Deflation ahead for health costs?

deflating American flag shaped hot air balloon


It looks like the innovations in health care delivery at Serigraph continue to produce results. The company is now running 35% below its peer group nationally.

Costs for a full health care plan, including administration and drugs, came in at $7267 per employee in 2010. That’s about one-third of costs in much of the public sector.

The most startling statistic in our campaign to keep people healthy and to ratchet back health care inflation is hospital admissions. In 2010, the number of inpatient admits dropped to 34, less than half of our peer group average of 70.

Our company had 71 admissions in 2007, so we are saving more than 30 admissions a year at a sticker price of $24,000 and a discounted price of about half of that. That’s a big deal for a mid-size company.

It proves that proactive primary care, including prevention, wellness and chronic disease management, really works.

Further, at mid-year in 2011, our costs per employee are tracking about even with 2010 numbers. That raises the possibility of a 2012 with no premium increases for employees. It will be the 6th time in nine years with no premium increase.
Some other positive results in 2010:

• Emergency room visits were 71 per 1000 lives, or 38% of average. Serigraph people use the ER room only in a real emergency.
• Inpatient surgeries were 51 vs. 80 average per 1000.
• Radiology scans totaled 775 vs. 1300.
• Claims related to poor lifestyle choices were only 3% of our total claims, versus 7.7% for our peers.

These strikingly positive numbers are a testimonial to the engagement of the Serigraph workforce in reforming how care is delivered in this country. They are helping to mange this complex issue.

Reforms such as a consumer-driven plan, on-site primary care, finding the best centers of value and transparency on prices and quality are making a difference, a huge difference.
We still have a lot of innovation to do. For instance, we decided recently to go after depression, the second most costly chronic disease in the work place. Few companies, if any, have an enlightened managerial effort on that front.

We will develop an annual health plan for every employee and spouse, to be worked out privately between them with our on-site medical team.

We will continue our push to obtain all-in prices from health care providers, instead of the complex bills that no one can understand.

The effort to improve health and the related cost structure will never end. It is a learning journey.

The progress in the private sector toward a better business model for the delivery of healthy care has been so striking that it is possible to conceive of the year when health costs go down instead of spiraling upward, as they have done for the past 40 years.

The annual increases in the nation’s health bill in medicine has decelerated in recent years to 6% to 8%, compared to a high of 15% earlier in the last decade.

Some of the decrease has been due to the Great Recession and people’s reluctance to spend on anything during tough times, including health care.

But the rapidly developing, ground-up reforms brought about by corporate payers and their employees also has had a cumulative impact. In the long run, the grass roots reforms will prove far more powerful than the pending insurance reform from Washington D.C.

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