With the cost of employee health care climbing more than 15% a year, Hazel Inc. decided, like many other companies, to do something about it.
What the Washington, Mo., manufacturer did was sign on with the St. Louis Area Business Health Coalition. The 36-member group is one of more than 150 employers' coalitions in the United States, the vast majority of them started in the past four years. These coalitions provide forums for the exchange of ideas and information, lobby for legislation, develop employee health-education programs, and compile comparative pricing and quality information."Employees must be educated and given an economic reason, such as an increased share of the cost, to reduce excessive and indiscriminate use of medical services," says Dean M. Hosmer, executive director of the St. Louis coalition.
At Hazel, which makes vinyl and leather products, a health plan instituted in January 1984 requires the company's 950 employees to pay the first $200 of their medical expenses each year ($400 for families) and 30% of the next $3,000. (These deductible and co-payment fees are higher, on average, than those most employees are currently required to pay.) Employees who identify any incorrect charges on their medical bills and bring them to the attention of the company's plan administrator will be rewarded for half the amount of the refunded incorrect charge. The idea, says Lee Dardick, Hazel's president, is "to make employees more responsible medical care consumers."
In addition to advising members on their employee health plans, the St. Louis coalition recently instituted a hospital utilization review program, which pays doctors to review hospital treatment procedures for employee-patients. The service cost the coalition $500,000 in 1983, but it saved the 36 participating employers $5 million in one year by cutting the average hospital stay from 7 days to 6.2 days. Also planned is a hospital preadmission review program; employees will be required to get approval from the panel of physicians for all nonemergency hospital procedures -- a process that Hosmer predicts will save $3 million in reduced hospital admissions. "The people will get the medical service they need, but much of it will be as outpatients," Hosmer says.
For these and other services, Hazel, with $48 million in annual sales, pays the coalition $3,000 a year in dues. (The dues are based upon each company's number of employees.) For Dardick, it is money well spent. "The value of the coalition is ongoing," he says. "They're going to come up with a lot more [ideas]. The cumulative benefit is what we're after."