declined to be interviewed for this story. But Mike Meyer, human resources manager of Foundation Coal’s Belle Ayr mine in Gillette, says preliminary indications are encouraging.

    "The bottom line for the first year was that we broke even," Meyer says. However, he adds, the numbers were skewed by one of the dozen participating employees who suffered from an advanced case of cancer. "It still would’ve cost a lot more if the patient had had treatment locally rather than at a center of excellence, but if you look at the other 11 people, we actually saved as much as $15,000."

    He also notes that prior to visiting the center, the patient had "been going around in circles visiting doctors for three years" without an accurate diagnosis--a waste of time and money. "And you can’t put a price on peace of mind," he adds.

    Medical facilities seem to be getting the message. A case in point is the Wyoming Medical Center in Casper, which approached Crowder about becoming a center of excellence. After reviewing the hospital’s track record, Crowder bluntly told the facility that it didn’t measure up.

    "We said it’s not money--your outcomes aren’t good enough," Crowder says. "They told us we were the first group who’d ever raised that issue and that everybody else only cared about prices." That particular wake-up call resulted in the Wyoming Medical Center sending one heart-lung surgeon and an operating team to the highly respected Cleveland Clinic for additional training. Now it is in the process of qualifying as a fourth center of excellence. Three more facilities also are on their way to certification.

Workforce Management, January 2005, p. 16 -- Subscribe Now!

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