The health care dilemma

Chief Executive, The, May, 2004

THE TIME HAS COME for CEOs to elevate health care to the top of your agendas. It's not just an issue for Human Resources or the Chief Financial Officer. What's ultimately at stake is the ability of companies to make money in view of exploding cost structures and to retain the loyalty and productivity of your employees. (See cover story, page 20.)

We agree that there is going to have to be more "cost sharing" (i.e. having employees pay for some portion of their health costs). It's not economically rational to have a system in which aging baby boomers, in particular, have infinite demand for high-quality care yet pay little or nothing for it. The fancy term is that the "pricing mechanism" needs to be fixed. More colloquially, everyone ought to have some skin in the game.

We also agree that CEOs are going to have to work hard to drive down the costs of the nation's incredibly inefficient health care and insurance systems. But that's difficult and only so much can be achieved in terms of cost savings.

At the same time, we think it's important for leaders to take the high-road approach wherever possible. Look what Jim Goodnight has achieved at the SAS Institute in North Carolina. By providing doctors on the corporate campus and by adopting other policies that are positive for lifestyle and health, his company attracts some of the best talent. And SAS has excellent retention and loyalty. That's worth a great deal in the marketplace.

Other companies are experimenting with allowing their most valued employees to obtain access to the best health care, whether at the Mayo Clinic or another top facility. And others are encouraging employees--and top managers--to keep fit.

So there is no one silver-bullet solution to the health care crisis. Ultimately, managing the dilemma is going to require closer coordination with all the other players--hospitals, pharmaceutical companies, medical equipment makers, insurance companies, doctors and others. There are so many constituencies involved that CEOs need to build coalitions, rather than attempt to pinpoint blame or to merely shift the burden to others. If CEOs are serious about not wanting the government to step in, as you told us in the latest CEO Confidence Index (see page 12), you have to begin taking a leadership role.