Employers should use the same diligence when purchasing employee health care that they exercise when buying supplies and other services.

That’s the message from a health care seminar presented last week by the Colorado Springs Regional Business Alliance and the Colorado Business Group on Health, a nonprofit coalition of Colorado employers created to change how health care is consumed. The takeaway for those charged with maintaining health care plans for their employees: Use a few simple tools to do your homework and “purchase smart.”

‘It can’t continue’

According to John Wilson, vice president of economic development with the RBA, wasteful health care spending impacts regional economies.

“For employers, they’re facing [health care] costs that are four to five times the [Consumer Price Index]. That’s a problem. Even worse, the workers — their deductibles are up to seven times their earnings gains in the last five years,” he said.

Wilson said those paying $1,000 a month on care a decade ago may have since seen those costs double.

“That prevents me from getting a new suit, buying clothes for the kids, maybe going out for dinner,” he said. “It hurts the local economy. Additional money for [the same results] is being sucked into the health care system.”

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According to Robert Smith, associate director of the CBGH, health care budgeting and spending has become unwieldy because the consumer has allowed it.

“We don’t have a broken health care system,” he said. “It’s the way the marketplace works.”

Smith said in the 1970s, health care was around 8 percent of GDP and was inflating at two to three times the normal rate.

“Everyone said it can’t continue … that there’s no way this is a sustainable system,” he said. “Forty years later, it’s still pretty much the same and now we’re at 18 percent of the GDP. Our point is not that hospitals or physicians are bad guys. Our point is we need to be more proactive purchasers as employers. You need to know what you’re buying.”


As research goes, the Internet is never a bad place to start. There are several online tools that can be used to determine the quality of care available in the region, as well as ways to compare the costs of services.

According to Smith, care can be siloed into one of three categories: chronic, episodic and catastrophic. He said about a third of services fall under episodic care, the category that best allows consumers to shop around.

“When your primary care doctor refers you out for a particular procedure, that’s when that consumerism should kick in,” said Melissa Damiano, vice president of key accounts, Western region, for Healthcare Bluebook, a Tennessee-based health care consumer advocacy group.

According to Damiano, where you have those procedures, even within the same network, can mean a 500 percent cost variance.

“Location matters,” she said, explaining a colonoscopy in Colorado can cost anywhere from $800 to $4,000. Physician costs are about the same, she said, but individual facility costs create the schism.

“There’s a fair price in every network,” she said, adding service and procedure costs can be weighed at healthcarebluebook.com.

Damiano said quality also varies widely within networks.

“Hospital systems may be great at one thing but do poorly somewhere else,” she said. “For instance, when we think the Cleveland Clinic, we think cardiac care. They’re one of the best systems nationally in cardiac care. But for joint replacement, they’re in the bottom 8 percent in the nation.”

Smith said a high-performing network is “like a unicorn. We can describe it, but we’ve never seen one. We’ve never seen a system perform at the highest levels across all services.”

Another resource is ProPublica’s Surgeon Scorecard, which can be found at projects.propublica.org/surgeons. The site allows users to search complication rates for surgeons at the hospital of their choosing. The site displays surgeons, by name and procedure, and whether they have low, moderate or high complication rates.

Bundling and diabetes

Two other avenues toward reining in health care spending included bundling services and an emphasis on preventive care, especially revolving around pre-diabetes.

Jessica Linert, director of insurance for the Colorado Public Employees’ Retirement Association, said her organization recently began bundling its most popular procedures to eliminate cost variations for identical services.

Linert said, since PERA recipients are retired, the age demographic is higher than active employees, so those preferred services may vary. However, she said employers would be wise to negotiate prices with carriers and third-party administrators on recurring procedures, to include certain types of surgeries as well as imaging and maternity care.

Donna Marshall, executive director of the CBGH, said one of the largest drains on employer resources are the 26 million Americans with diabetes. But an even greater concern is the 79 million pre-diabetic Americans, those with conditions that could lead to full-blown diabetes within the next five years.

“Colorado is 21 percent obese and we’re one of the fittest states in the nation, but 21 percent is where Mississippi was 20 years ago,” Marshall said.

Marshall said the National Diabetes Prevention Program is a vetted disease management and lifestyle coaching program that has benefited numerous employees and their employers.

Marshall said it’s a pay-for-performance program, so there aren’t costs unless employees participate.

The program has reduced the risk of developing diabetes in pre-diabetics by about 60 percent, Marshall said, adding employees with diabetes can cost employers an additional $4,400 annually.

“One thing I really like about this program is that it’s made up of organizations in the community,” she said. Those include the YMCA and The Center for African American Health. “It’s a community approach to disease prevention and wellness promotion.”

Information on the DPP can be found at cdc.gov/diabetes/prevention.


Click here for related story about how to use safety measures to cut costs.