Here’s something you don’t see every day–and may never see again: in response to the prodding of a dedicated and persuasive doctor–and their own terror that their workers might join a union *gasp*–a coal company in Wyoming has developed a health care system that is concentrated more on effectiveness than efficiency–and it’s working. Sound implausible? Read on.
Maverick Health Plan Ups Quality to Cut Cost
Wyoming mining firms save by getting workers top care from the start, rewarding providers.
By Vicki Kemper, LA Times Staff Writer
GILLETTE, Wyo. — In the open-pit mines of the Powder River Basin, trucks and shovels the size of buildings work around the clock in a computer-choreographed ballet to move the coal that generates one-third of America’s electricity. It’s a grueling, hard-nosed business, with little room for dreamers.
Yet in this unlikely environment, retired surgeon David Crowder launched a small revolution about a year ago that could stand some conventional healthcare wisdom on its head.
His prescription for skyrocketing health insurance costs: Instead of focusing primarily on belt-tightening and gate-keeping, give employees the highest-quality medical treatment right from the start — and reward providers for doing a superior job.
A droll, self-taught consultant operating in a world of MBAs, policy experts and national human-resources firms, Crowder, 59, says his approach can deliver better care at lower prices for employers and employees alike. What’s more, he believes that giving hospitals and doctors a financial incentive to get more effective as well as more efficient can help stem the rising tide of Americans priced out of health insurance.
So far, his strategy appears to be working for the two mining companies — Foundation Coal West Inc. (until recently a subsidiary of RAG American Coal Holding Inc.) and Powder River Coal Co. — that hired him to lower their health insurance costs and keep workers satisfied enough that they would not join a labor union.
Crowder’s focus on quality as a means to achieve savings is not entirely new. About 150 large corporations that make up the Leapfrog Group, for example, have been working almost four years to establish a system of objective standards and rewards that would improve the quality and affordability of healthcare.
But what Crowder and the coal companies are doing goes beyond such efforts, health policy experts say.
“How unique is this?” asks Len Nichols, vice president of the private, nonpartisan Center for Studying Health System Change. “Pretty darn.”
It’s a multilayered approach. Crowder and the mines give doctors and hospitals incentives to release information about their performance. Then they use the information to objectively identify the highest-quality healthcare providers. Following that, they give workers a financial incentive to use those providers. “This is critical,” Nichols says.
“That’s clearly 21st century, and most of the country is still in the 20th, if not the 19th,” says Nichols, who met Crowder this year at a health-policy conference in Washington, D.C.
Granted, the program is barely a year old and relatively small, covering 1,700 Wyoming miners who work for Foundation Coal and Powder River Coal, their 4,600 family members and about 600 retired miners and spouses in Utah, Indiana, Illinois and Pennsylvania.Still, Nichols and others believe it has valuable lessons to offer as insurance costs put coverage out of the reach of increasing numbers of Americans and their employers.
The number of uninsured Americans has risen steadily to 43.6 million, while the proportion of Americans younger than 65 who have employer-provided health insurance has slipped from 67% in 2001 to 63% last year, according to a new report by the Center for Studying Health System Change.
Last year, American employers saw their health insurance costs per worker increase by about 10%. And that was after they tried to control spending by reducing benefits and requiring employees to share more of the costs.
Crowder’s clients tried the same things before bringing him on board. Foundation reduced its payment for employees’ healthcare premiums and bills from 100% to 80%. Later, it raised the family deductible on its basic health insurance plan, increased co-payments for prescription drugs and began promoting a catastrophic plan with a $6,000 family deductible.
Health costs climbed anyway. Last year, before Foundation Coal hired Crowder to work on a monthly retainer of $4,300 and fully implemented his strategy, the company’s per-employee health benefits costs rose 31% — to $10,749.
This year, things have begun to turn around. Foundation has not pushed new increases in workers’ costs or trimmed its benefits, which are well above the national average.
It has increased the share it pays for miners and their families if they use hospitals designated as “centers of excellence,” yet its per-worker costs have inched down 2.5%.
Meanwhile, costs continue to rise nationwide by nearly 10% annually.
Powder River Coal declined to give details on its experience, but Crowder says it is following the same strategy as Foundation Coal and seeing similar results.
(emphasis added by me)
Startling, isn’t it? Advocates of real health care reform–not the ones whose idea of ‘reform’ is lowering costs without regard to its effect on workers’ health but the ones who can see further than the ends of their noses–have been saying for years that ‘effective’ health care is cheaper than ‘efficient’ health care, which often sacrifices health by refusing to intervene early enough or heavy enough. The HMO system took over from the old on-demand system largely because a few huge non-profit HMO’s (notably one in Oregon) demonstrated that early intervention and focused treatment was a lot more cost-effective than emergency treatment at a late stage when intervention modalities had to be extreme (and extremely expensive) as well as scattershot.
‘Prevention’ was an idea whose time had come, and the HMO system took over the American health care industry. Experienced HMO providers, however, warned at the time that Health Maintenance depended on providing services that were, by their very nature, not conducive to huge profits: early intervention meant using simpler and less expensive treatment modalities with low profit margins. A couple of for-profit HMO’s of that pioneering time had done well but only because they had down-shifted their definition of what ‘doing well’ meant–they went back to the primordial benchmark from the less greedy pre-Reagan days and defined a 7-10% return as an acceptable profit margin.
As the new batch of strictly-for-as-much-profit-as-they-could-squeeze-out-of-cutting-services HMO’s took control, those warnings weren’t just ignored, they were actively undermined when HMO ‘entrepreneurs’ made outrageous promises to their investors of 20-30% profit margins and sky-high dividends. The only way they could hope to redeem even a fraction of those promises was to ruthlessly cut needed services in the name of ‘efficiency’ while at the same time extorting or defrauding health insurance providers, especially Medicare and Medicaid, by upping hidden charges and raising prices. It’s no accident that at the same time HMO’s began taking over hospitals, those hospitals started charging $50 for 20 cents worth of aspirin, or that emergency care stats rose alarmingly due both to the number of uninsured who had to use emergency rooms as their primary care provider and the number of insured whose condition was allowed to worsen to the point of breakdown because their HMO had refused to pay for tests that would have picked up their ailment earlier or refused to pay for earlier treatment because their ‘intervention guidelines’ were focused on late treatments like surgery.
Essentially, what Crowder has done with the two coal companies is return to the original methods the early HMO’s proved were successful: do it right to start with. Intervene early, offer the best possible care, reward providers for keeping your employees healthy rather than for refusing them treatment. One doesn’t dare to assume in the Bush Age, when everything from war to disease is defined by its potential to generate corporate profits, that the message of this success story will penetrate the wall of greed that has built up around health in this country, but one can always hope that some sliver of it might affect decision-making at some point. Dreams don’t cost anything, after all. Yet….