Since the Business Health Care Group launched its new health insurance plan at the start of the year, some of its members already are experiencing cost savings.
• New Berlin-based HK Systems Inc. reported an estimated 13-percent decrease in its health care costs for 2007.
• Slinger-based Drillmaster Tool LLC had a 7.25 percent decrease in his health care costs from Jan. 1 to July 1. The company, which employs 25 people, had experienced between 15 and 25 percent annual increases in health care costs over the past five years.
• Milwaukee-based Briggs & Stratton Corp. plans to see no increase in its health insurance costs, which is unique at a time when the average annual increase for companies not associated with the Business Health Care Group is about 10 percent, said Dianne Kiehl, executive director of the Business Health Care Group.
Kiehl said it is too early to release average cost savings for all of the group’s 360 member companies. However, she said that early results are encouraging.
“Double-digit (percent savings) is realistic,” Kiehl said. “Early reporting from member companies is single- to double-digit decreases.”
The Business Health Care Group will have a full year of data by the end of the first quarter of 2007, Kiehl said.
The group was formed to attack the high health care costs in the Milwaukee area, which result in higher health insurance costs for employers. As part of its strategy, the group is trying to convince as many firms as possible, large and small, to join the group so they can maximize their purchasing power to help negotiate lower prices with providers of health care services.
Drillmaster president Edward Shanley said the main reason for the decrease in his company’s health care costs is consumer education and access to cost information for hospitals from the Business Health Care Group.
South Milwaukee-based Bucyrus International Inc. has kept its health insurance increases in the single digits this year, said chief executive officer Tim Sullivan. The company has 1,150 employees in the Milwaukee area and about 3,000 worldwide. Sullivan was one of the founding members of the Business Health Care Group.
“All in all, we have contained our costs very well this year,” Sullivan said. “We are down in the low single-digit increases as we move into 2007, which is a marked improvement, and there are a lot of things that go into that.”
Bucyrus has focused on reducing its health insurance costs by joining the Business Health Care Group and educating its employees about health care costs, Sullivan said.
“There has been a lot more communication between ourselves and our employees,” Sullivan said. “We have engaged them, and they have reacted very well once they understood the true facts of health care.”
Currently, health care costs in southeastern Wisconsin are between 25 and 27 percent above the Midwest average, according to a study conducted by the Greater Milwaukee Business Foundation on Health Inc.
According to Mercer Inc.’s National Survey of Employer-Sponsored Health Plans 2005, the total cost for health care per active employee rose 9.2 percent in 2005 to $9,321 in Wisconsin. Nationally, the cost per active employee rose 6.1 percent to $7,089. The average cost per active employee in the Midwest in 2005 was $7,584.
The Business Health Care Group was founded in 2002 by Jeffrey Bleustein, former president and CEO of Milwaukee-based Harley-Davidson Inc., and Donald Davis, former CEO of Milwaukee-based Rockwell Automation Inc. Bleustein and Davis brought other CEOs of large local companies together to discuss the problem for businesses dealing with escalating health insurance costs.
Milwaukee-based Robert W. Baird & Co. Inc., joined the group within its first year of formation.
“As a CEO of a business in southeastern Wisconsin, the one cost we all deal with that is the most difficult to manage directly are health care costs,” said Paul Purcell, chairman, president and chief executive officer of Baird. “Health care costs in southeastern Wisconsin are higher than our regional and national counterparts and have grown at double digit rates. It became close to a crisis trying to manage costs.”
The group hired Kiehl in 2004 and contracted with Humana Inc. in 2005 to be its health care administrator. The majority of 2005 was spent creating a network of physicians and health care providers based on cost transparency and quality, Kiehl said.
“This effort is a significant collaboration, not just between businesses, but health care providers as well,” Purcell said. “It also involves educating the consumers of health care and how to consume more efficiently, increasing the transparency of health care processes in terms of cost, efficiency and quality, and we need to have a collaborative effort to create a wellness environment so people are healthier.”
The Business Health Care Group changed its name from Business Health Care Group of Southeast Wisconsin last month. The regional focus is the same, however the group wanted a name that was easier to remember, Kiehl said.
The goal for the Business Health Care Group is to meet the Midwest average cost within five to seven years. Kiehl believes that Business Health Care Group members will be in line with the Midwest average by 2010.
“So often, we have had some kind of health care service and have no idea what it costs because we don’t see these things,” Shanley said. “Now, employees receive an explanation of benefits from Humana that lays out the costs.
“Now, when employees need a procedure done, I suggest they check the Web site to compare hospitals and talk it over with their doctor,” Shanley said. “If a procedure at one hospital is $1,000 lower than another and the quality is still there, the doctor may suggest going to the place with better pricing.”
The Business Health Care Group’s Web site, www.bhcgsw.org, offers resources and information for providers, brokers, consumers and employers in an effort to get all parties involved in making health care a market-driven industry, Kiehl said.
“You can’t blame it on any one party. There is equally shared guilt,” Kiehl said.
The basis of the partnership is opening the doors of communication to all parties: consumers, businesses, health care providers and health care administrators, Kiehl said. By making everyone accountable and supporting issues with action plans, community involvement, business and provider discussions and collective purchasing, the Business Health Care Group hopes everyone will be more educated and the market will respond, she said.
“As a business community, we want to work with physicians to find out what we can do from an initiative standpoint,” Kiehl said. “Consumers have never been held accountable for their wellness compliance, for treatment participation or for disease management.”
With the initiatives and collective purchasing, the Business Health Care Group hopes to have an effect on health care administrators as well by having leverage when negotiating pricing, Kiehl said.
“The idea is not to drive lesser quality care, it is to drive better care at the right pricing that will evolve through free enterprise as our employees become better consumers of health care and take care of themselves,” Sullivan said.
“It’s all about accountability and alignment,” Kiehl said. “We need to hold people accountable and make sure activities align with each other. If we stay focused on that, we will make progress.”
Kiehl said the Business Health Care Group continues to look for new members – companies of all sizes.
“We are actively pursuing membership and the achievement of our goals,” Kiehl said. “With more companies to represent, the more effective we can be in the market.”
The group opened membership up to small businesses on Jan. 1. It added about 80 new small business member companies whose plans became active between Aug. 1 and Nov.1.
“What we are saying for small businesses is that they need to engage with the rest of the business community to walk in unison to affect the market,” Kiehl said.
