Benefits managers' new role: selling cost cutting to employees

Business & Health, March, 1993 by Sean T. Barry

To assist its employees, Weyerhauser began to offer a service called Care Line, a toll-free number they can call for information about medical services or procedures. Registered nurses staff the line, acting as patient advocates, and helping employees identify the questions to ask their physicians, such as what alternatives are available to them and, occasionally, even recommending a specialist near an employee's home.

The combination of communication, education, and careful scrutiny of its internal health care data and usage patterns has proved successful in keeping Weyerhauser competitive. The $130 million Weyerhauser spends for its health care costs, for 35,000 U.S. employees, is still 15% below the industry average, according to Wallace.

To identify its specific concerns, Weyerhauser now consults with employees before making changes in the health care plan. Employee surveys and communication between employees and the benefits staff and through Care Line help align the need for change in the health care plan and the desires and concerns of the company's employees.

"It doesn't always align perfectly," Wallace points out, "but sometimes you do have choices. And when you have a choice, it's important to lean toward the area that is most palatable to the employees."

Outside solutions

To date, Weyerhauser has focused its efforts internally, by analyzing cost data and identifying areas for improvement. Yet many companies, including Xerox, employ cost containment strategies outside the company, at the source of care-- the provider.

"We've taken the position that we need a long-term plan, and not short-term fixes," says Darling at Xerox. "in order to do that, we need to encourage the use of organized delivery systems of care."

As Darling points out, "Such systems do a far better job of managing the problems of ensuring high-quality care: providing medically necessary services and access to what's needed, the right mix of cost-sharing for so-called small-ticket items, and discretionary protection for those things that no one can control or plan for, like multiple sclerosis, organ transplants, or AIDS."

Since Xerox has 55,000 employees at more than 200 locations-including major operations in Stamford, Conn., and Rochester, N.Y.--it needed a strategy to provide competitively priced care for all its employees. And to ensure that employees bought into the new plan, the company had to allow leeway for employee choice. Xerox consulted with 22 managed care organizations about establishing an organized system of care, a system that provides soup-to-nuts health care and combines the financing and delivery of that care. (See "Networks of care may serve as a model for health reform," February.) After extensive surveys assessing employee needs and concerns, Xerox began its HealthLink program in 1990.

In essence, HealthLink is a corporate version of managed competition, a health care delivery model endorsed by President Clinton, and developed by the Jackson Hole Group, a panel of health policy experts such as Paul Ellwood, M.D., president of InterStudy, a health policy research organization in Excelsior, Minn., and Alain Enthoven, professor of management at Stanford University's Graduate School of Business.