NCPA - National Center for Policy Analysis

Innovative Health-Care Plan Developed At Merrill Lynch

May 24, 2000

Health care analysts report that Merrill Lynch & Co. has somehow achieved the best of two worlds in the health-care plan it offers its employees: generous benefits at a lower cost.

How did the financial services giant do it?

  • Instead of controlling costs by restricting employees' access to specialists and brand-name drugs, it saved money by focusing on the quality of care and early detection.
  • Beginning in 1987, the company began conducting random audits of staffers' medical care -- and found that some were being treated for the wrong disease, while screening tests weren't always followed up.
  • Executives of the firm formed a company to push for quality improvement.
  • If an employee was getting an improper diagnosis and otherwise failing to get the best possible treatment, the patient's doctor would get a call from Merrill's medical consultant offering a few tactful suggestions.

By following this route, along with efforts to detect potential medical problems and take action before disaster fell, the company achieved savings of about 25 percent per employee last year compared to health plans at comparable firms.

A half-dozen other corporations have copied Merrill's plan and the federal government will run a similar pilot project for thousands of its workers this summer.

Source: Carol Gentry, "How Is Merrill Lynch Limiting Health Costs? By Expanding Benefits," Wall Street Journal, May 23, 2000.


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