Healthy Behavior Saves, Even For Hospitals

Philip Betbeze, Senior Editor-Finance , September 24, 2007

Jewish Hospital & St. Mary's Healthcare in Louisville, KY, spends about $30 million a year on health insurance for its 5,000 employees. That may sound like a lot, but it's about $6 million less than it should be, says John Hammond, the health system's vice president of human resources.

That's because Jewish enrolled in a population health management program four years ago, a story I'll detail in the November issue of HealthLeaders magazine. The savings are spectacular to be sure, but the larger issue might be the strategic insight the health system's getting by trying some of the same innovative products--population health management and consumer-directed health plans to name two-that other large employers are trying.

The irony that hospitals are being bitten by the same animal--double-digit healthcare premium increases--as other large employers is not lost on Mark Carter, Jewish's chief financial officer.

"We're just like any other large employer. It's very challenging to actively manage our healthcare costs, so I have a lot of empathy for other organizations and their spending on healthcare," he says.

Four years ago, Jewish hired Franklin, TN-based Gordian Healthcare to administer its Healthy Choices program, but most employees don't know Gordian is behind the program (it's marketed internally as a service from Jewish). Jewish pays Gordian to use its staff of nurses to help high-risk employees exercise, lose weight, stop smoking and cut their cholesterol, among other healthy behaviors, based on an individual's results from a health risk assessment that Jewish incentivizes its employees to complete. Don't call it disease management--these employees are generally a long way from developing serious chronic problems from their unhealthy behavior--but many are on the wrong path. It's more of a gentle carrot-and-stick approach to keep these people from developing these expensive chronic health problems that account for as much as 80 percent of the total annual health expenditure for large employers.

In return for their work, employees get a $15 per pay period break on their health insurance premium. Those savings are prominently displayed on their paychecks. If employees don't participate, they pay higher prices for insurance, and Carter says he hears about it when that money's taken away because the employee hasn't been returning his health coach's calls.

"Believe me, people notice and complain when that goes away," Carter says.

So what's the point? Well, I suppose it's that amid all the negativity we hear about the unsustainability of healthcare cost inflation, it's encouraging to hear about programs that are focused on wellness and that seem to work in cutting costs without compromising the health and well-being of the rank-and-file. Personally, it gives me hope that those in this industry who depend on reimbursement for procedures to fix serious problems in people because of poor health choices still recognize that the cheapest way to ensure good health in the vast majority of people isn't through the expensive procedures they provide, but through general attention to healthy behavior.

It's not a panacea. Jewish is trying other potential solutions as well, offering five different health plans, most of which have a consumer-directed healthcare angle.

But it's a start.

Hammond, in describing the benefits of assisting in employee wellness, brings up an old adage that says the best time to plant a tree is on a warm, sunny day 20 years ago.

"The second-best time is today, or in our case, four years ago."

Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at

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