Los Angeles Times Examines Unorthodox Employer Strategy To Reduce Health Care Costs

The Los Angeles Times on Monday profiled retired surgeon David Crowder and the "small revolution" he has launched at two Wyoming coal-mining companies to lower health care costs and improve quality of care for employees. Last year, despite efforts to reduce health care costs by increasing employee cost-sharing obligations and reducing benefits, Foundation Coal West and Powder River Coal continued to struggle with rising health care costs. Foundation last year saw its per-employee health benefits rise 31% to $10,749 over the previous year.

Crowder, who worked to improve physician-mine relations during his 20 years in private practice, was hired by Foundation and Powder to help lower the companies' health benefit costs and "keep workers satisfied enough that they would not join a labor union," according to the Times. His plan, which the Times reports "could stand some conventional health care wisdom on its head," is to give employees the best medical treatment from the outset and to reward providers for high quality of care.

Crowder's plan revolves around quality data provided by participating providers, which allowed him to designate four centers of excellence: Poudre Valley Health System in Fort Collins, Colo., for orthopedic and spine problems; St. Joseph Hospital in Denver for cardiac care; University of Texas-M.D. Anderson Cancer Center in Houston for cancer care; and the Mayo Clinic in Rochester, Minn., for difficult diagnoses. The coal companies provide incentives to the miners to use the centers of excellence from the beginning of their treatment.

For miners who seek treatment at the designated providers, the companies increase their cost-sharing burden from 80% to 90%; waive employees' deductibles; and reimburse employees for some food, travel and lodging costs incurred during treatment. Meanwhile, providers are encouraged to improve their quality of care -- thus lowering costs further -- to win center-of-excellence designation from the coal companies. For example, in the past year, Wyoming Medical Center in Casper has worked to improve its treatment programs, and it is set to be named the fifth center of excellence by Crowder based on the results of its efforts.

So far, Crowder's approach "appears to be working," according to the Times. Per-worker health benefit costs for Foundation have dropped 2.5% in the last year, and the company has stopped increasing employees' cost-sharing obligations. Crowder said Powder has had a similar experience, although the company declined to provide specific details. Mike Meyer, director of human resources at Foundation's Belle Ayr mine, said the company has saved about $11,000 on 10 employees' health care costs. Although Meyer said he had hoped for higher savings, he also said that the program seems to be "effective" so far, adding, "It's a start." Crowder said that real cost savings will develop over time because better care prevents the development of complications and often precludes the need for repeat or unnecessary procedures.

Jean Marshall, Foundation's former director of compensation and benefits and a consultant to Crowder's program, said, "We're probably not going to make huge strides for another three to five years." She added, "But it's going to make a difference. And if we can give employees some tools" to improve and protect their health, "we'll be ahead of the game." Len Nichols, vice president of the Center for Studying Health System Change, said Crowder's program is "[p]retty darn" unique. He added that the strategy is "clearly 21st century, and most of the country is still in the 20th, if not the 19th" (Kemper, Los Angeles Times, 8/23).