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Union Finds Better Health Care Formula

January 16, 2012 By Aaron Sinner, Hindsight Community Fellow

Across the country, health costs continue to skyrocket, increasing 6.7% annually in recent years.

Statistics, however, have long suggested the U.S. can lower health care costs while improving quality of care. One local union is proving these statistical trends into practice.

In implementing its new Value-Based Health System, the International Union of Operating Engineers Local 49 has kept costs flat the last three years.

The story starts with a familiar situation. In 2004, the Operating Engineers, or 49ers as they’re known, were struggling to manage their rapidly rising health expenses.

“We were hemorrhaging,” said Jim Hansen, Local 49’s recently retired Health and Welfare Trustee. When the union negotiated compensation increases, the numbers suggested it needed to invest the entirety of the raise in health insurance. The 49ers confronted a common dilemma: Either cut benefits or increase spending on health care.

Instead, the union opted to focus on value, an oft-overlooked third option. This focus resulted in the implementation of Healthier You, a Value-Based Health Care program, in 2006.

Choosing this course led Martha LaFave, Health Fund Coordinator for the 49ers, to a novel approach. “We didn’t look at the dollars,” LaFave said. The union instead focused on obtaining top-quality care and trusted costs would decline as a result.

Dr. Daniel Buss, the Minnesota Twins’ team physician and a supporter of the 49ers approach to health care, suggests it’s an insight one should expect from a union.

“[Operating engineers] are very attuned to the fact that if you have to come back out and redo something that wasn’t done correctly, it tends to be much harder to do then if you just did it right the first time,” he said in a video discussing the program’s benefits.

This insight led to Value-Based Health Care built on two central principles: (1) early detection and (2) seeking care from the best.

In prioritizing early detection, the 49ers have put the “prevention saves money” theory to the test to an extent few have dared try—and to noteworthy results. The union pays for an annual physical exam for each member and spouse—the health care fund covers more than 33,000 people.

The physicals are designed by HealthDynamics, a physician-founded firm focused on preventive care, and are valued at $5,000. Because of the 49ers large purchasing power, they pay $500 for the physicals. It guarantees an extremely comprehensive physical, including a medical evaluation, fitness assessment, nutritional analysis, cancer screening, and stress inventory. But the physical has proven effective: A whopping 70% of those who take it have made lifestyle changes as a result. Each change is a step toward prevention, preserving health and averting future medical expenses.

The second key to the 49ers’ success comes in finding the best doctors and specialists for any given job. For this, the union turned to Health Systems Management, a company that conducts data-driven doctor evaluations.

“It arms people with information they’d have no way of finding on their own,” said Jason George, the Legislative and Political Organizer for the 49ers. With the information in hand, the union locates the best doctors for any given medical problem and works to set up their members with those doctors. The union is even willing to fly members to the best possible care, paying travel expenses for a member and travel companion.

Such a drastic break from traditional American health care requires some extra attention. To tie it all together, the 49ers’ patient advocacy team, which includes Health Systems Management, is responsible for following up with members to guarantee the best possible health outcomes. They call members after exam results come in to help set up the appropriate appointments and follow up in the weeks and months after procedures to ensure there are no complications. Patient advocates work as a backstop to help members take maximum advantage of the information available and make sure no one slips through the cracks.

Value-Based Health Care does present its own set of challenges. Beyond the annual physicals’ high costs, the union also confronts the reality of members who are hesitant to shift away from their family doctors toward physicians with proven track records.

While only 10% of members have signed on for the annual physical Value-Based Health Care—offered at no additional cost—that percentage grows every year. The union holds educational meetings with members annually across the state, which has encouraged increased participation.

“When you implement anything new it’s critical to educate members about the benefits and the reasons behind the new program,” says George.

Yet despite this low participation rate and only a few years of implementation, the Operating Engineers are already realizing savings.

By their second year of implementation, the 49ers had already bent the cost curve; costs have now been flat for the past three years. For a system based on the importance of prevention, such a result is phenomenal, as the bulk of money saved through prevention, early detection and fewer wasted health care dollars can show up many years after the initial intervention. Savings for the 49ers can only grow as more members participate and expensive treatments even further down the road are prevented through early detection.

LaFave, Hansen, and George are brimming with stories of the better outcomes that result from early detection and top-quality physician care. These stories—and the numbers—demonstrate that the 49ers have cracked the U.S. health care riddle and discovered how to keep costs down while achieving an even better level of health.

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  • Bernice Vetsch says:

    January 24, 2012 at 2:51 pm

    I hope that both the Minnesota legislature and the federal health care committees in the House and Senate will invite the union to testify about this method.

    Shopping around for the lowest prices on preventive and curative care, especially expensive surgery, should never be accepted—much less insisted upon—by those who design insurance plans they hope will work for patients.  It is nevertheless often suggested as a way to save health care dollars.