Georgia Manufacturer Uses Innovative Techniques to Cut Costs and Increase Benefits

Case Study of South Georgia Manufacturing Firm


In late 2005, a particular South Georgia Manufacturing Firm found themselves around the conference table with their consultant discussing an annual dilemma – rising healthcare costs. The tone was a little different that year, as the management team and the consultant were determined to gain control in one way or another without impacting an employee force whose average wages were less than $12 per hour.
     The firm has approximately 220 employees plus their dependents covered under the medical plan; many are Hispanic. They had already addressed the Worker’s Compensation issues with great success and knew a different approach had great potential.
    The firm’s founder had worked hard over the years to develop their reputation and was now seeing some of that hard work threatened by, in large part, continual escalating medical program costs. It was stated that employees were very important to them and they had always taken care of the workforce, so eliminating or reducing the benefits of the healthcare program was simply not an option.
     In the past, they had dealt with carriers and administrators who seemed focused on conventional cost shifting in order to hold costs down. Higher deductibles, co-pays and out-of-pocket expenses, coupled with increased employee contributions, were simply “squeezing the balloon” – shifting the liability for incurred expenses to those least able to afford it. Each of these “shifts” had the net effect of additional employees deciding to become “self-insured” and taking a chance. For those that stayed on the plan, higher costs meant less compliance and, in the long run, increased large claims for the program.
     It struck everyone at the table that over the years no one had ever made sure the goals of the company were the primary focus of those who served them as providers. Reduced costs without impacting outcomes appeared to be a foreign concept to those they did business with. It was obvious the higher the cost of the program, the higher the compensation for the various service providers – at the expense of the firm and its employees. Shareholder value and executive compensation seemed to trump the firm’s own goals.
     The consultant said, “The firm had been, and continues to be, careful to employ the latest techniques and processes to stay competitive in the industry and we felt the same philosophy ought to apply to an expensive program like our healthcare. The problem is the healthcare industry has been incredibly slow to move toward logical and rational solutions and there had to be a concept that addresses the issues of accessibility, affordability and accountability. All our traditional programs have rewarded everyone for an increase in claims, except for the one who has to pay the tab – us! In other words, it was apparent everyone, except the employer, wants to keep employees and dependents sick so costs will escalate!”
     After spending time researching alternatives, the consultant called in a Georgia-Based Healthcare Solutions Firm, WORKsiteRx (www.WORKsiteRx.com)*, to evaluate the data that was available at the time and give input on the situation. Right off, it was recognized that appropriate and comprehensive data was missing but that it was critical to the task of evaluating the various risks and potential rewards of changing the program. Without the data and a baseline to measure from, there was no way to know if there had been any progression or regression from year to year and, as with conventional programs, the data lay in several places and within disparate systems.


A Transformational Plan
     Following a comprehensive review of available material, it was obvious the firm was a prime candidate for a “transformational plan” that focused on financial accountability and clinical effectiveness. Effective January 2006, a unique program was implemented that embraced accessibility, affordability and accountability, as well as full transparency.

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