For more than 25 years, Colorado Springs School District 11 (the largest district in southern Colorado) has self-funded its health care. We have always believed that by being self-funded, we could cut out the middle-man (insurance companies) and ultimately save costs.
We understand that we are responsible for our own health and that there is no magic solution to solve our problem. We have to create the solution. Employees pay co-pays and deductibles, and the district pays everything else.
This model worked incredibly well throughout the 1990s and early 2000s. We had our bumps related to the occasional large claim, but the overall long-term results were successful and we were able to manage our increase in costs with minor plan design changes and small premium increases. We were even able to add wellness and disease management to the menu of health care to create a more consumer-driven health plan and encourage healthy behavior.
When the Great Recession of 2008-09 hit, health care costs were virtually frozen for nearly five years. Doctors and hospitals were forced to hold down price increases, and utilization remained stable. All this led to a great health care run with no premium increases for five consecutive fiscal years.
But we knew the pent-up demand of the health care system would not go away. As soon as the recession was over, prices immediately started to jump. Now we were faced with tough decisions once again. How would we solve the problem this time?
We knew we needed to be aggressive and explore some nontraditional options. First, we switched to the Penrose-St. Francis Health Services system. Penrose-St. Francis is part of the Centura Health network, composed of 17 hospitals and dozens of health neighborhoods in Colorado and Kansas. The hospital system brought new and creative ideas to invest more in wellness and prevention rather than sick care. Led by President and Chief Executive Officer Margaret Sabin, the Penrose-St. Francis system brought a quality of care previously unknown in our plan. In addition, it brought a wide variety of programs to target specific high-cost plan elements in order to reduce utilization expenses.
For the first time, we were truly partnering with our hospital provider, rather than treating it as a vendor-business relationship. This partnership takes a balanced approach — providing health care to our members when they are ill and providing programs that support employee health and wellness.
The hospital opened a dedicated health clinic for District 11 employees and dependents operated by the Centura system. The clinic is centrally located in the district and is convenient to staff. It offers basic services without the wait of a doctor’s office or an emergency department.
Other creative programs include providing biometric testing, wellness coaching and exercise classes. Penrose-St. Francis has helped accelerate District 11’s efforts to meet its objective of delivering sustainably affordable health care, while also developing a culture of health throughout the district.
In addition to the new hospital network, the district worked with its Voluntary Employee Beneficiary Association Trust and the Board of Education Self-Funded Trust to implement a new investment opportunity for the trust assets.
The trust administration was able to broker a transaction to enter into a trust-owned life insurance program as an investment. In a fairly complicated transaction, the trust was able to safely invest trust assets in a hedged product that yields near market rates.
Other advantages of the relationship with the trust include health care consulting, improved purchasing power on third party administration expenses, prescription drug networks and additional wellness programs.
Health care costs continue to be a vexing problem for school districts in Colorado. Typical health care costs for an aging employee demographic are outpacing the minimal funding increases coming to Colorado school districts.
Now, with the strategic help of our partners, the district is on the cutting edge of health care.
Glenn E. Gustafson is the chief financial officer for District 11 and Jessica Reijgers, who contributed to this column, is the district’s employee benefits manager. Reach Gustafson at email@example.com and Reijgers at firstname.lastname@example.org.