The Company That Solved Health Care: How Serigraph Dramatically Reduced Skyrocketing Costs While Providing Better Care, and How Every Company Can Do the Same
Even with new health-care policies, one thing is clear: health-care costs will continue to rise dramatically. While individuals may get better coverage, businesses will have the same problem they've had for the last four decades. Health care, one of corporate America's largest expenses, is growing at double-digit rates, and nothing done in Washington will change that.
But one medium-size company set out to tame the beast of rising health-care costs, employing best practices and cutting-edge ideas. The results have caused others to sit up and take notice. Serigraph, Inc., a Wisconsin-based manufacturer of decorative parts, and its chairman, John Torinus, did what Washington can't or won't do: reduce cost increases to less than 2 percent while improving the quality of health care for its employees. The implications for corporate America are staggering--the opportunity for genuine reform in an expense category that has been spiraling out of control.
Serigraph began its initiative to control health-care costs in 2003, when its annual health-care bill was $5 million and another $750,000 was needed for the projected 15 percent annual increase. The company employed three strategies for reform, each of which can cut the health-care bill by 20 percent to 40 percent--consumer responsibility, the primacy of primary over specialty care and centers of value. Applied in concert with other management methods, these three approaches almost eliminated growth in health-care costs while improving the quality of employee care. The results are documented. They are beyond refute.
"The Company That Solved Health Care" describes the fascinating details of Serigraph’s program, and shows how any company can achieve similar results. This book is essential reading for any manager responsible for his or her company’s health-care expenses, any academic or thinker involved in the health-care debate and anyone who wants to better understand why health-care costs have been rising and what can be done to achieve price stability while improving patient care.
the absence of pricing discipline, payers like Serigraph have to try to create a semblance of a marketplace. We decided to use carrots instead of sticks to motivate our co-workers to find the bargains. Our standard health plan features high deductibles and reasonable co-insurance, offset by lowered premiums and an HRA. The incentives motivate our people to pay attention to the craziness of medical pricing and to take advantage of the chaos. While the consumer-driven plan won immediate positive
couldn’t wait any longer for our providers to get more proactive. Our first attempt at proactive health care management targeted diabetes. It is well-known that two-thirds of the diabetics in the United States do not follow their regimens and, therefore, are out of control on three blood tests: A1C, lipids, and cholesterol. Just as we set a goal of zero defects in manufacturing our products, we set a goal of zero “treatment defects” in the diabetic arena. Obviously, we are not referring to
their lives. They want the latest information. Employers and providers have to respond by communicating intelligently and incessantly, by giving them all the information they need and deserve. Indeed, we hyper-communicate. 11 SILVER BULLET FOR BETTER VALUE: LEAN DISCIPLINES THAT TRANSFORM SERIGRAPH OPERATING TEAMS—no slouches at quality and lean manufacturing disciplines—have made repeated benchmarking trips to Appleton, Wisconsin, to learn what ThedaCare, a four-hospital system with 5,500
to pass on cost increases through higher prices. Worse, our reality is heavy pressure to lower our prices each year of a multi-year contract. These “price-downs” mean we live in a world of deflation. We have to match the “China price” or the “India price” through high productivity and cost control. That makes us particularly vulnerable to hyper-inflation in any major cost sector. Health costs are our third-largest expense after payroll and raw materials, and in 2003 they were heading to
should be required annually. They are effective in catching high-risk situations needing immediate attention, in identifying chronic diseases, in convincing people to change lifestyles, in setting a platform for health coaching, and in allowing payers to measure and manage their overall health costs. Full annual physicals would be even better. • Make Price and Quality Transparent—People have an inalienable right to patient-friendly information on quality and real prices. Outcomes like infection