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How Creativity Saves Money in Health care

February 16, 2016 Posted by Krysta West - No Comments

There has been a lot of talk lately about the cost of health care in Maine, especially around L.D. 1305. While lawmakers attempt to address the issue in Augusta, some businesses have taken matters into their own hands by instituting company-wide policies that save money by providing incentives for employees to shop for the best value when planning medical procedures.

With a little creativity and hard work, Hardwood Products Company and Puritan Medical Products Company of Guilford, Maine have instituted successful incentivized employee programs that have saved the company health plan a significant amount of money by working with employees to receive lower cost care and sharing some of the savings.

A prime example of how these businesses are working to drive down the cost of health care while also providing quality services to their employees is the colonoscopy. The goal of both Hardwood Products Company and Puritan Medical Products Company was to provide 100% coverage to employees for this important preventative care procedure. After doing a little research, Scott Wellman, CFO to both companies (and a Maine Heritage Policy Center Board Member), worked with the company Patient Advocates and found that the cost of a colonoscopy in Maine varies from $850-$8,500, and that the more expensive procedures do not correlate with a higher quality of care. In fact, the facility charging $850 is able to charge such a competitive rate do to the fact that they specialize in colonoscopies and perform far more than other facilities.

In order to encourage employees to utilize this facility and save the plan a significant amount of money, Mr. Wellman offers company employees 100% coverage AND $200 cash if they select this facility for the procedure. For obvious reasons, this shared-savings program has been extremely popular and most employees in need of a colonoscopy have opted to take advantage of this offer.

The savings do not stop with the colonoscopy. Another example of extremely high (and varied) health care costs in Maine is the hip replacement. This relatively routine procedure costs anywhere between $25,000-$65,000. Mr. Wellman is able to offer plan participants high-quality care at New England Baptist Orthopedic Hospital and Care Center in Boston, Massachusetts with no co-insurance, a very small deductible, 100% paid travel, lodging and food paid for while STILL saving his plan thousands of dollars per procedure because the cost at this top-tier hospital is only $16,000, saving the plan between $9,000-$49,000. One Maine hospital, St. Mary’s in Lewiston, has even offered competitive pricing on high quality joint replacements so that plan participants do not need to drive all the way to Boston.

The program has compiled a list of where the best value can be found for most common high-dollar procedures. Often times, they happen to be in Boston at top-tier hospitals that handle far more volume than any Maine facility. While employees are not limited to these facilities and are free to seek care wherever they chose, the plan will only cover the cost of the best value procedure. In other words, in the case of the hip replacement, the plan will cover $16,000. If employees seek care elsewhere, they are responsible for the remaining balance beyond that amount.

This common-sense program has had great success in leveling the costs of health care while most other employers have seen costs rise year after year, and it is very popular among employees who appreciate the opportunity to receive medical care at some of the best hospitals in the country.

Hardwood Products and Puritan Medical Products have also instituted preventative care measures through an annual voluntary wellness program. Wellness programs have become popular with employers over the years as businesses realize the importance of a healthy work force. Healthy employees are more productive at work and cost health care programs less than chronically ill employees overall. Although an increasing number of employers offer these programs, employee participation is often an issue with an average of only 24% of employees participating in wellness programs. Hardwood Products and Puritan Medical Products have overcome the employee participation barrier by providing a cash incentive of $325 simply for reaching certain benchmarks indicating overall health, and the wellness program at the two businesses have achieved an impressive participation rate of 90%.

By thinking outside of the box and encouraging employees to shop for the highest-value medical care, Hardwood Products Company and Puritan Medical Products Company have achieved significant savings by providing incentives and sharing savings with employees. Similarly, L.D. 1305 would provide incentives to consumers while injecting transparency into health care in Maine to increase competition and drive down medical costs for all Maine consumers.