NCPA - National Center for Policy Analysis


August 27, 2004

Retired surgeon David Crowder launched a small revolution in health care about a year ago when he implemented a plan that gives employees the highest-quality medical treatment right from the start and reward providers for doing a superior job instead of focusing primarily on belt-tightening and gate-keeping,

So far, his strategy appears to be working for the two mining companies -- Foundation Coal West Inc. and Powder River Coal Co. -- that hired him to lower their health insurance costs and keep workers satisfied enough that they would not join a labor union.

  • Crowder and the mines give doctors and hospitals incentives to release information about their performance.
  • Then they use the information to objectively identify the highest-quality healthcare providers.
  • Following that, they give workers a financial incentive to use those providers.

Granted, the program is barely a year old and relatively small, covering 1,700 Wyoming miners who work for the coal companies, their 4,600 family members and about 600 retirees in Utah, Indiana, Illinois and Pennsylvania.

  • Last year, before Foundation Coal hired Crowder, the company's per-employee health benefits costs rose 31 percent -- to $10,749.
  • This year, things have begun to turn around -- Foundation has not pushed new increases in workers' costs or trimmed its benefits, which are well above the national average.
  • It has increased the share it pays for miners and their families if they use hospitals designated as "centers of excellence," yet its per-worker costs have inched down 2.5 percent.
  • Meanwhile, costs continue to rise nationwide by nearly 10 percent annually.

Crowder believes the real savings -- in complications that don't develop, procedures that don't have to be redone and surgeries that aren't performed in the first place -- are significantly greater.

Source: Vicki Kemper, "Maverick Health Plan Ups Quality to Cut Costs," Los Angeles Times, August 23, 2004.


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