Editor’s Note: Serigraph, Inc., headquartered in West Bend, has been successful for over a decade in using a healthcare plan that closely parallels the Segal Consultants’ recommendations to the state Group Insurance Board. John Torinus Jr., Chairman of Serigraph, has written the following description of that plan and how it came about, for the readers of the Chippewa Valley Post.
By John Torinus Jr.
Back in 2003, my company, Serigraph Inc., was facing a crisis in managing its health costs. Our total costs were $5.5 million, and we were looking at a 15% increase in 2004.
That would be a bump of more than $800,000, and we simply didn’t have the money. Health costs had become a threat to our survival. With about 800 employees and their families to think about, we had no choice but to innovate.
We manage aggressively and creatively in every other aspect of our business – making decorative components like the face of the instrument cluster in your car or the control panel for your clothes washer and dryer. So why not for our third biggest expenditure, health costs?
Our managers quickly came to the conclusion that the old business model for the delivery of health care in the United States was busted. It was reactive (fixing symptoms, not keeping people well), impersonal (6-8 minute office visits before being whisked off to an expensive specialist), opaque on prices and quality of outcomes (prices were impossible to get ahead of treatment), and expensive (highest in the world by far).
So we set about to design a better model, one that was proactive in keeping people out of the hospital); relationship-based with primary care doctors front and center; long term oriented over the careers of our people; value-based where quality comes first and cost second; and transparent.
We started demanding prices for treatments, and, at first, were stonewalled. We persisted and developed one of the first transparency sites in the county. It revealed that prices varied wildly, as much as 400%, even within the same hospital system. It could only be described as economic chaos. Why would a hip replacement cost as low as $23,500 at a high quality hospital but four times that down the street?
That 400% price variation continues to this day. Obviously, there were huge savings to be had if we put our management hats on.
So, where are we at today with our continually improving new model? Here are some of the highlights of our healthcare plan:
Our total costs (for employee and employer together) for a top-notch plan are about $13,000 per employee, about 30% below the national average, even though we have an older workforce.
The well-being of our co-workers has sharply improved, with hospital admissions reduced by half and cholesterol and blood pressure readings down sharply.
Our on-site and near-site health care clinic, staffed by part-time doctors, nurse practitioner, health coach, chiropractor and dietician are free to co-workers and their families.
Our deductibles and co-insurance are offset by an employer-paid health account in their name. Incentives and disincentives work.
We are self-insured, so we can keep the savings from our innovations in care. Why give our savings to an insured pool?
Every employee and spouse receives an annual health risk assessment, with blood draws, a health report card and an optional health plan developed with our medical team. This allows our medical team to deal with chronic illnesses, where 80% of costs lie, and our managers get the aggregate data so we can manage workforce health. For example, we have a 27% smoker rate, way higher than the state average of 14%, so we have work to do on smoking cessation.
Rebates are given to co-workers for smart consumer choices on elective procedures: $2,000 in cash for going to an infection free orthopedic shop for a joint replacement; $500 for a colonoscopy.
Generic drugs are free.
We screen for mental illnesses so they can be treated promptly.
Our wellness program can earn a co-worker two days off.
We have an on-site fitness center, walking paths on our campus and a variety of nutrition and exercise programs.
In summary, our co-workers and their spouses engage in co-managing our well being as a workforce and our health costs. That has enabled the company to go without premium increases for co-workers in seven of the last twelve years.
Not surprisingly, our co-workers rate the SeriHealthcare plan as the best aspect of their employment at the company. It is a recruiting and retention tool.
For a Feb. 24 Wisconsin State Journal report on a discussion of proposed changes in the state’s healthcare plan, click here.